Dive Brief:

• Online furniture retailer Wayfair on Tuesday announced its bringing its brands offline. The company is planning three store openings next year: two for its AllModern brand and one for its Joss & Main brand. The stores will be located in the retailer's home state of Massachusetts.
• Customers will be able to purchase goods directly in the stores or place orders for home delivery, according to a company press release.
• The Joss & Main and AllModern stores are the first in a series of openings over the next two years as Wayfair plans locations for each of its five brands, including Birch Lane and Perigold.

Dive Insight:

After first testing out physical retail in 2018, Wayfair appears to have its eyes set on the channel.

Over the years, the company launched a number of pop-ups, as well as a smaller-format permanent store under the Wayfair name, which closed earlier this year. The company is now planning for larger format stores for both its Wayfair and Perigold brands.

Wayfair benefited last year by not only selling in a category in high demand but also from operating primarily online — where many consumers were shifting spending in order to limit trips to stores. For fiscal 2020, the retailer's revenue grew 55% year over year to $14.1 billion, and its net profit was nearly $185 million from a loss of $984.6 million in the year-ago period.

But demand for home goods is beginning to wane, and consumers are shifting spending to other areas, dealing a blow to Wayfair's top and bottom lines. In its most recent quarter, the retailer reported net revenue decreased almost 20% from last year to $3.1 billion, which CEO Niraj Shah said was partially due to consumers shifting "some spend towards travel and entertainment and from e-commerce towards brick and mortar."

As the limitations of selling goods almost exclusively online become increasingly apparent, many digitally native brands have been forced to enter physical retail in some capacity, whether it's through partnerships with big-box retailers, pop-up shops or permanent stores. Some brands view physical stores as an additional marketing vehicle, hoping to offset the high costs associated with acquiring customers primarily online.