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 castingโ a โshadow over CEO Lisaโ Laughton’s efforts to foster aโ more collaborative relationship with employees, particularly thoseโฃ represented by โa growing union presence within the company. The closures,โค and the ensuing layoffs, come just months afterโค REI agreedโ to begin contract negotiations with โits 11โ unionizedโค stores – a critically important concession secured after the union dropped a federal complaint regarding wage increases.
Laughton,โข who โฃtook the helm โafterโ Eric โขArtz, has publicly emphasizedโ the โคneed for REI to evolve and compete in โคthe modern retail landscape. In a recent letter to staff, she urged employees to avoid “falling into the mindset of nostalgia,” stating, “Thisโข plan โขis not about getting back to what โคthe co-op โขused toโค beโฆIt’s about climbing the challenging peak โthat’s in front of us, putting the co-op on more โsolid footing.” she previously โechoed Artz’s sentiment that REI must be competitive to โคsurvive,and challenged the workforce to becomeโฃ “not just the best co-op,but also the best retailer.”
However, theโฃ union representing workers at the New โYork and Boston locations expressed beingโข “blindsided” โby the closures,โ signaling potential โdisruption to the newly established negotiating process. In a statement to Fortune, โthe union stated it was “seeking more data to โunderstand this โdecision” and hoped the “new relationship โestablishedโค this past summer between REI and โฃthe REIโ Union โขwill enable both parties โขto secureโค the best possible โฃoutcome for the affected workers.”
Theโ closuresโข are particularlyโ sensitive given the strained relationship โbetween REI’s management and itsโ workforce, often referredโ to as “Greenโ Vests.”โฃ Artz’s tenure, following the โคpandemic’s initial sales โdipโค and subsequent surge, was โขmarked by decisions that alienated many employees. He โฃimplemented moreโ centralizedโ decision-making, oversaw a costly โฃe-commerce overhaul, and brought โขin executives from largeโค national retailers like Walmart, Cabela’s, and Dick’s Sporting Goods – a departure fromโ REI’s ancient focus โon internal promotion. these movesโ sparked concerns that REI was sacrificing itsโค unique co-op identity for a more conventional, big-box retail approach.
artz and โคother executives defended these changes, attributingโ REI’s financial challenges โคto theโ costs โassociated with โคmember dividends โand charitable โdonations. During his leadership, unionization efforts gained momentum, culminating in the New York City storeโฃ becomingโฃ the first to unionize in 2022, now one of elevenโข REI locations โwith union portrayal.
REI framed the store โclosures as โa necessary business decision, stating that exiting leases for stores that don’tโ meet company standards is “aโ responsible and prudentโฃ part of running a retail business.” Though, the timing โof the announcementโ raises โคquestions about Laughton’s ability toโ build trust and secure employee buy-in for her vision of a more competitive REI, particularly as theโ company navigates contractโ negotiations with its unionized workforce.