New York — Wayfair’s strategy is to continue to take share in a home furnishings category “that doesn’t have a lot of energy behind it,” explained Niraj Shah, CEO, co-founder and co-chair of Wayfair during the Morgan Stanley Global Consumer & Retail Conference here.
Shah said while the economy overall has done better this year, the home category “continues to have a malaise.” Housing has stagnated, and that has had a knock-on effect on the category. “The category doesn’t have a lot of energy, but it’s not going off a cliff either. It’s kind of bumping along,” he explained.
Wayfair, he said, has focused on some “idiosyncratic drivers” to accelerate taking market share, including launching its new rewards program; starting up Wayfair Verified, which vets certain products by quality, ease of assembly, price and popularity; making delivery program enhancements; undertaking marketing channel expansion via influencers and social; doing more with its Wayfair Professional B-to-B program; and the ongoing replatforming of core technology systems.
“The macro isn’t in our control,” said Shah. “These things are in our control.”
On the topic of tariffs, Shah said it’s unlikely there will be consumer pull-forward in demand because of tariffs proposed by president-elect Donald Trump. Rather, he said, customers are looking for value and sales this holiday season.
If tariffs are imposed, Shah said the home furnishings category is more prepared to deal with them than previously. Last time, tariffs happened very quickly, he said, and the industry was not expecting it. But since then, suppliers have become more savvy about where production is located. Suppliers don’t want to react after the fact like last time, he said, so they have tried to plan to get ahead of it with a lot of flexibility.
And with its broad range of suppliers that operate in many countries, Shah said Wayfair can pivot more quickly than some others.
“We have a base of 20,000 suppliers. … We have an inherent flexibility in our model that is an advantage of kind of the marketplace format we have,” he said. “It’s tougher if you’re a traditional retailer where you’re picking which person you’re sourcing from and then you’re either getting the benefit or detriment of that decision.”
The Wayfair flagship store in Wilmette, Ill., which opened in May, has been another bright spot for the business, and Shah said the company is seeing multiple business impacts from it.
“What has happened so far has been quite fantastic,” he said, noting most of the customers are “new to file,” meaning they haven’t been in Wayfair’s existing 90-million customer file.
Additionally, he said, it has taken a different view on sales, as customers aren’t necessarily expected to buy at the store, although they can do so, but they are encouraged to work with associates who use iPads to create lists or use the phone app to create a basket and place orders online.
The halo effect is measured in multiple ways, said Shah, whether it’s tracking orders placed by those who shared their information in store or placed online orders afterwards; or by looking at the geographic trade area around the store and tracking it against synthetic twin markets with similar geography; or measuring sales in Illinois going back two years before the store opened and then after the store opened.
“The halo has been quite strong,” he said. “The store out of the gate, with still a lot of room to optimize how it performs, has actually been doing very well.”
As a result, Wayfair is working on a location for another store, he said.
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