Wayfair (W -2.74%) management is hoping that physical retail is the way forward to help this business grow. In this Motley Fool Live segment from "3-Minute Stock Updates," recorded on July 18, Fool.com contributors Toby Bordelon and Connor Allen take a closer look at the company's new strategy.
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Toby Bordelon: Regardless, this new physical retail strategy, I think, is going to be a challenge. We're starting to see some initial results pretty soon from that. We'll see whether the company is up to the challenge, but it's a very different direction from them. We'll see how they do.
Connor Allen: I think Wayfair realized that people don't spend a ton of money online for furniture. If you're spending 3-4 grand on a couch, potentially even more, you're going to want to see that couch. You're going to want to sit in that couch before you spent that money. That's why they're trying to get in the physical arena as well as building out some luxury brands like Birch Lane, I think is one of their luxury brand names. Do you think they're going to have a lot of success here in luxury? Because like you see a company like RH and obviously Restoration Hardware has had a ton of success in luxury furniture. But Wayfair, they're known for the cheap fall apart easily, just little bedside tables that you can purchase online. How do you think they're going to succeed?
Toby Bordelon: That's the big question. I obviously have some doubts about their success, but I think that's part of the logic behind the physical retail, as you say. They need to get into physical to have that luxury appeal and pushing it with brands other than Wayfair is what they're doing, starting with AllModern, Joss & Main, that stuff. I'd definitely do think that physical retail move is a part to boost those brands and see what they can do with that. But regardless, it definitely seems that management thinks physical retail is the way to go for them moving forward to try to help this business grow. We'll keep an eye on and see how it goes.