Brick-and-mortar stores are making a comeback, and online home goods retailer Wayfair is joining the trend by opening its first namesake store near Chicago. This move follows a growing number of digitally native companies, such as Warby Parker, Figs, Casper, Glossier, and Everlane, that have turned to physical stores for further growth. Despite being a powerhouse in the online furniture industry, Wayfair recognizes the need for customers to have a tactile and visual experience when purchasing items like mattresses. Wayfair CEO Niraj Shah acknowledges that certain purchases, especially those that are considered and expensive, may be better suited for an in-store experience where customers can work with associates, discuss financing options, and receive design help.
Wayfair’s new 150,000-square-foot store in Wilmette, Illinois, set to open on May 23, aims to become a one-stop shop for all things home. While its size and on-site restaurant may resemble an Ikea store, Wayfair’s assortment will offer a diverse range of styles. Liza Lefkowski, Wayfair’s Vice President of Merchandising and Stores, explains that the store will feature furniture, a decor-centric marketplace, home improvement products like large appliances and kitchen cabinetry, housewares, small electric items, and storage and organization solutions.
The decision to open physical stores reflects a larger trend of brick-and-mortar openings. After a period of store closures that sparked concerns about the so-called retail apocalypse, the tide has shifted. In 2022, more storefronts opened than closed for the first time in five years. This trend continued in 2023 and 2024, with an increasing number of net new openings. Discount retailers like Dollar General, Five Below, Burlington, and TJX Companies have contributed to this growth, but direct-to-consumer brands are also making their mark.
Direct-to-consumer brands like Warby Parker, Figs, Brooklinen, Burrow, Everlane, and Untuckit have recognized the value of physical stores in expanding their reach and attracting new customers. For example, Warby Parker, often credited with starting the direct-to-consumer movement, plans to open more than 900 stores in the U.S. After opening about 40 stores in 2023, the company experienced a 12% revenue jump compared to the previous year. Figs, a health-care apparel brand, saw 40% of its Los Angeles store customers as new shoppers. These success stories indicate that customers still value engaging with brands both online and offline.
However, expanding into physical retail is not without its challenges. Companies need to consider factors such as location, logistics, driving foot traffic, and operational costs. This can be a costly and resource-intensive process. Some direct-to-consumer brands have learned this the hard way by expanding too quickly and facing a decline in demand. Allbirds and Purple, for example, have had to close underperforming locations and reevaluate their store strategies.
Wayfair, which has not turned an annual profit since 2020, will face similar challenges as it enters the brick-and-mortar space. The company plans to start slow and carefully roll out stores, analyzing what works and what doesn’t before making further investments. While there are upfront capital expenditures involved, successful brands understand that no single channel is a silver bullet. Larry Cheng from Volition Capital emphasizes that good brands work across all channels.
In conclusion, Wayfair’s decision to open its first store reflects the growing trend of digitally native companies embracing physical retail. By acknowledging the importance of tactile and visual experiences in certain product categories, Wayfair aims to provide customers with a pleasurable and effective in-store experience alongside its online offerings. The resurgence of brick-and-mortar stores indicates that they are still an essential part of the retail landscape and can contribute to a brand’s growth and profitability. However, companies must carefully navigate the challenges and costs associated with physical retail expansion to ensure success.
