Place Was Never Just Place: What a Shrinking REI Costs Outdoor Brands.

REI is healthier than it has been in years — and smaller, more disciplined, and more careful about where it shows up. This story isn't about REI. It's about what a shrinking REI means to the brands it carries.

The numbers tell the recovery. REI closed 2025 with $3.54 billion in net sales — essentially flat — but cut its net loss to $54.3 million from $156 million the year before and $311 million the year before that, with two profitable quarters to close out the year. It added a million members, passing 26 million. It opened six stores. This is a turnaround that is working.

It is also a turnaround built on subtraction. The Experiences travel business: gone, then partially relaunched through Intrepid Travel on lighter terms. Hundreds of roles: gone. And three of the most visible doors in the system — Paramus, Boston, and the SoHo flagship — closing through 2026. REI is getting well by getting focused. The discipline that is saving the co-op is the same discipline that makes it a narrower partner for the brands that sell through it.

Mary Beth Laughton, the co-op's CEO, said something at Outside Days in Denver this spring that gets at REI's view from the inside: We don't have an inspiration problem. We have a convenience gap. She was talking about getting more Americans outside — REI-supported research shows that 45% of Americans spend less than two hours a week outdoors, even as 75% acknowledge the mental health benefits of being outside and 80% say it helps them unplug from screens. The competition, in her telling, isn't specialty retail or Dick's or Amazon. It's the screen, the couch, the rain, the friction. REI's job is to lower it.

That is a real and useful frame for REI. It is also, uninvited, a frame for the brands selling through REI — and they should be reading it carefully. Because the part the brands feel and struggle to name is worth naming precisely, and most of them are diagnosing it wrong.

The misread

Here is the conversation I keep having, in one form or another.

A founder-CEO of an outdoor brand tells me her direct-to-consumer business is growing nicely. Good margins, clean data, a real relationship with the customer. And yet REI — still her largest wholesale account — is pulling back. Tighter assortment, fewer doors, more caution. So she does the rational thing: she builds the forecast, and the forecast says pour more into DTC to cover the wholesale softness.

Then she says the thing that actually matters, almost as an aside. The problem is, DTC sells the stuff people already know we make. The products that made people notice us in the first place — our best, weirdest, most distinct ones — those needed the floor.

That aside is the whole problem, and the forecast hides it. What REI gave the brand was never just a place to sell product. It was credibility — the kind a customer assigns to a brand the moment they see it on REI's rack, the kind a brand cannot buy with a Meta ad. DTC replaces the revenue REI used to ring up. It does not replace that credibility, and it does not replace the discovery that came with it. The forecast tracks the dollars. The brand is losing something the forecast can't see.

What REI actually was

In the marketer's oldest framework — the four Ps — REI gets filed under Place. Distribution. Shelf, region, reach. But for an outdoor brand, REI was actually doing the work of three Ps at once, and the brand only paid for one.

Place, yes. But not in the way the framework usually means it. REI's floor wasn't a delivery mechanism for inventory — it was a discovery surface. The rack mattered because a customer could stand in front of it and compare four rain shells side by side: feel the face fabric, check the seam tape, run a finger across the print, try the cut on, hold up a $400 Arc'teryx next to a $159 Patagonia Torrentshell and decide what the spread was actually buying. eMarketer pegs physical stores as the single largest channel for fashion product discovery — nearly 40% of clothing shoppers learn about new products by visiting a store, more than any individual digital channel. The NSGA's late-2025 study of sporting-goods shoppers found 79% prefer multi-brand stores for equipment and 70% for apparel and footwear, citing "side-by-side comparison" and "new-brand discovery" as the top reasons. Forty-eight percent of consumers say the ability to touch, feel, and try on is the most important part of in-store shopping; for Gen X and Boomers it's nearly two-thirds. The premium product — the technical jacket, the weirder shorts, the higher-stack trail shoe — is the product that depends most on this surface. You don't decide to spend $400 on a shell from a picture. You decide it from holding it next to the $159 one.

And also Promotion: a buyer's decision to stock you was an endorsement you didn't pay for and couldn't fake. Getting into REI meant something to a customer, and the green vest on the floor was an unpaid sales force translating your product story to someone holding two jackets and unsure which to buy. Laughton calls those employees the co-op's "secret sauce," and she is right — they were also, functionally, your closers.

There is a complication inside that Promotion role worth naming, because brands rarely do. REI runs a house brand. Co-op Brands — Campwell, Trailmade, Flash, Magma, Swiftland on the apparel and gear side; Co-op Cycles for bikes — has been an explicit growth pillar since 2023, when REI promoted Isabelle Portilla to lead it with a stated mandate to "accelerate Co-op Brands' growth to the largest, most sustainable brand in the company's assortment." REI Co-op rain shells run 25–35% under the name-brand equivalents on the same rack. The Campwell down line sits below the Patagonia Down Sweater at the same store. Co-op Cycles is cross-shopped against Trek and Specialized — both also stocked by REI. The host of the dinner party is also a guest with a competing dish. Anonymous vendors named the pattern in Outside Business Journal five years ago as the "show pony" problem: top-of-line brands brought in at small volumes for the halo, and the customer who came to see the halo walks out with the Co-op equivalent at a fraction of the price. The names of the carried brands change. The pattern doesn't. REI's own Chief Merchandising Officer, Kristin Shane, made it explicit on the record this March: Patagonia and The North Face are simultaneously REI's biggest vendors and its biggest DTC competitors. The conflict cuts both ways. What Shane didn't say — but the assortment shows — is that REI Co-op is on the floor competing with them too.

And then Product: the discipline of earning the buy shaped what brands made. You built to a standard because a buyer with taste and a point of view stood between you and the customer. The assortment logic was a forcing function. It made you better. The buyer who decided what made the rack was a brand operating asset most companies didn't pay for and didn't fully see.

