Layoffs and Refunds
The sudden and unexpected layoffs of 180 full-time employees and 248 part-time guides at a popular outdoor recreation company have left many in the industry and the community stunned. The decision, announced by President and CEO Eric Artz, has been attributed to economic reasons. The company, which has been a mainstay in the outdoor recreation industry for decades, has been struggling to stay afloat due to the current economic climate. The layoffs are expected to have a significant impact on the local community, with many employees and their families affected by the sudden loss of income. The company has also announced that refunds will be issued to affected employees and guides.
Economic Reasons
According to Artz, the decision to lay off employees was made due to the current economic climate. The company has been facing significant financial challenges, including declining revenue and increased competition. The outdoor recreation industry has been experiencing a decline in revenue due to various factors, including the COVID-19 pandemic and changing consumer behavior. The company has also been facing increased competition from other outdoor recreation companies, which has put pressure on its pricing and profitability. Artz stated that the company has been working to adapt to these challenges, but ultimately, the decision to lay off employees was made necessary due to the economic realities.
Impact on the Community
The layoffs have sent shockwaves through the community, with many employees and their families affected by the sudden loss of income.
The Rise of Adventure Tourism
Adventure tourism has experienced significant growth in recent years, with many tour operators reporting high demand for their services. This trend is expected to continue, driven by the increasing popularity of outdoor activities and the desire for unique experiences.
Key Statistics
The Impact of REI’s Closure
The sudden closure of REI’s Experiences business is a significant development in the adventure tourism industry.
The Rise of Small Group Adventure Tours
The small group adventure tour market has experienced significant growth in recent years, with companies like Wildland Trekking and Explore Worldwide leading the charge. This trend is driven by a desire for immersive, off-the-beaten-path experiences that allow travelers to connect with local cultures and environments.
Benefits of Small Group Adventures
“It’s a huge opportunity for us to be the go-to destination for outdoor enthusiasts,” he said. “We can focus on what we do best, which is creating unique experiences that bring people closer to nature.”
The Unprofitable Core Business
REI’s core business is retail, but it has struggled to turn a profit. The company has been trying to adapt to changing consumer preferences and market trends, but its efforts have been met with limited success. In 2020, REI reported a net loss of $44 million, despite generating $2.4 billion in revenue. Factors contributing to REI’s unprofitability include: + High overhead costs associated with maintaining a large retail network + Increased competition from online retailers and big-box stores + Difficulty in adapting to changing consumer preferences and market trends
The Advantage of Being Unprofitable
While REI’s unprofitability may seem like a disadvantage, it actually presents an opportunity for smaller travel companies like REI Adventures. By focusing on creating unique experiences that bring people closer to nature, REI can differentiate itself from larger retailers and establish a strong brand identity. Benefits of being unprofitable: + Ability to focus on core strengths and values + Increased flexibility to innovate and adapt to changing market conditions + Potential to build a loyal customer base through exceptional customer experiences
The Rise of REI Adventures
REI Adventures was launched in 2018 as a way for REI to expand its offerings and reach new customers.
The Adventure Travel Segment: A Growing Market
The adventure travel segment has seen significant growth in recent years, with many companies adapting to changing consumer preferences and trends. According to Explorer Chick CEO Nicki Bruckmann, the segment remains stronger than ever and continues to grow. Key statistics: + The global adventure travel market is projected to reach $1.4 trillion by 2025 (Source: Grand View Research) + The market is expected to grow at a CAGR of 10.3% from 2020 to 2025 (Source: Grand View Research) + Adventure travel is becoming increasingly popular among younger generations, with 75% of millennials and Gen Z travelers preferring experiential travel over traditional vacations (Source: Skift)
The Shift in Focus
REI’s exit from the space is not an indication of the segment’s decline, but rather a strategic decision to refocus their efforts on retail/DTC.
The Rise of REI Experiences
In 2018, REI, the outdoor retailer, announced the launch of REI Experiences, a new venture aimed at providing customers with unique and immersive outdoor experiences. The idea was to create a platform that would allow customers to connect with nature, challenge themselves, and explore new outdoor activities. Key features of REI Experiences:
- Guided hikes and backpacking trips
- Rock climbing and bouldering
- Kayaking and stand-up paddleboarding
- Cycling and mountain biking
- Skiing and snowboarding
- Yoga and meditation retreats
- Photography workshops
- Wildlife viewing and birdwatching
- Upfront fees for guided trips and activities
- Membership-based models for frequent participants
- Partnerships with local outdoor guides and outfitters
- Revenue sharing with local businesses
The initial response to REI Experiences was overwhelmingly positive, with many customers expressing enthusiasm for the new offerings. The platform quickly gained popularity, and by the end of 2018, REI Experiences had already attracted thousands of participants.
The Business Model
REI Experiences operates on a unique business model that combines elements of retail and experiential marketing. The company generates revenue through a combination of upfront fees, membership-based models, and partnerships with local outdoor guides and outfitters. Key components of the business model:
The business model is designed to provide customers with a seamless and enjoyable experience, while also generating revenue for REI Experiences.
The Impact on REI
The launch of REI Experiences had a significant impact on the company’s overall business strategy.
