Wayfair steps into IRL retail

One of the biggest destinations for home furnishings online is going IRL next week. The first Wayfair brick-and-mortar store opens Thursday in a suburb of Chicago.

The company brought in about $12 billion last year, but has seen sales slow since the e-commerce frenzy of the pandemic waned. Now it’s following the lead of digital brands like Warby Parker, Allbirds and Glossier and turning to old-school physical retail to give the business a boost.

Brick and mortar — even the term sounds old-timey — but it’s still how consumers make more than 80% of their purchases in the U.S., according to census data. 

“I have never bought anything in the furniture space online,” said Jonathan Zhang, a marketing professor at Colorado State University. “I need to feel the texture, I need to sit on it, I need to see the fabric.”

It’s not so easy to send back that couch that turned out to be a little more fuchsia than you expected.

“These are expensive, considered purchases — it takes some time to get comfortable with it,” said Adam Katz, head of physical retail for Wayfair.

He said the new store will help address the friction points with buying home furnishings online. Though the 150,000-square-foot space will carry only a fraction of what’s online.

“As big as our store is, you cannot fit millions of products in there,” he said.

Instead, it will have a curated selection of about 10,000 items.

Now, a single store might not add a huge volume of sales, said Anastasiya Ghosh, a marketing professor at the University of Arizona.

“But kind of treat it as another way to build brand loyalty, right? Allow customers to have an experience with your brand,” she said.

Ghosh added that online consumers aren’t usually very loyal — they’re often motivated by convenience and price.

And online advertising has become less effective, said James Cook, director of retail research at real estate consulting firm JLL. “If they open up stores, especially in high-traffic areas, they really increase their visibility,” he said.

Research has documented a “halo effect,” he said. Digital brands that opened a physical store then saw a nearly 14% bump in online sales in the surrounding area.