A bit of an interruption to pandemic news and personal anecdotes… because I wanted to touch on a story that’s a big deal around here.
The first thing I thought, when I heard that Mountain Equipment Co-op was being bought out by Kingswood Capital… was, wow, great, awesome… terrific and unexpected news… that the legendary Joe Segal and his crew would be taking it over… finally, it’ll be in good hands.
Joe Segal is indeed nothing short of a legend in this town… businessman, builder, community leader, philanthropist. A well-deserving recipient of both the Order of B.C. and the Order of Canada. And, to be honest, his business ingenuity might have been what could’ve saved MEC… but, unfortunately, it’s not Joe Segal’s Kingswood Capital that’s taking over… it’s a different one, an American private investment firm… and that’s not great news. Say it ain’t so, Joe.
At best, they will simply strip the company down to a form that makes money, and what might have been left (not much) at the heart and soul of MEC will be gone, and it will now just become another big-box retailer. And, at worst, they’ll just shut it all down and redevelop the significant real-estate assets they’ve now acquired. They’re promising to keep at least 17 stores open and 75% of the workforce. We shall see. Sounds good on paper, and those are good quotes to fall back on next year when they shut it all down anyway and say “We tried, but couldn’t survive the effects of the pandemic…” or whatever other excuse.
MEC will become a SFU Segal School of Business case-study on how to run a gloriously successful business into the ground, through awful mismanagement. There’s far too much to get into here, but it’s a long list of bad decisions, and it’s no surprise to anyone who’s been following MEC’s (mis)fortunes over the years. There has been a grassroots movement to remove the presiding board, for years.
Now that they’ve screwed it up completely, this is really the only course of action. They sold because they’re bleeding money and out of options. When he was young, Joe Segal lost his entire life’s saved-up fortune of $3,000 in one night of poker. He managed to dig himself out of that hole… but the close to $100M needed for these guys who don’t know (and haven’t known, for years) what they’re doing – is too much to ask.
It’s this, or bankruptcy and liquidation. And at least this gives it a tiny chance of saving what was once there.
I remember the first day I walked into that impressive place… I remember giving them my $5 and signing up and feeling like I was part of something. I didn’t even know what a co-op was until that day.
More importantly, I remember the last time I was there… and it’s also pretty telling with respect to how things had changed. It had already turned that corner… from co-operative, to… not. I’d gone in to get some hiking boots, and here’s what happened when I approached a salesperson on that elevated shoe area:
“Hi there… I’m looking for some hiking boots.”
“What sort of hiking will you be doing?”
“Hmm… nothing too crazy… like something good enough for the Grouse Grind.”
“Pfffft…. that’s not a hike.”
Heh… I chuckle about it, thinking about it now. But back then (this was more than 20 years ago), it pissed me off.
“Ohhhhh…. sorry. OK, well, if I were a self-righteous prick such as yourself, whose idea of what a hike is differs so much from the common man, what might I be looking for?”
He rolled his eyes and walked away. And I walked out of MEC and haven’t been back since. That was one small step (out the door) for a man. And this recent business decision is one giant leap for mankind… in an unfortunate but necessary direction.
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i suspect that we joined at around the same time. I’ve been ordering stuff from them over the past few months, and it struck me as being very much against their principles that my orders were being shipped in several different packages, rather than combined. Now, I realize that this method (i.e. drop shipping) is the internet retail way of the future, but I was surprised that MEC would adopt that model at the expense of reduced packaging etc.
Most recently (last Friday) I placed an order with MEC for something that I could have purchased from another (small) retailer for a couple of dollars less. I paid more to get it from MEC due to brand loyalty. I would not do that today.
Sticking with their core values might not have been the best strategy $-wise, but abandoning them to try to compete in the global market against Amazon etc was a loosing proposition, and in doing so, they lost any differentiation that they had.
It’s a bummer.
But hey.. the smoke lifted enough today for there to be shadows for about an hour.
Are you sure it’s not a daughter company of the local Kingswood? That was my first hunch, but maybe you got more Intel on the matter.
