Reuters reports - U.S. online furniture retailer Wayfair said it would cut 1,750 jobs, more than 10% of its workforce, to save costs as persistent high inflation weighs on consumer spending.
This is another industry giant laying off employees after technology giants such as Amazon and Microsoft and home furnishing giants such as 3B Home furnishing announced layoffs, hoping to control expenses to survive the economic recession.
Wayfair said the layoffs will affect 18% of the company's workforce. The company also cut 870 jobs in August last year. Wayfair had previously outlined a $1.4 billion cost-saving plan to trim operating costs amid weak demand for furniture. Including the layoffs in August, Wayfair said the workforce portion of the plan saved about $750 million. Wayfair had 16,681 full-time employees as of Dec. 31, 2021, according to regulatory filings. Wayfair's recent layoffs aren't limited to sales and human resources staff, but include more tech roles. Wayfair laid off nearly 200 people in engineering positions at its Boston headquarters, including 35 senior engineers and 23 senior software engineers, according to a government filing. The massive layoffs are understood to have hit Wayfair's software team in Boston and elsewhere, which maintains the company's cloud-hosted servers and software development tools. "It means we're only spending energy on keeping critical systems running," one engineer said. It is worth mentioning that Wayfair has expanded its recruitment in India while laying off 1,750 people. Indians will work in Wayfair's new technology development center opened in Bangalore earlier this year. Human capital is cheaper in India, industry insiders say. Wayfair lost more than 1 million customers in its most recent quarter as consumers stopped buying new furniture and home decor, according to its latest earnings report. The e-commerce retailer said the number of active customers fell 22.6% in the quarter ended Sept. 30 from a year earlier. The company's second-quarter sales fell 9% year-over-year. Loss of $283 million. The company's shares have plummeted nearly 80% in 2022. "Wayfair's business isn't working and it's losing a lot of market share," said GlobalData Retail analyst Neil Saunders. The furniture and home furnishings industry has seen a broader slowdown following a boom in 2020 and 2021, when many customers were unable to travel or go to the office and spend money to redecorate their homes. Ongoing inflation, which hit 8.2 percent in September, has also affected lower- and middle-income consumers, who have curtailed discretionary spending and instead focused on paying for necessities like groceries, gas and rent. Wealthier consumers are also shifting spending away from furniture and other goods and towards travel and services. Mortgage rates have risen sharply, reducing demand for new homes. "We're seeing shoppers becoming more cautious in their spending patterns, looking for great value and waiting for sales," Wayfair chief executive Niraj Shah previously said. In addition to Wayfair, other furniture companies in the United States have also been hit hard by the slowdown in furniture sales, including RH and Williams-Sonoma, which owns West Elm and Pottery Barn, 3B Home Furnishings, etc.
