Wayfair built its business online. Now it’s betting on massive stores

At a time when high mortgage rates and weak home improvement spending have dampened furniture sales, online retailer Wayfair is making an unlikely bet: building more massive stores.

Wayfair plans to open a large showroom in Denver by the end of the year, followed by stores in Cincinnati, Ohio; Yonkers, New York; Fort Lauderdale, Florida; and Princeton, New Jersey, in 2027. That’s in addition to its existing flagship stores in Chicago, Atlanta and Columbus, Ohio.

“This is a cyclical category. People need to have somewhere to sit, they need to have a bed to lay on. It will come back,” Chief Financial Officer Kate Gulliver said in an interview on Bloomberg’s Chief Future Officer show. And she’s convinced that when shoppers are ready to spend again, Wayfair needs to meet them wherever they are. “If that’s offline, we want to show up offline,” she said.

The expansion is part of a multiyear effort to turn around the business after profits plunged post-pandemic. Early signs suggest the retail strategy is bearing fruit. Wayfair shares have risen more than 50% over the past year, well ahead of most of its peers.

In April, Wayfair reported a fourth consecutive quarter of positive sales growth, after a streak of six straight quarters of flat or declining revenue. Revenue is expected to climb more than 5% in the second quarter compared with a year prior, according to an average of estimates compiled by Bloomberg, outpacing the broader U.S. home furnishings market.

In its first year after opening in 2024, Wayfair’s Chicago store saw that more than 50% of shoppers making purchases were new to its customer base.

The retailer says the offline experience is designed to go hand-in-hand with online shopping, so prices remain consistent regardless of where people make a purchase. But the stores offer something the website can’t, like a display of working shower faucets.

“Where else can you go and actually test it out on the shower wall?” Gulliver said. “As a CFO, you see running water in the middle of the store and you think, ‘Is that going to be a great investment?’ But it is so fun and it’s so engaging.”

In recent years, Wayfair revamped its loyalty strategy to cultivate more repeat shoppers. For a $29 annual fee, Wayfair Rewards members receive perks including 5% back in rewards, early access to sales and free delivery. Though the program has cut into margins, the company deems it worthwhile as it tries to gain more market share. By the end of 2025, purchases from members accounted for more than 15% of U.S. revenue.

Gulliver said the company’s business model has lessened some of the financial risks of its brick-and-mortar bet. Unlike most retailers, Wayfair stocks its showroom floors with inventory still owned by its 20,000 global suppliers, a move that has made its expansion strategy less costly and more flexible upfront.

Still, building stores means Wayfair must master the art of effective retail staffing and curating its vast online array of merchandise for stores, skills that it never needed as a pure e-commerce company in its first roughly 20 years in business.

“We’ll need to sort of develop that muscle,” Gulliver said.