The HK Daily Report (1.63min read)
I am shocked by how this matters to folks here. I always hated the douchery of it…
One thing that drove me insane about MEC was that they didn’t get taxed on profits (if any) that they made. Thus, they had a major competitive advantage over many sporting goods retailers and bike shops around town, who had to pay taxes on profits that they earned. Luckily (or should I say unlucky) MEC dropped the ball so badly on their day to day management, and bloated cost structure, that the other retailers and bike shops could stay competitive due to better efficiencies in their operations.
It is a sad end to an organization I have depended on for decades.
As someone who works in the apparel industry, I sense they had serious problems, otherwise investors like Chip Wilson would have taken it up…especially with the real estate interests. Knowing how supply chain works on the apparel side, I suspect that they simply were not charging enough, or they were not managing thier inventories and fabric investments properly….talk to the supply chain managers and buyers…thats the real story.
This topic came up on my FB thread in the last few days, first, it was from an old teacher of mine telling me MEC had sold, I googled and could not find anything, within an hour the news broke the story that indeed they had sold to an American company. I am shocked and upset but I too could see their downfall. Can’t remember my first time but I do remember thinking about how they ship everything in fabric reusable bags as a very smart thing for the enviroment.
I worked in retail for 15 years, starting as a salesman in computers, learning how retail works for London Drugs in the early days 2000-2010, at some point the old man who ran the company passed away leaving his children to run it, the story goes none of them were interested in it so they let the board run it. Within a few short years working for LD went from fun happy place to a dog eats dog world, when I finally left in 2015 I was fighting to get 40/hrs a week after 15 years of service, many of my coworkers who are still there are down to 16/hrs a week pre Covid, leaving them to work shifts at multiple stores to pay the bills.
What happened was they tried to be competitive not by providing good products and good prices but instead providing all and any products a competitor could have at the near same price, so 25 different USB sticks, 35 Different printers, etc etc I called it product overload when a consumer has so many choices they will either not buy or they will buy the cheapest option
That is a great story. Humility is the key to everything that is good, and lack of humility is at the core of everything that isn’t.
Horatio Kemeny Greg Hopper https://www.thebeaverton.com/2020/09/mec-reassures-customers-theyll-still-charge-800-per-sleeping-bag/?fbclid=IwAR03OYhKwn27eTcCDHfwOg0k4keOfViNWRSApu0aGBTlRqLvwt475UsL7tk
Sigge Björkland must be laughing in his grave. MEC was primarily responsible for under cutting the price and quality of cross country ski gear available in the lower mainland. Light ski touring customers would always price check against Sigge’s gear aginst MECs then buy the MEC gear, which often wasnt fitted nearly as well, being low end didn’t last well, and was deficient in performance in areas such as being able to actually turn the XC skis. Noting that a limp low end boot that twists cant support a turn well or at all lol. You could often tell a MEC xc ski customer from the others by the way they were wrapped around trees.
MEC’s non profit charitable status was an unfair trading advantage over many of the smaller specialty outdoor stores and drove a succession out of business over the years. MEC however in the past 15 years did provide a geographic anchor which attracted a cluster of smaller specialty stores which could outperform them in areas of fit, knowledge, sizing, and merchandise quality.
MEC were handy to have around as a general source of just about anything.
MEC MEMBER from 1975,…. when they really did have low prices and good merchandise but awful stocking and questionable service.
I loved (still do) MEC. Spent many hours walking around the isle checking out all the cool gear.
Spot on, as usual! I was in the flagship store last Sunday. The kids’ and men’s clothing departments were barren wastelands. Clearly they had been picked through ten times over. When I asked a staff member when more product was coming in, all he said was “They’re not shipping it to the stores, it’s all backed-up in the warehouse. Blame it on COVID.” And I thought… this isn’t the pandemic, the company isn’t paying its bills, not having foresight and lacking leadership. Here we are: “forced” to stay local, buy local, get outside and enjoy the immense and beautiful outdoors in our own backyard and MEC isn’t positioned to thrive in the very economy it was literally made for. Such a fall from glory. Personally, I’m hoping REI sees this as an opportunity to jump the border and bring their fabulous model and Kirkland-like private label product offering to us Canucks!