The object that started REI was not a fleece, a tent or a titanium mug. It was an Austrian ice axe. In the late 1930s, Seattle climber Lloyd Anderson was tired of paying American markups for dependable European equipment. He and his wife, Mary, organized 21 mountaineering friends into a cooperative buying club. Orders were handled from the attic of their home. The problem was wonderfully specific: serious people needed serious gear, and ordinary retail was not serving them.
That attic operation became Recreational Equipment, Inc., a national outdoor retailer with 195 stores, more than 26 million lifetime members and $3.54 billion in fiscal 2025 sales. Yet the original logic remains visible. REI pools demand, selects equipment, explains it and returns value to the people who joined. The shelves grew. The activities expanded from climbing into camping, hiking, running, cycling, paddling, fitness and snow sports. The relationship is still the merchandise behind the merchandise.
01 / The product behind the productsA loyalty program with a constitution
Anyone can shop at REI. Membership is the conversion event. Pay $30 once and the relationship lasts for life, with no annual dues. Members can earn an estimated 10 percent reward on eligible full-price purchases, receive special pricing and shipping benefits, trade in selected used gear, save on shop services and participate in co-op governance. In 2025, REI added one million members and distributed $203 million in member rewards.
The arrangement does what a conventional loyalty scheme tries to do, but with more emotional equipment. A points card says, “Come back because you are close to a coupon.” REI membership says, “You are one of the owners.” That distinction is legally structured, culturally useful and commercially sticky. A new camper can buy a stove at a mass merchant. At REI, that camper is also buying the promise that someone will explain the fuel, that the product can be serviced or returned under stated terms, and that the next purchase may produce a reward.
The cleverest thing REI sells is not a piece of gear. It is the confidence to use one.The retail proposition in one sentence
02 / The customer problemThe wall of nearly identical jackets
Outdoor retail has a peculiar information problem. A rain shell may look like another rain shell until a seam leaks six miles from the trailhead. A sleeping bag's temperature rating can feel abstract until the air turns cold at 2 a.m. Bicycles, climbing protection and avalanche equipment add fit, maintenance and safety to the decision. Online reviews help, but they also produce a thicket of affiliate lists and incompatible opinions.
REI reduces that uncertainty with range and translation. Its stores carry more than 1,000 brands, from widely known names to technical specialists. Green-vest employees fit packs and boots, discuss local conditions and direct customers toward the right level of product. Bike and ski shops, repairs and participating rental programs extend the exchange beyond the register. Expert Advice articles, Co-op Studios films and field-tested Editors' Choice awards turn staff, member and customer experience into media. The result sits between a neighborhood outfitter and a mass merchant: enough scale for choice and convenience, with a continuing expectation of human expertise.
03 / The business machineHow the co-op flywheel turns
The main engine is familiar retail: buy goods from brands, add a margin and sell through stores, REI.com, Outlet and the app. The interesting part is how REI stacks other loops around that transaction. Co-op Brands tents, packs, apparel, footwear, sleeping bags and bicycles give the retailer control over design and margin. Membership makes repeat purchases more likely. Shops and repairs create service visits. Re/Supply invites members to trade eligible gear for gift cards, then gives the product another sale and the seller a reason to shop again.
The lifetime-member loop
This model is not charity wearing hiking boots. REI is a for-profit consumer cooperative, and retail economics still set the oxygen level. It must cover inventory, leases, logistics, technology and labor. It has no public shareholders and no venture rounds to report, but it does have members expecting rewards, employees expecting a good workplace and communities expecting the co-op's stated purpose to appear in actual decisions. Surplus can support reinvestment, member rewards, employee incentives and retirement contributions, and nonprofit giving. A loss narrows those choices.
04 / Product expertiseA private label that listens in public
REI's in-house products work because the company can observe customers at unusually close range. Store employees hear why a strap chafes. Members test products across climates and body shapes. Repair technicians see what fails. Designers can feed those observations into the next version. Recent examples include sleeping bags offered in nine sizes, kids' bicycles informed by data about how children actually grow and move, a redesigned Half Dome tent, and a bear canister engineered to double as a camp stool.
The company also acts as a standards setter for vendors. Product Impact Standards address materials, chemicals, animal welfare, inclusive sizing and representation. In 2025, REI entered a three-year agreement with Ambercycle to support performance textiles made from existing textile waste. It expanded renewable-energy work with Sol Systems and Nester Hosiery. These programs do not erase the footprint of making and shipping gear, but they give a large buyer leverage beyond its own label.
