A Wayfair patio set
Source: Wayfair Facebook

Wayfair Is Making Its Biggest Bet on Physical Retail Yet

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Mar. 15 2022, Published 10:22 a.m. ET

Online retailers are feeling the pain as their COVID-19-related boom is fading. One is Wayfair. Does the furniture and home goods retailer have physical stores to rely on for revenue?

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Wayfair sells more than 14 million home products across five websites, with more than 70 percent of its sales coming from its 80 “house brands.” Founded in 2002, it was formerly known as CSN Stores.

Lockdown-related online sales are fading

The company benefited hugely from pandemic-driven lockdowns. Shoppers stayed indoors and focused on furnishing their homes. As a result, the company not only added millions of customers during the pandemic, but in 2020, also posted its first annual profit as a public company. Amazon and Home Depot, which also have a strong online presence, reported strong sales and profits as well.

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wayfair furnishings
Source: Wayfair Facebook

However, as the pandemic has receded and restrictions have eased, Wayfair’s growth has suffered. Its active customers (shoppers who have placed an order within the past 12 months) fell. In the 12 months ended Dec. 31, 2021, its revenue fell 3.1 percent year-over-year to $13.7 billion.

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Wayfair is moving to brick-and-mortar stores to keep up with competitors

As the stay-at-home trend fades, online retailers are looking for more ways to engage with customers, and many are turning to an omnichannel approach. However, Wayfair has been late to the physical-store game, with competitors William Sonoma and Bed Bath & Beyond having an established presence both online and in-store.

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In Dec. 2021, Wayfair announced that it will open three brick-and-mortar stores in Massachusetts (two stores under its AllModern brand and one under Joss & Main) in 2022, with more to come in the following years. The new stores, whose exact sizes aren't yet known, will showcase furniture, bedding, dinnerware, silverware, and other home items.

During its Q4 2021 results, Wayfair said its capital expenditure will be between $95 million and $105 million in the first quarter as it builds its brick-and-mortar stores. The company also plans to open a larger Wayfair store in 2023.

Does Wayfair have physical stores?

Wayfair operated a variety of pop-up shops beginning in 2018, and in 2019, it tested a single location near its Boston headquarters but closed it in 2020. It has also operated a close-out store. The company's current investment will be its biggest bet yet on physical retail.

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