REI's labor fight is real. So is the hole it's in.

REI's Anniversary Sale week opened with a boycott. The union representing workers at 11 unionized stores, and vocal advocates on social media, called for members to skip the sale. Then, on May 21, Crain's reported that REI was accelerating the closure of its SoHo flagship to July. About 72 workers at the location will lose their jobs.

I don't have a clean position on this. Employees have the right to advocate for better working conditions. But the boycott is happening at a moment when REI is in a poor structural position, the alternatives don't replicate what REI provides at the industry level, and I think the next few years are going to be hard regardless of how a contract gets resolved.

REI's workers have been trying to negotiate a contract for four years. Eleven stores have unionized since SoHo in 2022, and not one has a signed agreement to show for it. The company hired one of the country's best-known union-avoidance law firms, National Labor Relations Board charges have been filed against them, and 115,000 members voted against REI's board nominees in 2025. Not great.

At the final bargaining session at the end of April, REI didn't send its head of labor relations to the table, didn't put forward a proposal until the last day of talks, and then floated four terms the union calls “poison pills”: a ban on the union supporting organizing at other REI stores, a non-disparagement clause, a mandatory $1 million annual donation to a charity of REI's choosing, and a six-year contract (twice the length previously discussed). REI has pushed back on some of this, saying the non-disparagement language was aimed at the union as an organization rather than at individual workers, and that the charity donation idea originally came from the union side. What actually went on isn’t public, so I can't tell you exactly where the “truth” sits, but it’s not a leap to say that both sides are probably spinning things to their benefit.

Still, the pattern doesn't read as good-faith bargaining no matter how you slice it. The workers have grievances. The company's handling of the issue has been poor. And anyone honoring the boycott on those grounds is making a defensible call.

Their 2025 financials came out in late April, showing net sales of $3.54 billion (up slightly from 2024), and a net loss of $54.3 million. That's a meaningful improvement (net income improved by $102M year over year) but it's the fourth consecutive year of losses.

The number that matters most for the labor conversation is their payroll-to-sales ratio, which sits around 25%. That’s incredibly high when compared to other large retailers. Costco: 11%. Tractor Supply: 14%. Dick's Sporting Goods: 14%. Those are the companies that are weathering retail challenges relatively well right now, and their ratio is a fraction of REI’s. REI's retail model is (by design) service-intensive. Experienced green vests are a value proposition they built the brand on, and the armchair experts often say that the solution is to lean back into that, with more experienced full-timers, more of that in-store expertise. But that's the opposite of what the financials allow for.

The dispassionate reading is that there's no world in which REI remains successful without that ratio coming down. And the only ways to do that are to reduce costs (closing stores, paying people less, reducing headcount, slimming down verticals like Experiences) or sell a lot more product. Costco is able to provide high retail pay, good benefits, and maintain a very healthy payroll-to-sales position because they have massive volume. 

More people are going outside than ever, but research indicates that they're buying less of the “core” gear that defines the outdoor industry. Specialty outdoor retail is struggling, and not just at REI. Dick's, whose core sporting goods stores remain strong, tried to build its own premium outdoor concept (Public Lands) but eventually pulled that back and shut down nearly all of Moosejaw within two years of buying it.

Brands have also shifted the ways they reach consumers. Specialty outdoor retail (and bigger outdoor retail like REI) used to be one of the places to find brands like Arc'teryx. But now, Arc'teryx has hundreds of its own stores globally, and has flipped its business from 80% wholesale to 80% direct-to-consumer. Salomon, Hoka, Patagonia, On and others are all taking similar approaches. Owned retail locations and DTC sales mean higher margins, better customer data, and tighter control over how their stuff gets discounted. So they're preferring sales through their own websites and stores instead of through wholesale partners like REI.

All of this means REI and other retail locations become less of a shopping destination, with less exclusive products, and less freedom to discount.

Much of the boycott discourse pushes shoppers toward local retailers or other options (as if part of the problem isn't that most of us already moved our shopping online). But even with union criticisms, REI currently has some of the best pay and benefits in retail, particularly among large national chains. Part-time workers get benefits, the retirement contributions are meaningful, and PTO is generous by category standards. It's also irrelevant to whether the workers at the unionized stores have legitimate grievances.

Most independent outdoor shops are small businesses. One or two locations, a handful of employees per store. They typically pay maybe $14-20 per hour, depending on location, for retail associates, offer benefits only to full-time staff if at all, and rarely have retirement programs. 

Independent specialty matters, and the case for shopping there is real. Independent specialty is often where new brands break in, where true local expertise lives, and where outdoor culture is built in ways that don't scale to national chains. The boycott discourse tends to fuse a cultural argument and a labor argument as if they're the same thing. The cultural case for shopping at these places is real. But as an act of labor solidarity, shopping local mostly shifts spending to operations that are worse on many of the issues this boycott is concerned with.

I'm not defending REI's corporate decision-making. There's a long list of choices over the past several years that are missteps of their own making. But what REI is at the industry level isn't really replicated anywhere else.

REI funds the Cooperative Action Network, which has driven over 775,000 members to write to elected officials since 2021, and generated a record 1.2 million messages to lawmakers in 2025 alone. They're leading the Brands for Public Lands coalition with 170+ companies pushing back on federal threats to public lands. Product Impact Standards apply to over 1,000 brand partners and have driven category-wide progress on PFAS phaseouts, recycled materials, and supply chain transparency. REI representatives sit at the table on EXPLORE Act implementation, Legacy Restoration Fund reauthorization, tariff conversations, and conservation policy work in Washington and across state capitals.

There’s a lot of talk about the shift from core outdoors to outdoor lifestyle, and how those brands are taking consumer dollars and market share; when that happens, we lose something else as well.

What happens as spending and cultural influence shift toward brands (or retailers) with less of a dog in the fight on American and public-lands issues? A global brand chasing growth in dozens of markets doesn't have the same reason to care about the EXPLORE Act as a mission-driven, US-based co-op does, and maybe it's not fair to expect it to. But who do we expect to be engaged (or get more engaged) in that work? Lululemon isn't spending the time and money to lobby for public lands. Alo isn't speaking up about Bears Ears. Vuori isn't part of the Brands for Public Lands coalition. Many of the bigger outdoor players do more, but there’s a difference between marketing around these issues and being deeply engaged.

The flip from "REI is great" to "REI is a pariah" over the last few years has been unfortunate. This isn't an argument that REI is above criticism. It's an argument that turning against it so completely, without acknowledging the complexity or what REI represents at the industry level, misses something.

And maybe I'm overstating that importance. It's possible the industry work reorganizes itself, other companies step up, and REI matters less than I think. I'd love to hear from others if they have a different take.

None of this is to say REI is doomed. The 2025 numbers are better than the last few years, and this isn't a company on the verge of immediate collapse. We're watching a company try to claw its way out of a hole it partly dug itself, and that's going to be slow and ugly even if it works.

The SoHo closure isn't the last hard decision REI is going to make. There's no sustainable version of REI that doesn't involve more cuts. None of that will feel good to watch or experience, and every headline will stir up emotional responses. But the alternative is a company that doesn't survive the next few years, and the alternative to that is private equity. And PE isn’t known for investing in policy coalitions.