REI’s Elk Grove expansion comes at a time of transition for the retailer
Sumner, Washington-based REI announced in October that the co-op would add six locations nationwide — including in Elk Grove, Chico and Carlsbad. But the expansions come at a time of transition for the business.
Sales declined 2% last year, and the organization posted a $311.1 million net loss, down from a $164.7 million loss in 2022. In January the company announced plans to lay off 357 people, including 200 in its headquarters.
Still, the company has opened 10 stores nationwide this year, for a total of 191, and closed sites in Santa Monica and Portland, Oregon.
Sanjay Varshney, founder and principal of Goldenstone Wealth Management and a finance professor at Sacramento State University, said the outdoor retailer may be looking to withdraw from locations that are less profitable and double down in geographies that could yield higher sales.
“They could just play defense, and basically keep responding to the challenges by shutting down stores,” Varshney said. “Or they could play offense.”
The planned, 22,000-square-foot store in Elk Grove’s Laguna Gateway Shopping Center — expected to open next summer — will be one of eight to open over the next two years. The company said additional 2026 store openings will be announced as leases are finalized.
The company said in a statement Friday that its new sites are near outdoor destinations, and in communities where many of its members live.
Elk Grove has several benefits for a business like REI’s, Varshney said, including easy access to the Bay Area relative to other parts of the region, and a higher-income population. The median household income in Elk Grove is $115,864, according to the census bureau, compared to $84,010 in Sacramento County overall.
“Elk Grove has been a huge beneficiary of higher-income households moving in, especially from the Bay Area,” Varshney said. “So the services will follow… I think the expansion strategy probably fits that mold. They’re probably finding these new geographic frontiers.”
This story was originally published November 1, 2024 at 1:04 PM.
