Can Free Events Help REI Overcome Its Challenges Amid Financial Losses?

Earlier this year, REI Co-op expanded its camping opportunities by acquiring 20 acres of land near the Grand Canyon National Park to create a new Signature Camp. Set to open in spring 2025 and operate from April to October annually, the campground will feature 10 tents on platforms, a communal fire pit, picnic areas, a storage shed, and modern amenities like flushable toilets and hot showers.

Now, REI Co-op is gearing up for a summer of outdoor adventure with over 300 free classes and events scheduled nationwide on Saturday, June 15. Anticipating nearly 6,000 participants, these Opt Outside events will feature diverse activities such as hiking, paddling, and other outdoor programs aimed at highlighting “how the co-op supports its members and broader outdoor community with resources, expertise, and inspiration.”

REI will also offer a curated selection of popular in-store workshops and guided tours led by experienced staff, guides, and community partners. In certain locations, the event will include appearances by influencers like Adina Crawford and organizations such as Adaptive Adventures and Latino Outdoors.

REI’s Opt Outside movement extends beyond a single day, embodying a lifestyle and core value of the co-op. The dedicated Opt Outside page provides year-round access to virtual and in-person resources. Last year alone, REI facilitated over 4,800 day experiences for more than 38,200 participants across 14 communities.

In addition to local activities, REI offers 150 adventure travel trips throughout North America, including new itineraries celebrating Black joy in nature in partnership with Outdoor Afro, Inc. Regular introductory classes on activities like hiking and camping further enhance the co-op’s offerings.

This summer, REI is also expanding partnerships with Hipcamp and Strava to enhance outdoor experiences. The “Summer of Magic Campout Series” with Hipcamp will surprise participants with free campouts during peak weekends, while upcoming challenges on Strava will engage fitness enthusiasts in new ways.

But how effective and profitable are these events and experiences?

REI has long enjoyed the loyalty of millions of members, turning it into a national retailer. However, recent years have brought challenges, including fierce competition and declining sales, resulting in a $311 million net loss for 2023, the second consecutive year of financial losses.

CEO Eric Artz emphasized the need for adaptability while maintaining the company’s commitment to environmental causes. Despite financial setbacks, REI continues to champion climate change awareness and aims to diversify its customer base by opening more stores and appealing to a broader audience, including women and people of color.

The retailer is undergoing significant changes, phasing out its own footwear and partnering with leading brands to expand its running product offerings. This shift has led to mixed reactions. Some employees and customers feel REI is becoming more like an online retailer, while others appreciate the focus on diverse, everyday outdoor activities and apparel.

As a co-op, REI’s members are also its owners, contributing to its community-centric approach. In 2023, REI returned $200 million to its 24 million members, highlighting its commitment to member benefits despite financial losses. However, this model also pressures the company to balance profitability with member and employee satisfaction.

Employee sentiment has been affected by recent layoffs and a budding labor movement, with workers in 10 REI stores unionizing. Concerns over reduced hours and shifts toward more seasonal staffing have added to the dissatisfaction. Despite these challenges, REI has increased investments in employee wages, healthcare, and benefits.

The U.S. running shoe market, worth over $10 billion and growing at 3.5%, presents a substantial opportunity for REI to improve its financial performance. The company’s focus on running aims to drive profitability and strengthen its market position, with sales in the category already growing at a double-digit pace.

By phasing out its own branded footwear and partnering with brands like On Running, Hoka, Salomon, and Brooks, REI aims to meet the needs of its many running customers. This move includes introducing Asics to its catalog for the first time.

According to Fan Zhou, REI’s general manager of footwear and running, the company’s approach involves expanding its running product range, training sales associates, and engaging the running community through events and marketing. “About half the people who come to us for hiking or biking supplies are also runners. And we estimate we were only serving about 50% of those active runners. So there’s a big opportunity to grow this space,” Zhou explained.

Nine new running-focused stores will open in cities like Denver and Chicago, featuring a broader selection of running products and hosting community events such as sponsored running clubs.

Board chair Beth Newlands Campbell emphasized the need for profitability, and the new running focus is a key initiative to counter recent losses and drive future growth.