Wayfair, the online home goods retailer, announced plans to lay off around 13% of its global workforce, amounting to 1,650 employees, to streamline the business and save about $280 million.
As of 2023, Wayfair, headquartered in Boston, had around 14,000 employees, with shares soaring nearly 16% in premarket trading.
Wayfair Facing Layoffs
CEO Niraj Shah, who recently went viral for urging employees to work longer hours, mentioned in an open letter that Wayfair hired excessively during the robust economic period of 2020, sparking a "dramatic surge" in Wayfair's sales to $18 billion. A couple of years later, Shah noted that Wayfair was experiencing a downturn in mid-2022, leading the company to carry out layoffs in 2022 and 2023.
"The changes announced today reflect a return to our core principles on resource allocation, such as getting fit on spans and layers as well as focusing on our highest priorities," Niraj Shah, Wayfair's CEO and co-founder, said in the news release.
Team sizes are being reduced across the organization, and seniority is being scaled back in specific roles to rebuild and adjust levels throughout this year. About 20% of the layoffs will impact the corporate team, saving Wayfair approximately $280 million annually. Employees will receive an email on Friday regarding their future with the company, and severance will be provided to those affected.
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Wayfair's Challenges Post-Pandemic
Wayfair thrived at the start of the pandemic when demand for stylish furniture and home decor upgrades was so intense that it helped bottleneck global supply chains and caused significant shipment delays. But four years later, inflation has caused prices to rise, leading middle-income shoppers to cut back on non-essential purchases to prioritize necessities like groceries, gas, and rent. Wealthier customers are now spending more on travel and services than furniture and other goods, and high mortgage rates remain high, reducing the demand for new homes.
Work Longer Hours, Says CEO
The layoffs were announced approximately a month after Shah delivered a straightforward year-end memo to his employees, emphasizing the preparation to work longer hours and not hesitate to let work affect their personal lives, "There is not a lot of history of laziness being rewarded with success. Hard work is an essential ingredient in any recipe for success. I embrace this, and the most successful people I know also do."
He aimed to clarify "Nirajisms," which are sayings about workplace culture that are either untrue, outdated, no longer applicable, or taken out of context, addressing the claim stating, "The one I heard was 'Niraj said that he does not think that we should work late," highlighting that everyone manages to have a great personal life in their way, with ambitious individuals finding ways to blend and balance work and personal life.
Shah thought of achieving success with teamwork, saying, "Together, we can win much faster than we are winning now if we all row in this direction together. Let's be aggressive, pragmatic, frugal, agile, customer-oriented, and smart. Thanks for being on the team!"
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