Chris Speyer says his seven-year stint at REI, most recently as chief merchandising officer and senior vice president, has been the highlight of his professional career. But when he left to join Mountain Equipment Company (MEC) in his native Canada last summer, he made it clear from Day One to CEO Peter Hlynsky that if there was an opportunity to take on an even greater role in the company, including some form of ownership, he would be interested.
That has now become a reality and could mark the beginning of another career highlight for Speyer. Last Friday, MEC announced that a Canadian investor group led by Tim Gu, the president of textile manufacturer E.Star International, which manufactures products in Canada and abroad for Canada Goose, Fila, Reebok, and more, has acquired a majority stake in MEC from Kingswood Capital. Speyer and Hlynsky are part of the new investment group, making the transaction a partial management buyout.
The deal was always going to be meaningful to customers and employees, Speyer said in an interview with SESO. They wanted MEC, with its distinctive understanding of the diverse local needs of outdoor enthusiasts across the country, to return to Canadian ownership after it was sold to Kingswood Capital, a Los Angeles-based private equity firm that bought the company after it declared bankruptcy in 2020.
“But in this moment, Canadians are more aware of their identity and their sovereignty,” Speyer said. “With this and what’s happening with the Hudson’s Bay Company and other parts of Canadiana, it just becomes even more profound that MEC is coming back home,” he said, referring to Canadian Tire’s recent acquisition of Hudson’s Bay after it filed for bankruptcy earlier this year.
The terms of the transaction have not been made public. Kingswood will remain a minority owner of MEC.
MEC CEO Peter Hlynsky. Photo courtesy of MEC.
“MEC being back in Canadian hands means we are more committed than ever to equip Canadians for all trails ahead,” Hlynsky said in a statement.
Business Improving
While Hlynsky was shopping the company around to potential investors over the past several months, Speyer has been leading the commercial side of the business.
“We’ve had six months now of positive comp growth, Speyer said. “That is a reflection of the fact that when we just focus on our fundamentals around being a great outdoor specialty retailer, the member and the customer will show up.”
MEC has struggled in the post-COVID period, with recent reports indicating that the company had fallen behind on payments to vendors. In February, Canadian newspaper the Globe and Mail reported Lever Style Ltd., a Hong Kong-based supplier to MEC, filed a lawsuit seeking more than $1.3 million in unpaid bills. Retail data and intelligence company RetailStat shared on LinkedIn that payment performance declined in December, with less than 55% of payments within terms. And a report by the Sports Industry Credit Association that was shared with SESO by a supplier shows MEC owed suppliers more than $94,000 over a five-day period in November.
Speyer said there hasn’t been any earth-shattering innovation that is helping to stabilize sales. Instead, inspired by the amount of employee talent in MEC’s 24 standalone stores and the affection its customers have for the retailer, he is focused on operating on good fundamentals, such as employee expertise, product assortment, and creating community.
“We just doubled down on what our members expected from us and how we differentiate ourselves,” he said.
Speyer believes REI and MEC are similar organizations in that they’re both purpose-led and embrace and learn from its members and customers (although MEC moved from being a co-op to a company after it was acquired by Kingswood). Speyer said he’s applied those same values to MEC, which will feed into new product development at the company’s popular private label.
“I have been so close to that REI purpose and values, and it’s good for me to lean on the power of those things when it comes to MEC,” he said.
Top Brand Performers at MEC
The three activities that make up the core identity of MEC are camping, hiking, and climbing, with backpacking connecting a through line to all three. Those have been performing well across footwear, packs, and apparel, with brands such as Arc’teryx, Keen, Norda, and La Sportiva all doing well.
“We have put a ton of focus on making sure how we show up for the trail is really relevant,” he said.
Bike and water are the two areas that are tougher, he said – a sentiment shared by many outdoor retailers because of the surge of demand at the beginning of COVID and the supply challenges that followed.
“Those are places we’re very committed to, but ultimately it’s a more challenging market, and we expect that to be the case, probably for the balance of the year,” he said.
More Made in Canada Products
Another differentiator at MEC is its ability to appeal to distinctive regional needs across a large geography, Speyer said. What customers need in Montreal is different from those in the Maritimes or those on the West Coast. While everyone in those locations might need a hiking boot, pack, or tent, he noted, products such as wetsuits, boats, and PFDs will need different specs for different types of regions.
“I think this is where a lot of international retailers struggle when they come into Canada, because it’s a big, big country,” Speyer said. “It has very unique identities depending on where you are, and the way the customer participates in the outdoors might look totally different in Toronto or Ottawa than it does here in Vancouver.”
MEC’s North Vancouver store. Photo courtesy of MEC.
With the help of Gu, MEC will start manufacturing some of its private label products in Canada, starting with a T-shirt in time for Canada Day in July. Going forward, MEC will look at manufacturing some of its textile products such as apparel and outerwear in Canada rather than Vietnam, Indonesia, and Taiwan, where the majority of its private label products are made.
“We think that is really consistent with this idea of Canadian values and it just makes perfect sense, given Tim’s background and his expertise here,” Speyer said.
MEC’s exposure to tariff pressure is very limited at present aside from merino socks, many of which are made in the U.S., he said. Private label products such as its Spark Ultra Light (UL) tent, the Pace UL pack, the Wanderwall pant, and the MEC x Aquanator rain jacket have all been well-loved by customers.
“Our private label is a demonstration of our expertise and hopefully great value for our members every day,” he said, which is especially attractive when customers are feeling economic pressures.
MEC will also ramp up its trade-in program. In November, the retailer launched its trade-in program for the Toaster, a popular one-piece winter suit for kids. Customers can trade in their kids’ used Toasters for a gift card for 50% of the original purchase price to incentivize customers to buy larger sizes as their kids grow. Now, MEC will expand the program to kids’ bikes.
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“We think about circularity a lot, but we also think about how we help solve problems for parents who are looking for well-made product that also is affordable and they can continue to get value out of it over time,” Speyer said. “If you can buy your 12-, 16-, and 20-inch bike at MEC and trade it in, we’re solving a customer problem, and we’re also encouraging a member to come back to see us with some frequency. You’ll see more of those type of programs as we start to scale.”
Outdoor Optimism
Speyer acknowledges that he’s an optimist, but he said that the outdoor industry has an interesting opportunity in front of it, despite all of the challenges it’s grappling with.
“During moments of societal stress or crisis, getting out for a walk or getting out for a hike, or going out for a bike ride or a paddle, is a really great way to manage your sanity,” he said. “We’re going to have a lot of conversations around the business and trade, but we should remember the customer really needs these outdoor experiences right now in a way that that maybe they haven’t since COVID.”
That means welcoming those customers in and talking about how to take care of their minds and bodies as the difficult times ensue around them, he said. It also means including vendors and employees in that equation, he said.
MEC brings its vendors together each quarter to talk about what’s happening in the business and to give them an opportunity to provide feedback on where it can improve. Vendors consistently ask for more ways they can work together to provide great in-store brand storytelling, how they can access MEC’s staff to provide employees with information, product knowledge, and stock, and how they can use MEC as a hub for innovation to show their assortments.
The retailer will continue to invest in educating staff and using merchandising tools to effectively tell brand and product stories to its customers, he said.
“It’s not rocket science,” Speyer said. “It’s just going back to a lot of fundamentals that I think sometimes are missed.”
Kate Robertson can be reached at kate@shop-eat-surf-outdoor.com.
