There’s an adage that competition breeds excellence.
But how does it apply when a big name outdoor retailer like Recreation Equipment Inc. enters a heavily saturated, locally owned Durango outdoor store market?
Durango’s population has grown exponentially in the last decade, opening the door for bigger names to enter the business atmosphere. Since 2010, the city has grown by 12.9%, according to the 2020 census.
With Southwest Colorado’s general interest in the outdoors, the addition of a new REI location coming in 2025 makes a lot of sense.
With that said, there are more than 10 locally owned outdoor retail stores in Durango. With the recent concern about grocery stores being able to sell liquor and the impact on local stores, it may appear that local outdoor retailers have a concern. But a few of Durango’s outdoor business owners seem confidant in the brand they’ve built for their establishments.
“I would think outdoor business have had discussions about how they’re going to react to REI coming,” said Ski Barn owner Bill Brown.
For Brown, the obvious solution was to expand customer service opportunities.
In July, the owner started offering online ski fitting consultations via Zoom. Two years ago, he started selling products online, which allowed him to offer products on a global scale.
This may be a growing trend for Durango outdoor retail businesses. By the end of 2023, 20.8% of global retail sales are expected to take place online, according to reports from Insider Intelligence.
Brown said that the interesting part about REI coming to town is that the outdoor retail industry tends to “bend” to the big-name company. REI does this by offering “30% off” sales twice a year, which can put a strain on local retailers.
“It’s kind of baffled me because it’s always before Christmas, and it’s like, ‘why are you giving away this year’s newest and greatest stuff at a huge discount?’ But it gets people in the door,” Brown said.
During the holiday season, smaller retailers like Ski Barn will often receive an email from manufacturers notifying them that they can decrease the minimum advertised price of particular products because REI is offering the sale.
However, most retailers don’t want to offer new products for a heavily discounted price, especially before the holiday season.
Pine Needle Mountaineering owner Jeremy Dakan expects to see a slight drop-off in sales when REI opens in 2025 because it’s going to be something new.
“They’re going to make a big splash, and anything new that comes into town is always exciting. We’ll see a dip in basic stuff,” he said.
This will mostly impact sales in basic camping gear, as well as footwear.
Dakan said that there’s a different customer base who shops at REI, and those who are REI members already shop with the company online.
REI Regional Director Janet Hopkins noted in a June news release that Durango’s 9,000 members were among the reasons for coming to town.
Dakan said REI is known for coming into areas and initially investing heavily in local nonprofits for a short-lived period.
“It’s kind of a big upfront marketing tactic that just kind of quietly goes away,” he said.
REI does advertise its philanthropic efforts. In a June news release, the company says it invested $6.9 million in 503(c) nonprofits nationwide.
Brown said it doesn’t make sense to him that REI is constructing a new building in south Durango.
“I don’t think me or any one of my competitors would go out and spend $7 million to build a new building to try to compete in this market,” Brown said. “It’s not like we’re in Denver or in Colorado Springs.”
However, some REIs in Colorado have struggled leasing buildings such as the Westminster location, which closed in 2020 because negotiations with the landlord fell through.
Brown said after discussions with business owners in Glenwood Springs and Summit County, where REI opened new locations in recent years, he was told REI has had little impact on them.
Business Improvement District Executive Director Tim Walsworth said REI’s future Durango location is a concern for local businesses.
When news first broke of the outdoor retailer making its way to Durango, the BID reached out to outdoor retailers in Flagstaff, Arizona. REI opened its Flagstaff location in 2014, and the city shares a similar demographic to Durango.
What the BID found through market research in Flagstaff is that REI normally takes about 20% of the market share during the first year. According to sales tax data from the city of Durango in 2022, sporting goods retailers brought in a little over $23 million in revenue.
That would mean if sporting goods stores were to replicate such revenue in 2025, than REI would take about $4.6 million of the pie in its first full year of operations.
However, Walsworth said one should take the revenue accumulated in 2022 with a grain of salt.
“That number I’ll give you will probably be slightly inflated, just because of that surge of post-pandemic travel and outdoor pursuits,” he said.
Walsworth isn’t wrong about a surge in outdoor recreation purchases during the height of the COVID-19 pandemic. In the United States, the industry has grown 6.7% per year on average between 2018 and 2023, with a marked jump from 2020 to 2021, according to data collected by IBISWorld.
The frustrating part for small outdoor retailers in Durango is that they’ll probably never be able to match REI’s prices, Walsworth said.
“They just have different buying power. A single-owner shop cannot buy at the volume as a chain-type business,” he said.
Walsworth echoed the strategies Dakan and Brown said will benefit their business: attention to customer service.
Walsworth said businesses that have been in Durango for decades have knowledge of the area, which is beneficial when helping potential customers select products.
Dakan said that doesn’t mean REI can’t recruit employees from the area who are knowledgeable, but he is confident in his employees – some of which have been with the business for decades – and their knowledge of products and the surrounding area.
tbrown@durangoherald.com