05 / Where it fitsBetween Amazon and the person who knows the trail
REI competes in several markets at once. Backcountry offers deep online selection. Dick's Sporting Goods and Amazon offer breadth and convenience. Patagonia, The North Face and Arc'teryx own powerful product brands. Bass Pro Shops commands destination-scale stores in adjacent activities. Independent outfitters retain local credibility that no national chain can manufacture. REI's answer is a bundle none of those rivals matches exactly: multi-brand technical selection, its own gear, national stores, service shops, used inventory, a lifetime co-op and a public position on outdoor access.
Partnerships widen that position. Arc'teryx was its overall vendor partner of the year for 2025. A limited collection with Swiss running brand On and Japanese retailer BEAMS pushed REI into style-conscious collaboration. Capital One supports the co-branded card and contributed to the Cooperative Action Fund. More than 360 nonprofit partners connect the national balance sheet to local trail, access and health work. The company is retailer, product developer, media publisher and civic organizer. Each role reinforces the others when they agree.
06 / The cost of a promiseValues are useful only when they constrain
In 2015, REI closed on Black Friday, stopped processing online orders and paid employees to go outdoors. Opt Outside was sharp advertising because it carried a measurable sacrifice on the biggest shopping day of the year. The policy became permanent in 2022. REI also uses the Cooperative Action Network to mobilize members around public lands. In 2025, members and employees generated a record 1.2 million messages to elected officials, helping support ballot funding and oppose public-land selloffs.
The co-op's environmental work now includes a reported 15 percent emissions reduction from its 2019 baseline and a second year meeting its waste-diversion goal. Re/Supply, repairs and rentals make the circular argument tangible: the lowest-impact jacket is often the one already made. The Cooperative Action Fund, launched in 2021, has directed tens of millions of dollars toward organizations that make the outdoors more accessible. This is not separate from the brand. It is one reason members tolerate the oddity of “owning” a retailer without watching a stock ticker.
A co-op model gives REI a moat. It also turns every hard decision into a values test.The obligation hidden inside differentiation
07 / The hard section of trailScale makes the contradictions louder
REI's recent financial results show improvement without a clean victory. Fiscal 2025 net sales edged above 2024, gross profit rose 7 percent and the co-op finished with two profitable quarters. The full year still produced a $54.3 million net loss. Under CEO Mary Beth Laughton, who took over in March 2025, the Peak 28 plan is narrowing priorities around product, service, membership and operating discipline.
That discipline has consequences. REI ended its Experiences business in 2025, leaving the large-scale classes and guided-travel operation that once made “inspire, educate and outfit” literal. It has opened stores in growing markets while announcing closures in some expensive urban locations. Meanwhile, employees at 11 stores have chosen union representation. A proposed contract was rejected in February 2026, and bargaining with UFCW and RWDSU locals continued. A cooperative owned by customers is not the same thing as a worker cooperative, a distinction that becomes vivid at the bargaining table.
None of this makes the co-op identity false. It makes it demanding. REI must carry technical inventory that mass retailers skip, staff stores with people who can explain it, fund member benefits and behave like an institution with an outdoor mission. Those choices cost money before they create trust. If efficiency strips out the expertise and community that justify a trip to REI, the company becomes another place to compare jackets. If purpose ignores store economics, there may be fewer stores in which to practice it.
08 / What people can do with itStart before you feel outdoorsy enough
For a customer, REI is most useful at the edge of a new activity. Visit a store to fit a pack or shoes, compare a tent's real footprint, ask about local weather and decide what can be rented rather than owned. Use Expert Advice to learn the vocabulary before buying. Join if the lifetime benefits are likely to exceed $30, not because membership is required. Bring eligible gear back through Re/Supply when an activity, size or ambition changes. Use repair shops to extend the life of a bike, ski or piece of equipment instead of defaulting to replacement.
For other businesses, the transferable idea is not “start a co-op.” It is to build loyalty around progress. REI helps customers become campers, riders and hikers; the gear is evidence of that change. Membership names the relationship, service keeps it useful, resale acknowledges that people evolve, and advocacy gives the group something to do together. The system is difficult to copy because it is built from decades of small, credible interactions.
REI began by making one obscure tool easier to obtain. Its modern task is broader and less romantic: keep a giant assortment moving, pay the bills, improve products, bargain with employees and convince millions of people that a national chain can still feel like their climbing club. The next summit is not another store count. It is whether the co-op can preserve the helpfulness that made membership mean something in the first place.