Digital furniture and home furnishings giant Wayfair will open its first physical store in a Chicago suburb next week. This move allows shoppers to test the comfort and quality of items, like that budget-friendly sofa, before making a purchase.
The store aims to provide a hands-on shopping experience, bridging the gap between online browsing and in-person evaluation.
Wayfair Opens First Physical Store
Wayfair is testing the waters by opening its first physical store in Wilmette, Illinois, on May 23. This move reflects the company's strategy to reach customers wherever they are. The Boston-based company, led by founders and co-chairmen Steve Conine and Niraj Shah, will launch a two-story, 150,000-square-foot store.
The store, described in a press release as "a one-stop shop for all things home," will offer furniture, home decor, housewares, and home improvement products to suit any style or budget. It will also feature a restaurant called The Porch.
As noted by Axios, the store will showcase various room styles, from modern to glam and bohemian. Unlike Ikea, Wayfair's physical store will have a curated selection of 10,000 items, a fraction of the 30 million online products.
Despite generating about $12 billion in revenue in 2023 and serving 22.3 million customers worldwide, Wayfair is exploring physical retail to enhance its digital-only strategy. By offering an in-person shopping experience similar to brands like Warby Parker and Allbirds, Wayfair aims to attract more foot traffic and boost sales.
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Wayfair Opens Physical Store Amid Sales Slump
Wayfair is expanding its flagship brand into physical stores as it faces sluggish sales and rising advertising costs.
Wayfair's online business has been successful in generating sales, but it's not profitable due to high marketing expenses, according to Neil Saunders, a retail industry analyst at GlobalData Retail. He explains that furniture stores need constant advertising because people don't buy furniture often. Wayfair must continuously remind customers of its existence.
The company posted a 1.8% drop in annual sales for 2023, totaling $12 billion, and reported a net loss for the year. In January, Wayfair laid off 1,650 workers, about 13% of its global workforce, following another round of layoffs in 2023 that cut 1,750 jobs.
Wayfair hopes opening physical stores will help attract more customers and boost sales, providing an in-person shopping experience to complement its online presence.
According to CNBC, many brands that begin selling directly to consumers now offer their products in department stores and big-box retailers. However, this approach has its challenges.
Brands working with wholesalers lose some visibility and control over their sales data, and they make less money. They also face risks if their partners remove their products or experience sales declines.
Opening their stores gives brands more control and helps mitigate these risks.
Despite the surge in online shopping during the COVID-19 pandemic, e-commerce growth has slowed. U.S. Census data shows that about 85% of retail sales 2023 still happened offline.
A 2021 Deloitte report on consumer preferences stated: "They're not shopping online. They're not shopping in-store. They're just shopping."
Wayfair is preparing a big event for its store opening in Wilmette, Illinois, on May 23. The day will feature special deals and activities for families looking to buy bookcases, kitchen islands, and file cabinets.
While Wayfair has suggested that the Wilmette store won't be its only physical location, it hasn't provided more details yet. The company is waiting to see how shoppers respond to its "Welcome to the Wayborhood" campaign.
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