Opinion: What Independent Outdoor Retailers and REI Can Do to Create a Healthier Industry Ecosystem

Retailers – including me – bear a lot of the responsibility for our current difficult situation. With the buying season looming, it's time to discuss what retailers can do to create a healthier commercial environment.

by Wes Allen

It’s June, which means Spring line showings have already happened and too-early order deadlines are just around the corner in the outdoor industry.

As we survey the landscape, it’s clear there are many challenges. Everything has already been on sale, and we’re still in our own little recessionary period. Many brands have failed at inventory management, and we have too much of the wrong product (much of it soaked in PFAS) that we’re trying to sell.

We just heard that while more people are going outside, many are going out less often. It’s a rough time overall, with plenty of blame to go around.

It’s easy to point fingers at the manufacturers. They make all of this stuff that we’re having to sell off-price. But of course, that’s not the whole story. Retailers – including me – bear a lot of the responsibility for our current difficult situation. With the buying season looming, it’s time to discuss what retailers can do to create a healthier commercial environment.

There are two major buying forces in the outdoor industry: the independent outdoor stores scattered across the country and Recreational Equipment Incorporated’s (REI’s) big green machine in Seattle.

The current recessionary environment in the outdoor industry is due to a mix of factors, and there are no simple fixes for the surplus of products and the scarcity of customers. But today, let’s talk about what those two main groups of outdoor retailers are doing well, what they’re not, and what we can do to be more successful going forward.

What Retailers Do Right

Independents

Independent retailers are deeply embedded in their communities. These stores are owned, managed, and staffed by local people. They’re often the first to pick up on regional trends and new activities and have the best grasp of what works in their unique outdoor markets.

These stores can really pull the local outdoor community together in their town.  Being locally owned gives an independent a relatable element that national chains lack, and leads to more engagement with the store and the other customers.

Independents also give back a significant portion of their sales to the community. According to the Grassroots Outdoor Alliance, the average independent retailer donates about 2% of their annual sales to charity, a common trait among most independent outdoor retailers.

REI

The floor staff. The green vests are made up of thousands of dedicated outdoor enthusiasts who help customers across the U.S. These folks are the biggest single group in the nation who have made it their job to get others outside because they believe in the industry and its mission.

I worked for almost a decade in the REI stores, and there is something that is as true today as it was then – the breakroom and floor of an REI holds the largest concentration of outdoorsy believers that exists in any area that has a store.

Path Ahead Ventures is a well-run program addressing a vital issue in the industry: the demographics of brand founders and executives don’t match those of the people in the U.S. who spend time outside. Recent data shows that minorities make up more than 11% of outdoor participants in the US. That doesn’t match up with the people who have businesses in the industry. While I’ve had questions about REI’s marketing of their community impact, Path Ahead seems to be making a real difference.

REI also provides real-time data that brands need to improve their lines. They’re the only entity in specialty outdoor retail that regularly informs vendors about product performance, shaping vendors’ strategies moving forward. It’s hard to overstate how important fresh data is for brands for effective decision making. The co-op is the only game in that particular town.

What Retailers Do Wrong

Independents

Independent retailers often complain when brands’ strategies conflict with our best interests but we rarely change our buying behavior to match our words. We love to gripe about how bad things are from the manufacturer’s side, but we don’t change who we order from. We just keep giving money to the corporations who we say hurt us.

We’re also a data black hole for brands. While we want new products that match our customers’ needs, we rarely provide our partners with information that enables them to figure out what is working. Our trepidation around that information being used to take our sales leads to us being served up product for next season that is mostly designed by “best guess.”

Independents also tend to buy very conservatively, seldom committing to new product categories and often failing to support new brands. It’s hard, and risky, to pick winners in the pool of new brands. We will pick some incorrectly and see those losses on our bottom line. But while we might fail by spending with unproven companies, we will absolutely fail if we don’t adapt to the realities of the modern marketplace. And the reality is that many of our heritage brands are now really in the commodity, off-price business.

REI

REI struggles to stock the right items at the right time to make enough full-price sales to be profitable. Its reliance on discounting contributes to the commoditization of outdoor products. Its financials, which REI makes public, and stated member rewards make it a mathematical certainty that more than 45% of its income comes from off-price sales; its size means that (in my opinion) it is diluting the brand equity of the manufacturers who are trying to maintain premium positioning. The co-op’s current strategy has led to half a billion dollars in losses over the last two years.

They also tend to “catch and kill” new product launches with their demand for early exclusives. Their focus on product exclusives and their relative lack of success in selling those exclusives reduce the market for new innovative products in the long term.

Some manufacturers tell me that REI is no longer a reliable planning partner for their brands, which affects factory buys and on-hand inventory for the brand, REI, and the rest of the industry.

What We Can Do Going Forward

Independents

• Align buying decisions with complaints: If you’re dissatisfied with a brand’s strategy, reflect this in your purchasing decisions. This alignment can pressure brands to consider retailers’ concerns and adjust their approaches. It’s well past time that we all step up and do this – anything less is insanity. Supporting brands with solid strategies and competent inventory planning is the single biggest move we can make.

• Proactively share data: Collaborate with brands by sharing sales and customer data. This transparency can help brands tailor their offerings and strategies to meet your product needs better. I know about the fear that a brand will weaponize that data against you.  Well, they already have enough direct-to-consumer data to do that in the big picture. This is about working together to drive your business by sharing specific information about what actually works.

• Take more risks with new brands and products: Diversify inventory by taking calculated risks on smaller, innovative brands and products. This can attract a broader customer base and position you as a trendsetter in the market.  As an independent retailer, this is our most valuable role in the outdoor industry. As long as it’s going to sell, buy the small vendor stuff.

REI

• Invest in the green vests: Enhance training and support for floor staff. These employees are the face of the company and are pivotal in creating positive customer experiences and driving sales. And stop trying to make the vendors pay to train your staff.

• Regain inventory planning mojo: Develop more accurate forecasting methods to manage stock levels effectively. This can reduce reliance on discounting and improve profitability through full-price sales. For decades, this was your superpower. All of us desperately need you to be more accurate in the future.

• Be more selective with early exclusives: If you demand early exclusives from brands, be strategic and ensure these launches receive sufficient marketing and support. This commitment can lead to successful product introductions and strengthen partnerships with brands. Ironically, letting other retailers help launch new product simultaneously will have a significant long-term benefit for the co-op.

The industry’s challenges are multifaceted and complex. No one group – retailers, reps, or brands – can fix the malaise that we see taking hold this spring. But those of us at the touchpoint between customers and brands can take some steps to improve it.

Wes Allen, principal at Sunlight Sports, started working the floor in a small outdoor shop in the ‘90s. Since then, he has worked for the world’s largest outdoor retailer, managed a brand, led the industry’s leading specialty retailer organization, and owned an independent retailer in Wyoming with his wife, Melissa.