Shoppers dished out for new sofas, beds and decor, remodeled their kitchens and backyards and invested in their remote work setup. Demand broke global supply chains and caused long delays for goods.
Two years later, the world is moving forward. The picture is a lot different now.
Inflation has tapped out lower and middle-income shoppers who have pulled back their discretionary purchases to pay for necessities like groceries, gas and rent. Wealthier customers have moved their spending from furniture to travel and services because of the shifting of their spending from furniture to other goods. Demand for new homes is hampered by the fact that mortgage rates are up.
I don't want to go bankrupt because of high inflation and high inflation leaving little room for unexpected costs That is what is pushing Wayfair and other chains that saw a sales spike earlier in the pandemic. Wayfair posted a net loss of $378 million during the quarter. Wayfair CEO Niraj Shah said on a call with analysts that customers are being more deliberate as they see where their discretionary dollars are going as prices at the gas station and grocery store eat up a greater share of their wallet. He said that he has seen many of the discretionary dollars flow away from goods to services, especially travel. Customers have been trading down cheaper options and Wayfair has been increasing promotions to spur demand, according to Shah. Wayfair's stock has plunged more than 60% this year, while RH shares have lost 45% and Bed Bath Beyond is down 57%. Williams-Sonoma, which also includes West Elm and Pottery Barn, has dropped 13%.