So when REI narrows — fewer doors, lighter SKUs, more lifestyle, more Co-op, more basic black — the CEO is not losing a channel. She is losing a discovery surface, a credibility engine, a sales-translation layer, and a product-discipline forcing function. Four jobs, retreating together, only one of which DTC can do. The revenue line recovers. The discovery and validation machinery does not.

This is the hinge of the whole thing: place was never just place. And the question that follows is the one every outdoor CMO should be sitting with — not what replaces REI as a channel, but where does a brand now manufacture credibility and discovery, when the institution that used to do it for free is stepping back?

There are three candidate answers. None of them is sufficient alone, and the most important one is not a retailer at all.

The new curators

Specialty retail is the instinctive answer, and it is real. The independent shop with a staff that actually climbs, skis, runs — that is the green-vest function preserved in amber. It deepens credibility with the people who matter most. But it is a perception play, not a reach play. The specialty customer is high-intent and narrow. You earn the core and surrender the halo. Good for who you are; weak for who hasn't heard of you.

Experiential big-box is the answer that is quietly thriving — just not at REI. Look at Dick's Sporting Goods, which is doing the opposite of retreating. Its House of Sport format drives longer dwell times and higher spend than traditional stores, and Dick's explicitly runs it as a brand-relationship engine: new partners like Gymshark start in a handful of doors to, as one executive put it, "get comfortable" and "build the trust" before expanding. That is the buyer-as-endorsement function — the exact thing outdoor brands are losing at REI — alive, deliberate, and growing somewhere else. Great big-box in 2026 isn't a warehouse of SKUs. It's a stage that confers credibility on the brands it chooses to feature. The job didn't die. It moved.

And then the curator that isn't a retailer at all. When a customer opens ChatGPT or Claude and asks for the best rain shell for the Pacific Northwest or the right tent for a four-day Sierra trip, the model makes an assortment-and-endorsement decision. It narrows the field. It recommends. It confers trust. That is the buyer's job. The machine is wearing the green vest.

This is not speculation. It is already happening at scale. ChatGPT crossed 800 million weekly active users in October — about 10% of the world's adult population — up from 400 million in February. Bain's 2025 consumer work found that 44% of online buyers now start their journey mostly in an LLM or split between LLMs and traditional search. Adobe Analytics measured retail traffic from generative AI tools up 693% year-over-year through the 2025 holiday season, with AI referrals converting 31% better than other sources and AI revenue per visit up 254%. Pew Research found that when a Google AI summary appears, click rate on the underlying organic results halves — from 15% to 8% — and 26% of sessions end without any click at all. The recommendation surface is migrating from the green-vest floor and the Google results page to the answer box. Both REI's CEO and her CMO have said as much on the record. Laughton talked at NRF about deciding "what is special that we want to keep just for our own platforms, and what can show up on one of those LLMs." She is treating the LLM as a distribution surface with its own buyer logic — because it is one.

Her hedge is the human. AI, she said, "hasn't gone hiking. It hasn't gone camping" — so the green vest's lived experience is the moat. She may be right that it is REI's moat. But notice what that argument quietly concedes for everyone else: the recommendation is migrating to the machine, and the human expertise is the defensible exception, not the rule. For a brand without 9,000 green vests, that is not reassurance. That is the warning.

And here is the recursive trap. Models learn what is credible from the existing corpus of signal — reviews, editorial lists, forum sentiment, the structured residue of a thousand buying decisions. Analyses of how ChatGPT decides what to recommend converge on roughly the same hierarchy: about 40% of the weight comes from being named in authoritative list-based editorial coverage; about 18% from awards and accreditations; about 16% from third-party reviews. Reddit alone accounts for an estimated 40% of LLM citations across consumer queries. Much of that signal layer was generated by the very ecosystem now contracting. As REI narrows, as doors close, as the floor staff who translated product into trust become rarer, and as publishers downstream of Google search lose 30–50% of their traffic to AI Overviews, the data that teaches the machine what's good gets thinner. The brands that don't actively generate their own credible signal won't just lose the human shopper. They'll go invisible to the machine that replaced the buyer — unrecommended, because there was nothing legible to recommend.

The reframe

Put it together and the shape is clear. In outdoor, Place is collapsing back into Promotion. Distribution used to be something a brand earned once and then let do the talking. Now it is something a brand has to earn again and again, across a dozen fragmented, lower-trust surfaces — specialty floors, experiential stages, creator feeds, podcasts that get cited in answer boxes, and the recommendation engines doing the narrowing.

The macro is moving the same direction underneath. Meta CPMs are running 20% higher year over year. DTC customer acquisition costs are up 25–40% across most apparel and outdoor categories. Google search traffic to publishers is down on the order of a third in a single year and still falling. The two surfaces a generation of outdoor brands built their growth model on — wholesale credibility plus paid digital reach — are both narrowing at the same time, and the new surface (LLM recommendation) is gated by editorial signal most outdoor brands aren't generating yet. The new rack is an answer box listing five products for an exact trip a customer is planning next weekend. The green vest is on the model that wrote it.

The CMO's job changes accordingly. It used to be: secure the placement, and let the placement confer the credibility. Now it is: create the credibility yourself, everywhere at once, clearly enough that a specialty buyer, an algorithm, and a stranger on a trail can all repeat what makes you distinct. The brands that win the next decade won't be the ones with the slickest DTC funnel. They'll be the ones that learned to be their own buyer and promoter — to articulate and defend what makes their best, weirdest, most distinct products matter, loudly and legibly enough that both a person and a model will say the name back.

REI will be fine. It is getting well by remembering exactly what it is. The open question is for everyone who used to depend on REI for discovery.