Mountain Equipment Co-op achieves retail success by following an improbable business model.

by Tom Mason

For more than 50 years the Paramount Theatre’s long narrow marquee was a landmark in downtown Halifax. Opened in 1935 when talking pictures were still new, the theatre reached its heyday in the days of Casablanca and Gone With the Wind. By the 1970’s generations of citizens from all levels of Halifax society as well as thousands of visiting sailors, soldiers and tourists had poured through the Paramount’s turnstyle. But times change. When the last of Halifax’s great movie houses turned off its projector forever in 1988, giant multiplex theatres located far from the downtown core had taken over the movie business. The venerable Paramount sat empty for a decade awaiting its fate.

That’s when Mountain Equipment Co-op stepped in. The popular outdoor outfitter moved into the Paramount property in 2001, transforming it from a cavernous theatre space into the most unusual – and greenest – retail building in the province. With it’s split-level design, suspended kayaks and two-storey indoor climbing wall, the Paramount’s interior offered an ideal space for the outdoor store, but like all great retail properties, location was the key. “It was the location that first attracted us,” says Gary Faryon, Mountain Equipment Co-op’s vice president of operations, who oversaw the renovation of the Paramount building. “We wanted a place that had high visibility, but it also had to be easily accessible. A place that our staff and our customers could easily get to by bike, by bus or by foot, in order to reduce the carbon footprint that we create.”

It sounds like a strange thing for a mega-retailer to be losing sleep over: reducing a carbon footprint created by the cars and SUVs of thousands of weekend shoppers. But Mountain Equipment Co-op, or MEC as insiders like to call it, is a long way from a typical retailer chain. The company was founded in 1971 by a group of West Coast climbers who came up with the idea, according to legend, while stranded on the side of Washington State’s Mount Baker in a snowstorm. Tired of paying high prices for crampons and climbing rope south of the border, the group came up with the idea of forming a co-op, charging members $5 to join, and selling them hard-to-find outdoor equipment at cost.

Thirty-six years later, that improbable business model still applies, in spite of the fact that the MEC that exists today would be barely recognizable to the group of free-spirited kids who founded it. The company has evolved into a Canadian retail juggernaut with more than $200 million in annual sales, 11 retail outlets across the country and an on-line catalogue store that attracts buyers from around the globe. But all that success hasn’t gone to the heads of the board of directors. The company has stayed true to its founding principles – principles that, on the surface, seem counterintuitive to the cutthroat industry of big box retail that they operate in. Instead of channeling the profits from the company’s annual sales into shareholder dividends, they are passed on in the form of lower prices to the co-operative’s 2.6 million members, each of whom still shell out just $5 for a lifetime MEC membership. The company doesn’t spend a penny on outside advertising either.

Instead MEC conducts business based on four core principles: green operations, ethical sourcing, product sustainability, and community involvement. MEC products aren’t throwaway items made in third world sweatshops. They are made in carefully audited factories by competitively paid employees, out of environmentally friendly materials that are built to last and can be easily repaired. And every building that the company owns or operates adheres to a set of green standards that require them to be energy efficient and constructed in an environmentally friendly way.

Linda Bartlett is the chairman of MEC’s board of directors. A native of St. John’s Newfoundland, Bartlett perfectly embodies the MEC ideal. She’s a dynamic public speaker, completely at home in a boardroom or on stage at an annual meeting. But she’s equally comfortable slipping on a spray skirt and climbing into the cockpit of her sea kayak or strapping on a pair of cross country skis. She’s been passionate about the outdoors all her life, and her passions have attracted her to adventures around the world, including a 250-km paddle up the isolated Churchill River in Labrador last year. She has canoed all of Newfoundland’s great rivers including the Exploits and the Gander with only her 165-pound Newfoundland dog as company. As the world celebrated the coming of the millennium in 2000, Bartlett spent two weeks kayaking the wild rivers of Nepal along with a few close friends – a group that included kayaking legend Peter Bray, who went on to become the first person to kayak the Atlantic Ocean later that year.

Before joining MEC’s board in 2002, Bartlett spent more than a decade developing Newfoundland’s adventure tourism industry, promoting the island’s rugged coastline and wilderness tracts to kayakers and adventurers around the world. She was drawn to MEC because the company’s ideals meshed perfectly with her own. “We’re one of the most respected companies in Canada,” she says. “Because we’re values based, we’re becoming a force for change in the Canadian landscape. We don’t just want to sell great products. We want to exert pressure on the most important issues of our time.”

