How REI is building an outdoor ecosystem around its customers

Shante Abdo

The purpose of a retailer is changing. The core function may still be to sell products, but there are entire worlds being built up around consumers now that have — at least on the surface — little to do with products sitting on shelves.

The rise of experiential retail has led to stores increasingly offering various services, classes and events within their walls instead of just commodities. Greg Portell, lead of the global consumer practice at Kearney, pointed to cooking classes at the likes of Sur La Table and Williams Sonoma, or gardening classes hosted by Home Depot and Lowe’s, as examples of some of the more community-focused or educational events retailers have begun holding.

REI, and the athletics and outdoors space as a whole, is particularly well-positioned for this type of overlap, operating alongside activities like kayaking or running that require specific equipment and apparel and could benefit from employees with expertise in the space.

“I think the running specialty channel, for instance, has been onto this idea for some time of organizing a fun run or a short run after work or early in the morning,” Matt Powell, senior industry adviser for sports with the NPD Group, said. “It’s creating community, and in this case, it’s putting like-minded people who are interested in running together with other people who are interested in running.”

For the outdoors industry, building that community is even more involved. It means organizing events like hiking, canoeing and rock climbing — all dependent on particular environmental conditions — or hosting events to educate consumers on certain activities. Merrell and Fjällräven, for example, have programs to try and connect consumers with their local environment.

“REI has that natural connectivity to the outdoors, and the biggest challenge many of us have with the outdoors is actually getting access.”

Greg Portell

Lead of the Global Consumer Practice at Kearney

REI has taken things to a whole different level. The specialty retailer offers days-long trips based around hiking, cycling, snowshoeing and other activities through its REI Adventures business, along with local events and classes. It’s not exactly a bid to become a travel business, but more so to build up an outdoor ecosystem around its consumer, where it can offer everything from merchandise to travel itineraries.

“The fact that they’re going into travel here is not unexpected because that ties directly to their brand. It’d be very different if we were talking about Hollister doing it or Abercrombie — they don’t have any real natural affinity to the travel sector,” Portell said. “REI has that natural connectivity to the outdoors, and the biggest challenge many of us have with the outdoors is actually getting access. So by creating a way for the newbies to get access to the outdoors, REI is enhancing their brand and they’re bringing more people into the category. That’s the profile of a company that we would expect to get into travel — same way you see National Geographic do it.”

Travel is particularly attractive for some retailers because, prior to the pandemic at least, consumers were spending a lot on experiences, according to Powell. Offering travel services was a way to get in on a hot spending category for consumers, though Powell said he’s not sure how many retailers actually make money on travel.

“It was the retailer trying to enhance the experience that the consumer was after,” Powell said.

Another participant in the space, wholesaler Costco has a travel business that offers members special discounts on trips. While Portell believes Costco’s efforts are more about bolstering the offerings for its cost-saving customer base than the brand connection REI has to outdoors travel, the retailers do share one thing: a membership.

While Costco only offers travel for its members, REI allows anyone to book trips, but it gives members discounts on its travel offerings, and the specialty retailer’s membership helps build out its ecosystem in other ways as well. For example, REI limits used gear sales to members. The company’s garage sales have traditionally been members-only, and now, as the retailer opens physical locations that sell only used gear, buying is reserved for members. (Anyone can browse those stores, but members are the only ones that can buy.)

Used gear has become another spoke in the wheel REI is creating for its customers. Facilitating used gear sales helps make the outdoors more accessible, if in a slightly different way than its travel options. Likewise, the retailer now offers virtual fit appointments and educational presentations online, further building out its customer experience.

To summarize, through REI, a given customer can: test out camping for the first time using the company’s rental services, schedule a virtual outfitting appointment for their next camping trip to figure out what kind of tent and cooking gear they need, buy the tent from REI’s used business to cut back on costs, buy the cooking gear new because they’re feeling fancy, start planning a Yellowstone camping trip, attend a virtual session on backpacking in Yellowstone to pick up some tips and, finally, book their 6-day Yellowstone camping trip through REI.

REI dresses you for the outdoors, educates you about the outdoors and can even lead your trip into the outdoors. In short: REI wants to do everything for you except the activity itself.

Making gear accessible

Since the appropriate apparel and equipment are key to enjoying the outdoors, it makes sense that part of REI’s world-building is solidly focused on making the appropriate gear for a given activity more accessible. That starts with REI’s used gear business. According to Ken Voeller, director of circular commerce and new business development at REI, the company’s online used gear business “has been pretty darn successful.”

REI doubled its online sales of used gear in 2020 and expanded the program in October last year to include used gear pop-up stores and a trade-in program where members can sell their gear in exchange for an REI gift card. So far, shoppers are using the used gear business to get into new sports and activities they haven’t done before, Voeller said. 

“We’re noticing that they’re starting to serve a different type of customer than maybe our traditional retail stores would,” Voeller said of the retailer’s used gear pop-ups. “We see customers walking into our used gear retail stores to buy a tent for the first time because they want to go camping for the first time or they’ll walk into our used gear retail stores to buy a pair of hiking shoes for the first time. We really see those used gear stores becoming kind of a gateway to the broader Co Op, and then by extension of course, the outdoors.”

REI has a variety of options for customers to get gear, including rental and used.

Permission granted by REI


That “gateway” is eventually expected to make up “a significant percentage” of REI’s overall gear and apparel business, Voeller said. REI plans to keep scaling the business both online and in-stores, though the retailer hasn’t decided what form its physical used gear business will take long term. Right now, it’s pop-ups. But permanent stores could be in the cards, or a combination of both. Also on the table are repair services, recycling services and other ways to keep members’ gear in shape and in use.

“Retailers now have an urgency to build up the segments and the sectors in which they operate, so for REI, that’s the outdoors. They want to create an environment where more people are doing the things that match the products they sell,” Portell said of the strategy at REI. “So making it easy, making it convenient, making it turnkey, those are all natural extensions … REI is making people realize that they should be outdoors [and] they’re making it easy for them to be outdoors.”

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