Online furniture and home furnishings retailer Wayfair is planning to open its first namesake store in Wilmette, Illinois in May. The 150,000 square foot store will include an onsite restaurant called “The Porch,” following a similar setup to Ikea. Although this will be the first physical store for the Wayfair brand, the company has previously tested store openings for its other brands like Joss & Main and AllModern.
The decision to expand into brick-and-mortar locations comes as Wayfair faces challenges with sluggish sales and the need for increased spending on advertising. Neil Saunders, a retail industry analyst, noted that while Wayfair’s online business has been successful in generating sales, it struggles with profitability due to high marketing costs. Furniture stores need constant advertising since customers do not buy furniture frequently, requiring Wayfair to remind customers of its existence regularly.
In addition to high advertising costs, Wayfair has also faced a decline in sales, with a 1.8% drop in annual sales in 2023 resulting in a net loss for the year. The company initiated two rounds of layoffs in recent years, including a total of 3,400 job cuts. CEO Niraj Shah attributed the hardships to excessive hiring during the pandemic lockdowns, which led to a surge in demand for online furniture purchases. However, with the pandemic subsiding and inflation rising, consumers are becoming more budget-conscious, impacting sales of discretionary items like furniture.
Despite the challenges, Wayfair’s new store is seen as an opportunity to drive sales and increase visibility in the market. Retail analyst Neil Saunders suggested that the physical store will complement the online operation, catering to consumers who prefer to see and try products before purchasing. He believes that the store could potentially signal a wider physical expansion for Wayfair if successful. The move acknowledges the importance of an omnichannel approach to retail, accommodating both in-store and online shopping preferences.
The success of the new store remains to be seen, but it presents an opportunity for Wayfair to enhance its market presence and potentially improve its financial performance. By offering a physical location for customers to experience their products firsthand, Wayfair aims to leverage the store to boost overall sales and solidify its position in the competitive furniture and home furnishings market. The strategic decision to open a brick-and-mortar store reflects Wayfair’s recognition of the evolving retail landscape and the importance of providing a seamless shopping experience for its customers.
