Outdoor retailer REI is betting big on running.
After pulling back on its own branded footwear, which the retailer will no longer make, REI is now expanding its footwear offerings with new partnerships with brands like On Running. Fan Zhou, gm of footwear and running at REI, said the move reflects the growth of the running apparel market and is a natural evolution of REI’s product lineup.
“Millions of our customers are runners, and they run a lot,” Zhou said. “About half the people who come to us for hiking or biking supplies are also runners. And we estimate we were only serving about 50% of those active runners. So there’s a big opportunity to grow this space.”
Zhou said growing REI’s running business will come from three tactics: expanding its running product assortment, training sales associates to be more knowledgeable about the category, and engaging the running community through marketing and running-related events.
The product change was the first and most important change. REI began producing its own running and hiking shoes four years ago, but the product will be phased out by the end of this year. In its place, REI will deepen its relationships with brands including Hoka, On, Salomon and Brooks by buying a wider array of their products, both in running footwear and apparel. Additionally, brands including Asics will be added to the retailer’s catalog for the first time.
Along with its e-commerce site and over 180 existing stores, REI will sell the updated shoe assortment in new running-focused stores. Nine locations will be opened throughout this year, in cities including Denver and Chicago. The running-focused stores will serve as marketing opportunities and will host events like sponsored running clubs.
The new focus also comes at a crucial time for REI. The company’s 2023 earnings showed that, despite revenues ending up at over $3.7 billion, the company’s losses widened to over $300 million. Meanwhile, the U.S. running shoe market is worth over $10 billion and is growing at a pace of around 3.5%.
REI is structured as a co-op, with its paying members being part owners of the brand. REI board chair Beth Newlands Campbell wrote in an April 30 note to the company’s members that profitability is still the ultimate goal. The hope is that running can help overcome the recent losses. The category’s sales at REI are growing at a double-digit pace.
“We planned 2023 as an important year to focus on moving the co-op toward profitability through focused growth, operational efficiencies and selectively investing in key areas of the business,” she said. “Despite the momentum we gained through the first three quarters of 2023, challenging market conditions in Q4 had a negative impact on our results — like many in the retail sector.”
