Retail

Stay-At-Home Orders Great News For Home Goods Sellers Like Wayfair

Roman philosopher Gaius Plinius Secundus, better known as Pliny the Elder, famously said “Home is where the heart is” somewhere around the year 45 AD — thus coining an aphorism that has had stunning staying power for the last 2,000 or so years. While the concept of “home” has changed in many ways over the intervening two millennia, whatever it is, wherever it is and no matter who lives there has done little to change our collective conviction that it remains where the heart is.

And while the year 2020 has made that phrase no less true than it was when Augustus sat on the throne as Rome’s first Emperor — in fact arguably it is now more true — the phrase could stand a few additions to make it more directly relevant to the age of social distancing. Home is still where the heart is. It is also where the office, gym, elementary school, movie theater, test kitchen, sandwich shop, spa and beauty parlor are these days.

And as consumers are spending more time at home and using it in ways they never quite have before, Handy Technologies CEO Oisin Hanrahan noted in a recent PYMNTS digital roundtable discussion, their spending is reorienting.

“People are really thinking about how they live at home — how they build their office, or fix up the  living room a little bit more because they’re spending so much time there now,” Hanrahan said. “People are asking themselves ‘Oh my God, how can I make as comfortable a space as possible?’ given that now they spend 24 hours a day there. I think it will be an interesting evolution.”

An evolution, notably, that we’re already seeing — in ways formal and informal. In the last several weeks, for example PYMNTS has interviewed a host of CEOs and other senior executives about their business’s experiences on lockdown and how they’ve adapted. To a man — and woman — everyone we’ve spoken to has taken some time to call out their recent renovations to their home office in response to working at home. But beyond all the amateur redecoration projects we’ve heard tales of lately, it is also visible in the data.

Wayfair, arguably the nation’s best known digital furniture retailer has seen its sales massively lifted by the now legion of consumers who’ve traded their travel budgets for expenditures dedicated to feathering their nests. CEO Niraj Shah noted in his call with investors that in January and February Wayfair’s traffic patterns have been healthy and consistent with trends, but not exceptionally different. Starting in mid-March, however, he noted Wayfair saw a pickup in both traffic and conversion, with increasingly strong repeat behavior coupled with an acceleration in new customer orders.

“This period coincided with customers beginning to shelter in place at home, which led to new needs for essential products like cookware and kitchen appliances, home office products and children’s furniture and play items, and also brought to light ongoing renovation and decoration projects that customers are now taking on,” Shah said.

How long the present spike will last remains uncertain, and Wayfair is “not orienting internally around these revenue run rates.” But, he noted, the pandemic has created a unique opportunity to acquire new customers and to accelerate the shift online — and long term, that shift will be for the good.

“We believe there are clearly definable long-term advantages accruing to Wayfair in this period. It is likely that eCommerce adoption is going to step change across a wide swath of categories,” Shah said.

And notably, while Wayfair is the largest and most publicly well-known purveyor of digital home goods in the U.S. — and in position to be the biggest beneficiary of the combined boosts of a consumer shift to digital combined with an exploding fascination with home improvement projects — it isn’t the only one. In pockets across the U.S., OfferUp CEO Nick Huzar told Karen Webster in a recent conversation, new furniture retailers are adding their inventory lineup to the OfferUp platform — because it is a fast way to onboard into the world of digital commerce and reach out to an existing audience visa the OfferUp marketplace.

“[The platform has a] local furniture store here in Seattle that has sold $2 million worth of furniture in two years on OfferUp,” Huzar told Webster, noting that this literally a mom-and-pop furniture business that early on saw the possible opportunity to have a line out to a new consumer demographic early on.

And that hasn’t just been a consistent revenue generator for the firm over the last few years, he noted — it has also been something that has allowed it to pivot quickly for the pandemic by simply adding a sentence to the OfferUp listing:

“Hey, we also do free delivery.”

And, Huzar, Hanrahan and a host of the other retail players PYMNTS has spoken to over the last several weeks agree: it is going to be the smart pivots and upgrades that build upon the trendlines already in evidence before the outbreak that will make the difference for players big and small between surviving the current period, and finding a way to thrive during and after it.

And, as PYMNTS data demonstrates, those smart pivots and outreaches to a new market are looking less and less optional by the day, as consumers are increasingly resigning themselves to being in this for the long haul. Our April 27 survey found just 27.8 percent were “very” or “extremely interested” in going out more often, while 46.5 percent were “somewhat” or “slightly” interested in doing so. The remaining 25.6 percent had no interest whatsoever in leaving their homes. The average consumer now expects it to take another 225 days before their lives will return to normal, according to our most recent survey — a sharp uptick from the 178 days expected on  April 11 and 138 days on March 17.

On average, consumers expect this pandemic will last 63 percent longer than they did 40 days ago. And an increasing share are coming around to the idea that this isn’t a temporary change so much as a mark of a new world beginning — as 8.4 percent of consumers now believe life is never going back to normal.

It is reasonable to expect, given that for consumers home will be where everything is for more than six months, that the great nest feathering already in progress will carry on at an accelerated rate for the foreseeable future. And if early data is indicative, the sellers that can provide the “feathers” digitally are poised to grab up a massive share of that suddenly growing market.

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New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

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