Saving an anachronistic old theatre from certain destruction fits in perfectly with that line of thinking. MEC could do it because, unlike most retailers, they don’t approach a new store with cookie cutter ideals. The company’s corporate presence doesn’t depend on color schemes, building styles or distinctive signs. “We’re not a glitzy, in-your-face organization,” says Bartlett. “It’s more important for us to establish a strong connection with the communities we do business in. Tearing down old buildings can be so destructive. So much goes to landfills during the demolition process. When we find a beautiful old building like the one in Halifax, we recycle it. Rather than tearing something down we find a way to use what’s there.”

It’s a policy that MEC follows across the country. The three storey MEC outlet in Winnipeg, constructed from a century-old derelict building in the downtown core, kept more than 3,700 tons of building materials out of local landfills and was one of the first two retail buildings in Canada to meet the national C-2000 Green Building Standard that measures energy efficiency, occupant health, environmental impact and functional performance. (The other building to meet the standard was also a MEC building retail – the company’s outlet in Ottawa.) In Quebec City, the store location was chosen in a run-down area of town that was suffering from serious urban decay. MEC hopes the move will be the first step in revitalizing the neighbourhood. The Calgary, Edmonton and Winnipeg stores all use wind-generated energy, while the Montreal outlet uses geothermal for both heating and cooling. A new store about to open in Burlington will use photoelectric cells on the roof.

In Halifax, energy was the number one consideration. With central heating in Nova Scotia primarily dependent on oil, MEC saw an opportunity to use another type of alternative energy – biodiesel. They hit on a unique source – Wilson fuels, a Nova Scotia-based company has been producing a biodiesel fuel made from conventional diesel and fish oil for a number of years. MEC installed heavy insulation into the walls of the old theatre building, well beyond Canadian standards. Where heritage and aesthetics collided with environmental stewardship, it was a no-brainer which came out on top. “We would have loved to keep the beautiful brick face on the side of the building but it wasn’t efficient enough,” Faryon laments. Instead, the outside face was covered by an extra layer of foam insulation, boosting the R-value of the building to astronomical standards. The result is that the Halifax store uses 25 percent less energy than a conventional modern retail building of similar size – a savings of almost $100,000 in energy costs for the building since it opened, according to MEC estimations.

Energy saving is just one of the features that makes the Halifax store stand out. Like all MEC outlets across the country, the store uses a minimal amount of building materials. The stark floors are burnished concrete, the ceiling covers and light fixtures are sparse. The cooling system is CFC free, the toilets are low flow and the store has paper and bag reduction programs in place. Even the cleaning contractors are educated by MEC staff to use environmentally friendly cleaning supplies and no paper towels. The result is that 84 percent of the Halifax store’s garbage is diverted from landfills to be reused or recycled.

Bartlett dismisses the idea that green policies are simply part of a marketing strategy designed to appeal to a target market of outdoor enthusiasts. “We’re trying not to wrap ourselves in a green blanket with this. We’re not making a big deal about it. It just happens to be one of our values.”

If ever there was a chance to fudge on those values, the new MEC distribution center in Surrey would be it. The $40 million, 200,000 sq. ft. warehouse facility is the largest single capital project that MEC has ever undertaken. Warehouses, removed as they are from the public eye, have never been known for an abundance of environmental technology, but the Surrey center is different. It’s built to last at least 50 years, it has room to expand and it is packed with environmental technologies like rainwater reuse systems, energy saving occupancy sensors for lighting, a “cool” roof and a construction waste diversion target of 75 percent.

The members of MEC wouldn’t have it any other way. With 2.6 million members and growing, Bartlett says that the co-operative represents a huge polity of like-minded people who are heavily focused on the environment. The demographics of that group are changing too. Today the typical MEC customer is not a hearty adventurer cut from the same cloth as Bartlett, Bray and the founders of the co-operative. They are more likely to be family people, whose idea of a wilderness experience is a long hike followed by a sound sleep in a real bed. But they are still passionate about the environment. “Canada is a big country, but there’s a thread that binds the outdoor community,” says Bartlett. “I’m a Newfoundlander, but because I’m involved in kayaking, I can talk the talk with kayakers in Quebec and B.C. Like a lot of outdoor people, I grew up in the club system, building trails and taking on environmental projects. In many ways, MEC is an extension of that.”