Market Data 
Online furniture and home furnishings seller Wayfair is set to open its first-ever namesake store next month, the company announced Thursday.
The large-format store, clocking in at 150,000 square feet and located in Edens Plaza in Wilmette, Illinois, will open to shoppers on May 23. It will also feature an onsite restaurant called “The Porch,” the company said, taking a page out of Ikea’s store setup.
Although this will be the first brick-and-mortar location for the Wayfair brand, the company has tinkered with opening test stores for some of its other owned brands, including Joss & Main and AllModern.
But the move to expand its flagship Wayfair brands into physical stores comes as it struggles with sluggish sales and an increased need for spending on advertising.
“Wayfair’s online business has been tremendously successful at generating sales. Unfortunately, it is not profitable because of the amount of marketing that has to be done to attract and retain customers,” said Neil Saunders, retail industry analyst and managing director at GlobalData Retail.
Furniture stores need to always be advertising, Saunders added, because people generally don’t buy furniture very often. Wayfair constantly needs to remind customers that it even exists, as a result.
But it’s not just the big advertising spend that’s hobbling the company. Sales are down, too.
Wayfair posted a 1.8% drop in its annual sales in 2023, to $12 billion, and a net loss for the year. In January, the retailer laid off 1,650 workers, or 13% of its global workforce. This follows a separate round of layoffs in 2023 that eliminated 1,750 jobs.
Its CEO, Niraj Shah, who went viral for telling his employees that they should be working longer hours as well as blending work with their personal lives, explained the company’s hardships in an open letter. Wayfair “went overboard in hiring during a strong economic period,” he wrote, referencing the pandemic lockdowns when online shopping spiked as homebound families spruced up their apartments, houses and backyards, sparking a “dramatic surge” in demand that doubled Wayfair’s sales to $18 billion.
But, coming out of the pandemic, and with persistent inflation, buying highly discretionary big-ticket items like furniture quickly dropped off the shopping list for more budget-conscious consumers.
Saunders said the new store could help drive sales and give Wayfair a more visible presence in the market that will “throw a halo around the online operation.”
“It’s basically a recognition by Wayfair that people shop in an omnichannel way, and like to visit stores as well as use online. This is particularly important in furniture and finishings where people like to see and try out products before buying,” Saunders said.
Whether the store makes a difference to Wayfair’s financials remains to be seen. “If this store is successful then it could be the start of wider physical expansion for Wayfair,” Saunders said.
