Wayfair enters retail

Wayfair, the renowned online home goods retailer, has opened its first large-format brick-and-mortar store, a 150,000-square-foot, two-story store in Chicago’s affluent North Side neighborhood of Wilmette, Illinois. The store opened ahead of Memorial Day weekend, with local media reporting that customers were lining up hours before the opening.

Like the online version of Wayfair, the physical store will offer furniture, home decor, housewares, appliances and home improvement products. Unlike the online store, the two-story brick-and-mortar store will have people on hand to provide decorating and home improvement advice, as well as host in-person events for shoppers.

Some items will be available immediately for takeout, just like in a standard brick-and-mortar store, while the physical Wayfair will also serve as a place where customers can view products in person in order to place an online order and then have them delivered. The store also has a small cafe serving simple meals to better keep shoppers on-site for longer.

Wayfair’s flagship brand is Wayfair, but other brands under its aegis include Allmodern, Birch Lane, Joss & Main and Perigold, each emphasizing different design aspirations for home residents.

READ ALSO: A new look at retail

As Wayfair co-founder and CEO Niraj Shah said on its last earnings call in early May, launching physical locations will be a deliberate process. Over time, this will also include some of the company’s other brands.

“We just launch a few stores for each of our brands and then iterate to make sure we actually got that right before we start scaling (to) make sure the unit economics are working as we expect,” Shah said on the call . “We don’t necessarily expect you to get it right away.”

The company’s launch comes at a time of increased e-commerce activity, but not enough to replace the need to shop in brick-and-mortar stores, according to a study by PYMNTS and Amazon Web Services. The study found that more than half of customers surveyed – 53 percent – said they preferred to buy household items in stores.

Headwinds remain strong in retail

As a sector, retail real estate has experienced weak demand in some categories for a decade or more, although it has seen some recovery following the lifting of pandemic-era restrictions. Recently, retail sales have seen some slowdown – in April 2024, sales were flat on a monthly basis and increased by 2.7% compared to the previous year, which does not quite match the inflation rate over the same period (3.4% ), according to the Census Bureau.

The bureau reports that home furnishings and furniture stores have been hit particularly hard recently by consumer disengagement, with sales in this category down 0.5% in April 2024 and down 8.4% compared to the previous year.

Wayfair is struggling with the same issues, with the company reporting a net loss of $248 million in the first quarter of 2024, though this represents a year-over-year improvement from a net loss of $347 million in the first quarter of 2023.