REI Store Closings Threaten CEO’s Push for Employee Buy-In
REI’s recent declaration of store closures in New York City and Boston is casting a shadow over CEO Lisa Laughton’s efforts to foster a more collaborative relationship with employees, particularly those represented by a growing union presence within the company. The closures, and the ensuing layoffs, come just months after REI agreed to begin contract negotiations with its 11 unionized stores – a critically important concession secured after the union dropped a federal complaint regarding wage increases.
Laughton, who took the helm after Eric Artz, has publicly emphasized the need for REI to evolve and compete in the modern retail landscape. In a recent letter to staff, she urged employees to avoid “falling into the mindset of nostalgia,” stating, “This plan is not about getting back to what the co-op used to be…It’s about climbing the challenging peak that’s in front of us, putting the co-op on more solid footing.” she previously echoed Artz’s sentiment that REI must be competitive to survive,and challenged the workforce to become “not just the best co-op,but also the best retailer.”
However, the union representing workers at the New York and Boston locations expressed being “blindsided” by the closures, signaling potential disruption to the newly established negotiating process. In a statement to Fortune, the union stated it was “seeking more data to understand this decision” and hoped the “new relationship established this past summer between REI and the REI Union will enable both parties to secure the best possible outcome for the affected workers.”
The closures are particularly sensitive given the strained relationship between REI’s management and its workforce, often referred to as “Green Vests.” Artz’s tenure, following the pandemic’s initial sales dip and subsequent surge, was marked by decisions that alienated many employees. He implemented more centralized decision-making, oversaw a costly e-commerce overhaul, and brought in executives from large national retailers like Walmart, Cabela’s, and Dick’s Sporting Goods – a departure from REI’s ancient focus on internal promotion. these moves sparked concerns that REI was sacrificing its unique co-op identity for a more conventional, big-box retail approach.
artz and other executives defended these changes, attributing REI’s financial challenges to the costs associated with member dividends and charitable donations. During his leadership, unionization efforts gained momentum, culminating in the New York City store becoming the first to unionize in 2022, now one of eleven REI locations with union portrayal.
REI framed the store closures as a necessary business decision, stating that exiting leases for stores that don’t meet company standards is “a responsible and prudent part of running a retail business.” Though, the timing of the announcement raises questions about Laughton’s ability to build trust and secure employee buy-in for her vision of a more competitive REI, particularly as the company navigates contract negotiations with its unionized workforce.
