Will Dillon’s $600,000 Gamble on REI Pay Dividends?
An outdoor retail giant takes up residence in Dillon.
On paper, the deal that helped bring REI to Dillon last fall begs one question: Why would a 900-person ski town offer a $600,000 tax rebate to a national company that brought in $2.56 billion last year?
Such was the incentive that Dillon offered to woo REI, which opened for business in early May, in the big box store vacated by Sports Authority last year. That money, the retailer says, made the site attractive because it covered the cost of renovating the location. The justification, from the town’s perspective, is that luring the country’s most popular outdoor gear store to an outdoor recreation mecca like Summit County should generate more sales tax over the next decade, which is how long REI’s lease runs.
“We love to fill vacant space,” says Dillon town manager Tom Breslin. “We’ll work with [landlords] to incentivize somebody to come in. So we looked at REI’s numbers, which are confidential, about what they think they’ll produce over time, and we decided it was a good investment.”
The Dillon store is REI’s 148th location and its 9th in Colorado. It is the first of four stores the renowned co-op plans to open this year, along with hubs in Florida, California, and New York. It is also the first REI store to open in the mountain region (Idaho, Montana, eastern Washington, Colorado, and Utah) in nearly a decade.
“We don’t put stores where there isn’t something rad to do outside,” says store manager Megan Odom, who has worked for REI for seven years. “It was great because that community already existed here. This is the type of place we all want to be in when we work for REI.”
Summit represents a smaller-than-usual market for REI, Odom says, but the co-op counts more than 8,000 members in the immediate area, which helped justify its opening. In addition to locals, Odom also expects to draw customers from Steamboat Springs, Eagle County, and Leadville, as well as destination travelers. REI’s membership exceeds 16 million nationally, and members get a 10 percent dividend return on every dollar they spend at the store each year, hence the “co-op” designation.
The Dillon outlet, with 14,000 square feet of bright, open floor space, is less than half the size of REI’s Denver flagship. But that footprint also includes community room for twice-weekly events and presentations, and the ski-tuning and bicycle repair shop is much larger than normal for a store this size, Odom says. In addition, the Dillon store will be one of two REIs nationwide to rent Alpine skis and snowboards next winter, along with Salt Lake City.
Dillon was already home to independent retailers whose inventory and services overlap with REI’s, like Wilderness Sports and Christy Sports, but Breslin says he didn’t field any complaints about REI’s tax rebate from those businesses. He said a similar deal is open to them as well. “We’d work with them too if they want to do an improvement and they think they’re going to generate more sales tax revenue and they give us a pro forma,” Breslin says. “We’ll underwrite some of their costs and improvements.”
REI’s impact stretches beyond its buzz. Odom says she received 500 applications to fill 40 positions and ended up hiring locals for about 80 percent of the jobs. The company’s history of donating to nonprofits bodes well for local organizations. And considering how often Summit residents need a piece of gear, whether obvious or obscure, there is the convenience factor.
As Breslin says, “I don’t know many locals who haven’t been to the REI in Denver.”