It is no secret that over the past year, Wayfair (W) has been suffering from an alarming shift in consumer behavior.
As home prices in the U.S. remain high, and the housing turnover rate remains the lowest it’s been in 30 years, with the average 30-year mortgage rate being almost 7%, consumers have deprioritized home goods spending. This includes pulling back on funding large discretionary home projects such as kitchen and bath remodels.
In Wayfair’s fourth-quarter earnings report for 2024, the home goods retailer revealed that it saw a 5.6% year-over-year decrease in the amount of orders its repeat customers placed during the holiday season.
Related: Wayfair suffers major losses amid a startling consumer trend
The number of its active customers also shrunk by 4.5% year-over-year, falling short of analyst estimates.
Overall, Wayfair’s total net revenue only increased by 0.2% year-over-year during the quarter, while it also faced a net loss of $492 million.
Wayfair makes a harsh decision
Amid its struggles to attract customers, Wayfair has decided to lay off 340 tech workers, according to a recent press release.
“To best support Wayfair’s next phase of growth, we must refocus our resources, streamline our operations, and ensure our teams are structured for long-term success,” said Wayfair in the press release. “As part of this effort, we are making the difficult but necessary decision to reshape our Technology organization, which includes the departure of approximately 340 valued colleagues and friends.”
The Wayfair Inc. website on a laptop computer arranged in Saint Thomas, Virgin Islands, U.S.
Gabby Jones/Bloomberg via Getty Images
In addition, the company also announced that it is closing its Technology Development Center in Austin, Texas.
Wayfair said the layoffs come during a time when it is focused on “harnessing technology” to help guide its customers. It is also “leveraging generative AI” to increase productivity at the company.
“We’re also significantly advancing personalization and simplifying navigation by tailoring our assortment precisely to each customer’s unique needs,” said Wayfair in its announcement. “These are just some of the innovations underway. Additionally, we are leveraging generative AI to boost productivity across our organization, ensuring efficiency and innovation at every level.”
Related: Lowe’s issues stern warning about an alarming consumer trend
Wayfair has recently been doubling down on its focus on developing technology that improves the customer experience. Last month, Wayfair launched Muse, a tool that uses artificial intelligence to allow customers to personalize their home shopping on its website.
“Muse is our evolution in how customers discover, personalize, and shop for their dream spaces,” said Wayfair CEO Niraj Shah during an earnings call on Feb. 20. “Muse can explore an infinite possibility of room ideas populated with items to inspire purchases on Wayfair. Muse elevates our best-in-class search experience by utilizing generative AI to blend inspiration in shopping.”
Wayfair joins a startling trend in the tech industry
The layoff announcement from Wayfair comes during a time when many tech companies such as Meta, Microsoft, and Intel had also recently made the harsh decision to lay off their employees.
So far this year, 81 tech companies have announced job cuts, resulting in over 22,600 employees being laid off, according to recent data from Layoffs.fyi.
More Labor:
- Meta’s recent layoffs take an unexpected turn
- Goldman Sachs defends a work policy shareholders fear
- Dell CEO sends a stern wake-up call to employees
Many tech companies have been rapidly implementing AI into their workplaces. Even though AI has often been painted as a way to help employees tackle heavy workloads at their jobs, there is a level of concern amongst workers that the technology will have the potential to replace them.
According to a recent survey from YouGov, more than one-third of workers in the U.S. are concerned that AI will result in job loss or reduced work hours. Also, 56% of workers in the survey believe that AI will shrink the amount of job opportunities, and 55% think that their work hours will be reduced due to the technology.
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