Wayfair Is Building A Network Of Outlet Stores By Backfilling Vacant -- And Underutilized -- Big Box Real Estate
The online retailer is growing a physical store network by taking over real estate vacated by bankrupt retailers as well as excess space in other Big Box stores
Online retailer Wayfair W 0.00%↑ recently opened its newest outlet store in a repurposed ~27,000 square foot former buybuyBaby store in Augusta, Georgia.
It is 1 of 6 outlet stores that the online retailer has opened in just the past two years.
Most of the new Wayfair Outlet stores are backfills of vacant Big Box retail stores — and one new outlet is even located inside an existing retailer.
The Wayfair Outlet stores primarily sell returned items as well as discounted products in good condition across a variety of categories that include furniture, bath, kitchen equipment and home decor.
The stores do not offer refunds or accept returns from items purchased either at the store or on the Wayfair website.
Other furniture retailers have also turned to vacant 2nd generation Big Box space to open a network of outlet stores.
Like luxury home furnishings retailer RH.
In addition to its 80+ high-end Galleries located in major cities, RH also operates a network of 44 outlet stores across the U.S..
Most RH Outlet stores are located in Big Box suites that were vacated by bankrupt retailers such as Toys R Us and Bed Bath & Beyond.
RH Outlets are a key part of the Company’s reverse logistics platform that enable it to efficiently collect and re-sell returned merchandise as well as liquidate discontinued, floor model and overstock inventory.
Re-tenanting vacant Big Box space has been a cost and time-efficient pathway for RH to quickly grow and develop its network of outlet stores.
Wayfair is likely finding similar value by taking advantage of real estate vacated by bankrupt retailers like The Christmas Tree Shops and buybuyBaby.
But Wayfair is also experimenting with other physical retail formats for its outlet store network.
In October the Company announced plans to close a 20,000 square foot combination warehouse and outlet store that it had operated for approximately five years in the Cincinnati suburb of Florence, Kentucky.
Wayfair, though, is not exiting the Cincinnati market.
In November the Company opened a new outlet store — located in a portion of a ~25,000 square foot Staples store in the Cincinnati area.
This Wayfair Outlet occupies a dedicated section of the Staples store and offers a selection of home, furniture and decor products that are advertised at ~50-70% off online prices.
So in addition re-occupying stores that were vacated by bankrupt retailers, Wayfair is also taking excess space in existing stores.
The "store-in-store" Wayfair Outlet-in-Staples may offer the Company an even faster and less expensive opportunity to grow an outlet store network.
Even though Staples has closed over 600 stores during the past decade, the Company still operates approximately 1,000 North American stores.
But demand for paper and printing products has been weaker in the past few years — so Staples likely needs much less physical space.
The venture with Wayfair may allow Staples to better utilize (and monetize) portions of its remaining store fleet and even draw more traffic to its stores.
Of course a potential Wayfair / Staples partnership is not a new approach.
Other retailers — like Kohls and Macy’s — operate store-in-store partnerships with Sephora, Toys R Us and others to occupy excess space.
But the arrangement could be a “win-win” if Wayfair envisions a much larger outlet store presence and Staples wants to keep its extensive retail fleet.