The ongoing return to working in offices is causing significant job cuts at some companies that saw major growth during the pandemic’s shift to remote work. Home goods retailer Wayfair recently announced layoffs impacting approximately 1,650 employees or 10% of corporate positions.
The cuts come despite Wayfair having seen tremendous success in 2020 and 2021 as consumers spent more time working and relaxing at home, fueling demand for the company’s furniture and decor. Now, with many people going back to offices, Wayfair is seeing declines in sales and finding itself with excess staffing levels originally intended to meet remote work demand.
Wayfair Announces Major Layoffs as Remote Work Declines
Wayfair, the Boston-based e-commerce furniture retailer, announced substantial layoffs impacting 1,650 employees, equating to 13% of the company’s global workforce. According to CEO Niraj Shah, the job cuts were part of a restructuring initiative to streamline decision-making processes and realign teams.
The reductions affected primarily remote workers, though the company stated select roles would remain remote where appropriate. Wayfair management has pushed for most employees to work in-person at company offices at least three days per week. Those in specific remote positions are required to work during standard Eastern time zone hours and travel quarterly to Wayfair’s headquarters.
Longer Working Hours for Success
The layoffs came just weeks after Shah advised employees to work longer hours to achieve success. In a year-end memo, Shah wrote, “Working extended hours, being responsive, integrating work and life, is not anything to avoid. There is little evidence that inactivity has been rewarded with success.”
During an all-hands meeting, Shah and Steve Conine, company co-founder, insisted bankruptcy was not imminent but doubled down on the need for diligent work. The cuts are the latest in a series of reductions for Wayfair. The company eliminated 550 positions in 2020, 870 roles in August 2022, and approximately 1,750 jobs in January 2023, equaling 10% of the workforce at the time.
Rebuilding and Restructuring
The restructuring aims to rebuild teams with modified levels, according to Shah. “The natural question is to ask ‘Why?’ I think the reality is that we over hired during a strong economy and strayed from our core principles, though we have largely returned to them, we are not quite there,” Shah wrote in a memo to employees.
Wayfair’s stock price dropped more than 3% following the announcement. The company’s shares have declined 80% since early 2021. Several other retailers, including Macy’s, Hasbro, and Etsy, have recently announced sizable job cuts in response to inflation, increased consumer debt, and a drop in discretionary spending.
Overview of Wayfair’s Workforce Reduction
Wayfair, Inc. recently announced plans to reduce its workforce by approximately 13%, affecting around 1,650 employees. According to company executives, the layoffs are part of a restructuring aimed at streamlining decision-making processes and aligning teams with the organization’s core principles. The workforce reduction is expected to generate $280 million in annual cost savings.
The reductions impacted workers across Wayfair, including some remote employees. The restructuring is Wayfair’s fourth round of layoffs since 2020. The company cut 10% of its workforce in January 2024, 19% in August 2022, and 6% in 2020. Wayfair’s stock price dropped more than 3% following the announcement as investors reacted to signs of continued struggles at the online furniture retailer.
Pandemic Over Hires
According to Shah, Wayfair was over-hired during the strong economic conditions of the pandemic and has had difficulty adjusting to the subsequent downturn. “By mid-2022, it was clear we were in a bust period,” Shah said. “It was also clear that we had gone overboard with corporate hiring during Covid.”
The company now expects to generate over $600 million in adjusted EBITDA in 2024, up from previous estimates of $479.3 million. Though necessary, workforce reductions are difficult decisions that impact many lives. The coming months will reveal whether Wayfair’s renewed focus on efficiency and profitability will enable sustainable growth over the long run.
Impacts of Decreasing Remote Work on Wayfair’s Business
With many employees returning to offices, Wayfair has had to reevaluate its workforce needs. Wayfair executives told staff that “most of the workforce [would] be in the office on most days, though some roles [would] continue to be remote.”
The layoffs are expected to bring $280 million in annual cost savings, crucial as Wayfair struggles with “category weakness,” making “revenue growth challenging,” according to Shah. Wayfair stock has fallen 80% since early 2021 as inflation and high-interest rates reduce consumer spending.
