Wayfair to exit Germany, focus on physical retail
Wayfair is leaving the German market as it looks to focus on other growth initiatives.
The online home furnishings giant entered Germany some 15 years, with it serving as the company’s original entry point into Europe, alongside the U.K. But in a letter to employees, Wayfair CEO and co-founder Niraj Shah said that, over the years, its efforts in Germany have lagged behind its success in the U.K. where it has grow market share.
“Scaling our market share and improving our unit economics in the German market has proven challenging due to factors such as the weak macroeconomic conditions for our category in Germany, the lower maturity of our offering, our current brand awareness, and our limited scale,” wrote Shah. “In our recent assessment, we concluded that achieving market-leading growth in Germany still remained a long and costly endeavor, and one that is increasingly lagging the potential return we see in other areas.”
With the exit, Wayfair plans to cut as many as 730 jobs, or about 3% of its global workforce, according to a report by CNBC, with about half of the affected employees having the option to remain with Wayfair if they agree to relocate to London, Boston or other locations where the company has a presence.
Going forward, Wayfair will continue to focus on operations and investments in its international markets — Canada, the U.K., and Ireland — where it has achieved meaningful market share and where “we believe hold significant potential to replicate the success we’ve achieved in the U.S,” Shah said.
Globally, the company’s core initiatives include expanding its physical retail footprint, optimizing its marketing reach, growing its loyalty program and developing our Wayfair Verified program.
In May, Wayfair opened its first large-format namesake store, at Edens Plaza in Wilmette, Ill. Previously, the retailer opened Wayfair pop-ups, along with stores for its Joss & Martin and AllModern brands, and it’s on track to open the first-ever physical locations of its Perigold brand, with stores opening later this year in Houston and West Palm Beach, Fla.
In the CNBC report, Wayfair finance chief Kate Gulliver said that the company’s Eden Plaza store has had a “halo effect,” where online sales to customers who live near the store have increased. It plans to open another store or two in the U.S. “in short order,” she said.
