September 6, 2024

REI Opens New Store in Rancho Mirage Amid National Struggles

By Bob Marra
New REI store at The River

The REI store in Rancho Mirage

Amid mounting financial challenges, the outdoor retail giant REI is opening a new store at The River at Rancho Mirage, which marks a significant expansion for the brand in Southern California. The official opening has been announced for October 4, while a soft opening started on September 6. The 25,000-square-foot store will occupy a prime space that has been vacant since Forever 21 closed its store at The River almost four years ago.

A New Addition to Greater Palm Springs

The opening of the Rancho Mirage store, scheduled for the summer of 2024, comes at a pivotal time for both REI and the local retail environment. The River restaurant and retail center, which has struggled with retail vacancies in recent years (including the loss of Babe’s Bar-B-Que & Brewery, which shut down on August 31), hopes the arrival of REI will inject new life into the center. The new REI location will feature a wide range of outdoor gear and apparel, catering to local outdoor enthusiasts and visitors to Greater Palm Springs. The store will also include a full-service bike shop staffed by professional mechanics.

The Rancho Mirage expansion is part of REI’s broader plan to open ten new stores across the U.S. in 2024, despite the company’s significant financial losses in recent years. These include locations in states like New York, Arizona, and Colorado, chosen for their proximity to outdoor recreational spaces, including national parks.

Financial Struggles Loom Over Expansion

While REI is opening new stores, the company has been hemorrhaging money. In 2023, REI reported a $311 million net loss, its second consecutive year of financial decline. Revenues dropped by 2.4% to $3.76 billion, with the company’s CEO, Eric Artz, attributing the losses to rising labor costs, increased investments in member rewards, and the aftereffects of pandemic-induced shifts in consumer spending.

The company’s financial troubles have led to multiple rounds of layoffs, cutting over 600 jobs in the past year alone and leaving many employees questioning the company’s direction.

Despite these losses, REI continues to expand its physical footprint, reflecting a commitment to growth even in a difficult retail environment. Mary-Farrell Tarbox, REI’s vice president of stores, emphasized the company’s mission to encourage more people to explore the outdoors, particularly in areas like Greater Palm Springs, which offers many natural outdoor attractions.

Balancing Ideals and Financial Realities

Founded in 1938 as a member-owned co-op, REI has long championed environmental stewardship and worker-friendly policies. However, as the company struggles with financial setbacks, there has been growing tension between its cooperative values and the need for greater profitability. Employees have expressed frustration over reduced hours, layoffs, and what some see as a shift toward a more corporate mindset.

Artz, who has been at the helm since 2019, has defended the company’s strategic decisions, arguing that REI’s long-term success depends on finding a balance between its ideals and the financial realities of the retail world. “There is no mission without margin,” he stated, as he sought to reassure both employees and customers that the company remains committed to its cooperative roots while pursuing financial stability.

The Future of REI in Rancho Mirage

As REI opens its doors in Rancho Mirage, the new store is expected to serve the area’s large community of outdoor enthusiasts, many of whom have had to travel to REI locations in Rancho Cucamonga, Tustin or Laguna in the past. According to past statements from the company, the store will also play an active role in supporting local nonprofits and continuing REI’s tradition of community engagement.

However, the success of the Rancho Mirage store will depend, perhaps in large part, on how well REI can navigate its financial struggles on a national scale. With increasing competition from e-commerce giants like Amazon and brick-and-mortar rivals such as Dick’s Sporting Goods, REI’s future remains uncertain. Whether this new store marks the beginning of a turnaround or simply a temporary boost in its fortunes is yet to be seen.

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