Say Goodbye to Remote Work
The changes reflect a broader trend of companies moving away from remote and flexible work policies common during COVID-19. Although remote work allowed Wayfair and other companies to access a larger talent pool, strengthen work-life balance, and reduce overhead costs, challenges have emerged.
Remote work can reduce productivity, collaboration, and company culture. The shift back to in-person work aims to remedy these issues, though it risks alienating employees who prefer remote options. For Wayfair, the transition highlights the delicate balance companies face in optimizing a hybrid workforce.
How Other Companies Are Handling the Return to Office
Some companies are taking a hybrid approach to returning to the office. Employees are required to work in the office for a certain number of days per week, such as 2-3 days, while permitted to work remotely the remaining days. This allows for some in-person collaboration and connection but still provides flexibility.
For example, according to the Boston Business Journal, Wayfair management has required its employees to show up to the office at least three days a week. Those in a handful of remote positions are required to work Eastern Standard Time zone hours and to travel once per quarter to the company’s Boston headquarters.
Hybrid or Fully Remote Model Challenges
Some companies have faced challenges with hybrid or fully remote models. Communication issues can arise, and it may be more difficult to build company culture remotely. However, remote and hybrid models also provide benefits like increased work-life balance, flexibility, and access to global talent pools.
When determining return-to-office policies, companies must consider factors like company culture, the work styles of employees, and the type of work being performed. Policies that are overly restrictive or do not align with employee preferences risk damaging company culture, morale, and retention.
What This Means for the Future of Remote Work
Prior to the COVID-19 pandemic, most companies operated under traditional, in-person work models with limited remote work options. However, the public health crisis forced an abrupt shift to remote operations for many companies.
As the pandemic recedes and offices reopen, companies are reevaluating remote and hybrid work policies. The layoffs at Wayfair indicate the company’s preference for in-person work and collaboration. Other companies may follow suit and scale back remote work options, citing challenges like managing productivity, collaboration, and company culture from a distance.
It is Not All Lost
Regardless of the hiccups, some positions and teams may remain well-suited to remote or hybrid arrangements. The key will be finding the right balance for each company and workforce. For employees, this means remote and hybrid work is not guaranteed long-term.
While some covet the flexibility and work-life balance of remote work, others struggle with a lack of face-to-face interaction and clear work-home boundaries. Employees should clarify remote work policies and expectations with their companies to determine if their positions may be affected.
Advice for Employees Impacted by Layoffs
Employees affected by corporate restructuring and downsizing should remain optimistic. Although job loss can be difficult, focusing on the next steps and viewing the situation as an opportunity will help in moving forward. Affected individuals should thoroughly review the details of any severance packages or benefits offered.
Negotiating the best possible deal and taking full advantage of what is offered can provide financial security during the transition to new work. Healthcare coverage, unused paid time off, retirement account rollovers, and career transition services are all possible benefits to explore.
Update Your Resume
With extra time on their hands, impacted employees should update their resumes to best reflect their experience and qualifications. Focusing the resume on relevant skills, quantifiable accomplishments, and career highlights will position one as an attractive candidate for new roles.
Reaching out to former colleagues, managers, clients, and anyone else in one’s professional network can uncover new opportunities. Letting connections know about one’s current job status and interest in new work may lead to introductions, referrals, or even direct job offers.
Consider Retraining or Upskilling
For some, job loss may be an opportunity to pursue a new career path or expand one’s skill set. Retraining programs, bootcamps, online courses, and certifications can all help individuals gain new knowledge and experience to transition into more in-demand roles.
With technology and automation transforming many industries, developing skills in areas like data analysis, software engineering, and digital marketing may open up a range of new job prospects. While job loss is difficult, maintaining an optimistic and determined mindset will help in moving on to new opportunities.
Wayfair’s Financial Outlook After the Layoffs
Wayfair’s recent announcement of substantial layoffs signals the company’s attempt to remedy over-hiring during stronger economic times and realign with core business principles. The job cuts are expected to generate over $280 million in cost savings, allowing Wayfair to focus resources on driving growth and profitability.
The 13% reduction in Wayfair’s 14,000-person global workforce will significantly decrease operating costs, especially administrative expenses related to compensation and benefits. Wayfair stated that the restructuring would “align our teams to core organizational design principles that will establish a healthy foundation for growth.”
