Photo by MChe Lee on Unsplash
In a cautionary note around experiential retailing, REI Co-op announced plans to shutter its Experiences business, which includes adventure travel, day tours and classes, as the operation remained unprofitable and was taking resources away from its core focus of selling gear and apparel.
Launched in 1987 as REI Adventures, the business was rebranded in 2022 to REI Experiences as the outdoor chain hoped the new name would be less intimidating and encourage more participants.
In 2022, REI said the Experiences platform was offering 124 multiday adventure travel trips supporting hiking, backpacking, cycling, paddling, climbing and snowshoeing treks across the U.S. and led by local guides. In addition, the Experiences team was supporting day tours and educational programming in 14 cities.
Significant investments continued in recent years. In February 2024, REI purchased 20 acres of land south of Grand Canyon National Park to create its fourth Signature Camp.
REI Experiences Never Reached Profitability
In a letter Tuesday to REI employees and past REI Experiences customers, however, REI President and CEO Eric Artz noted that Experiences division last year served only 40,000 customers, or fewer than 0.4% of all co-op customers. It also never reached profitability over its more than four decades, including its peak year in 2019.
"When we look at the all-up costs of running this business, including costs like marketing and technology, we are losing millions of dollars every year and subsidizing Experiences with profits from other parts of the business," he wrote.
He added, "Every path to profitability we explored would have required us to invest more time, effort, and focus away from parts of the business that reach significantly more customers, drive more positive financial outcomes, and have greater impact on our mission to get people outside."
Artz further noted that with the help of a focus on full-price selling, REI will be near breakeven for both operating income before dividends and free cash flow following steep losses in 2023 and 2022. He added, “At the same time, we still have more work to do to return the co-op to sustainable, profitable growth.”
REI Closure of Experiences Means Layoffs
The closing of the Experiences business, effective this week, will result in the layoff of 180 full-time and 248 part-time employees, including guides. Any current reservations will be refunded.
Artz said REI is forming a small team to “reexamine” how REI delivers classes and education at the local level. Local marketing teams will be combined with corporate teams to unify customer-facing work.
The CEO said REI is reinvesting resources into three core areas to “drive healthy, profitable growth” in the future including investments in priority activities (Camp and Backpack, Run, and Hike and Outside Life) that reach most customers, in tools to better manage inventory to improve in-stocks and profitability, and in personalization and visual merchandising to elevate the consumer experience.
Artz said, “Our roots are in the gear and apparel we sell and the outdoor moments they enable. This has been the core of our business for 86 years — and I believe when we stay focused on what we do best, we can and will succeed.”
Reddit Reacts to REI Experiences Closure
A Reddit post on the closure found some commenters sympathizing with REI’s decision. One user lamented, “Low margin business that does not support core operations and is likely a distraction. Feel bad for those involved but likely made a lot of sense to shore up the balance sheet.”
However, the discussion largely ran negative, with some believing REI failed to raise awareness of the programs that they saw introducing many to the outdoors. Many saw the program as potentially a key differentiator for REI, with some expecting to see the closing of in-store bike and ski maintenance departments.
One commenter stated, “Seems obvious to me REI really missed an opportunity with Experiences to become the guiding and planned outdoor adventure company in the U.S., and couple that with sales/outfitting, as well as in-store classes, to drive a complete, holistic outdoor company for customers, beyond one that mimics other big box stores that just sells clothing and some gear.”
One alleged worker who was among those being laid off stated, “This is truly a sad day for a coop who's going all in on corporate. I really hope this leaves room for small outdoor companies to start operating again and put this box store into the category it belongs.”