This article first appeared in our sister publication Shop Eat Surf Outdoor (SESO)
Update 3/13/2026: A statement provided by REI disagrees with the union’s characterization of the negotiation process. See the full statement below.
Outdoor retailer REI Co-op plans to cut pay for new hires and reduce benefits for existing employees as contract negotiations with unionized store workers hit a boiling point, leading to allegations of bad-faith bargaining and illegal labor practices.
A representative from REI shared a statement saying company executives disagree with the union’s characterization of the negotiations.
“Effective July 1, 2026, the salary range will be reduced, which results in a lower starting hourly rate for new employees hired as of that date,” REI told staff in a February memo, according to Bloomberg.
Current employees are also facing a reduction in their benefits packages. CEO Mary Beth Laughton informed staff that the company will make targeted changes, including slowing the accrual of vacation time, transitioning from guaranteed retirement contributions to a traditional company match model and aligning sick days strictly with state-by-state legal requirements.
“We’re still spending more than we bring in and expect continued economic pressure this year,” Laughton said in the memo. “While we’ve taken significant steps already to manage costs, we’re still on the climb toward a healthy financial position.”
The memo is a sign that REI continues to struggle in its turnaround efforts. In 2024, the co-op reported $3.53 billion in revenue, marking a 6.2% decrease from the prior year, alongside a net loss of $156 million. Last year, REI cut its workforce and shut down its decades-old Experiences division, which included travel, tours and classes, eliminating hundreds of jobs in an effort to return to profitability.
Escalating Tensions at the Bargaining Table
Over the past four years, the United Food & Commercial Workers (UFCW) union and the Retail, Wholesale and Department Store Union (RWDSU) have organized 11 of REI’s roughly 200 stores. Despite reaching 25 tentative agreements over months of negotiations, none of those stores have secured a final collective bargaining agreement.
The situation deteriorated rapidly in late February. REI’s attorney notified the UFCW that the two sides were at an “impasse,” according to a news release from the REI union. As a result, the company announced it would unilaterally implement the terms of its final contract offer — including the controversial pay and benefits cuts.
Union representatives fiercely disputed this claim. UFCW representative Matthew Horn communicated that no impasse existed and that imposing these terms unilaterally violates labor laws, reported Bloomberg.
“Among many others, they cut our retirement, our healthcare, our vacation days, holiday pay for part-time workers, plus the personal and unpaid time we’ve always set aside to go outside and return with real experience that we could pass on to our members,” said REI Bellingham worker Alex Pollitt in a statement. “It’s like they think the outdoors are only for the people who can afford it.”
“REI’s attempt to paint itself as a progressive, values-based co-op is a total illusion so long as they continue to treat their own employees with such blatant disrespect,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union (RWDSU), in a statement.
REI shared a statement in response to the union’s allegations: “REI Co-op cares deeply about our employees,” said the statement. “Over the past nearly four years, we’ve approached collective bargaining with care, consistency and respect for the process, with the goal of reaching agreements that support our teams and ensure the long-term health of the co-op. This includes working with union representatives to move from 11 separate bargaining tables to a single national structure to create greater clarity and momentum toward 11 store level agreements.”
The statement said the company strongly disagrees with the union’s characterization of recent events.
“At every step, our focus has been on reaching agreements that are fair, sustainable and in the best interest of our employees and the co-op. REI did not act illegally, nor did we walk away from negotiations. We have shown up consistently, constructively and in good faith, putting forward proposals focused on competitive pay and benefits.
After extensive, good faith bargaining and prolonged discussions on both sides, REI presented its last, best and final offer, which was designed to support its employees while protecting the future strength of the co-op, said the statement.
“While we did not ultimately reach agreement and the parties are at impasse, a lawful determination under federal labor law, it was not due to a lack of effort, care or respect for the bargaining process or for our employees,” it said. “We remain open and willing to return to the bargaining table and continue to believe that productive dialogue is the best path forward.”
A New Executive Team Navigates the Storm
As the labor dispute continues, REI is undergoing a massive internal transformation driven by a newly assembled executive team. CEO Mary Beth Laughton, who brings extensive digital and merchandising experience from previous roles at Athleta and Sephora, is steering the co-op through a comprehensive three-year strategy dubbed “Peak 28.”
The Peak 28 strategy is built on elevating the company’s culture, refining product assortments, enhancing service, and reinventing the membership program. To execute this vision, Laughton has recruited high-profile talent from across the retail sector. Kristin Shane joined as chief merchandising officer in March 2025, and Kim Waldmann, former global chief customer officer at Foot Locker, was recently tapped to serve as chief commercial officer beginning in March 2026.
Waldmann will oversee REI’s stores, e-commerce platforms, and overall operations. Her mandate is to seamlessly connect these channels to create a unified experience for the co-op’s 25 million members.
Rolling Out AI
A major pillar of the new strategy involves empowering REI’s store employees, affectionately known as “green vests,” and equipping them with modern tools. Shane has championed a unique approach to artificial intelligence within the co-op. Rather than treating AI strictly as an operational tool, REI is rolling out Microsoft Copilot across its workforce with the direct involvement of the Chief People Officer.
The goal is to put AI in the hands of employees so they can discover their own efficiencies, rather than enforcing top-down corporate mandates, Shane said. This technology integration is meant to support the green vests as they deliver the highly personalized, expert service that differentiates REI from its competitors.
Competing with Vendor Partners
The new leadership team is also tackling complex market dynamics, particularly the challenge of competing against the co-op’s own vendors. Heavyweight outdoor brands like Patagonia and The North Face have aggressively expanded their direct-to-consumer channels and standalone retail footprints.
To maintain its relevance, REI must convince these vendors that the co-op provides access to an incremental, net-new customer base, Shane said. The merchandising strategy now focuses heavily on inspiring customers to take up new outdoor activities entirely, effectively broadening the market rather than simply fighting over existing gear sales.
REI is scheduled to report its 2025 financial results this spring.
