Is Restoration Hardware The Retail Experience That Will Change The Way Millennials Buy Furniture?

We are living in one of the most historically difficult times for retail. Stores are closing, the number of salespeople on the floor is dwindling and the consumer experience hasn’t changed much, at least for the better, in a long time. But high-end furniture brand Restoration Hardware is looking to refine the retail experience.

While millennials (and generation Z for that matter) tend to value experiences over things, Chairman and CEO of RH, Gary Friedman doesn’t see this a problem. He has reinvented RH to create a retail experience that is totally unparalleled.

More importantly, there is proof his strategy is working. The company’s Third Quarter Report of 2018 revealed the adjusted net income increased 92% to $46.8 million.

A Retailer Without Stores

RH doesn’t call their retail locations “stores,” but rather “galleries,” of which there are 86 total. The company’s mall-based “legacy galleries,” which range in size from approximately 6,000-10,000 square feet are being phased out. This makes sense, as malls throughout America have been in decline for years now.

Instead, Friedman is choosing to focus on large format design galleries, which are anywhere from 46,000 to 90,000 square feet. While the smaller stores offered an experience that wasn’t too different from most furniture stores, albeit at a higher price point, the new galleries are offering up way more than furniture and décor.

Location is also key to this strategy. In addition to markets like New York, Chicago etc, RH has also been opening up bespoke galleries in affluent second home markets that are specially tailored to the local culture. There are currently locations in the Hamptons, Palm Beach, and Yountville, with plans to open in Aspen.

Selling A Lifestyle In New York

One of the most notable locations is the RH Gallery in the Meatpacking District in New York, which opened in September 2018. The historical landmark building was originally owned by John Jacob Astor in the late 19th century. RH collaborated with architect James Gillam of Backen & Gillam to renovate the building which features the original brick façade with cast iron I-beams.

At the very least, the space can be described as majestic. It has six floors over a sprawling 90,000 square feet.

Every large and small detail of the gallery is highly intentional. There is not one inch of space that has been overlooked. One hallmark is artist Alison Berger’s dramatic installation New York Night, which prominently hangs 90 feet through the staircase.

There is also a glass elevator so striking, it almost feels like a tourist attraction without the grit.

The Goods

With all of these amenities, the last thing to notice is that the store actually sells furniture. But there is plenty to buy with individual floors dedicated to each line, Modern, Outdoor, Baby & Child, and TEEN. Complimentary in house-design services are also available.

Hospitality

While chasing down a bottle of water can be a challenge at most furniture stores, the galleries in Chicago, West Palm Beach, Nashville, Toronto, New York, and Yountville have food and beverage programs.

The New York gallery has a rooftop restaurant by Brendan Sodikoff, as well as a barista bar and wine terrace. Sodikoff’s restaurant doesn’t look or feel like any restaurant you would find even at a high-end department store. The space itself is easily fit for a wedding or other high-end event. (But no, they don’t allow it.) There are multi-million dollar city views and even an outdoor garden terrace. The level of sophistication is also reflected in the menu, which includes American favorites like lobster rolls and truffled grilled cheese.

An Experience Like No Other

The interesting thing about RH’s galleries with restaurants is that many customers are likely just going there to eat. Speaking to several people who had been to the New York restaurant or were planning on it, they revealed that they had no plans to buy furniture. The vibe of the space feels more like the nearby Soho House than a retail store. The restaurant almost feels entirely separate from the rest of the store.

But perhaps that’s Friedman’s master plan. Go for the salmon. Stay for the sofa. Today, you might stop by for a glass of prosecco to celebrate a promotion. Tomorrow, you’re treating yourself to a new chair.

A Unique Business Model

Friedman prides himself on eschewing modern business practices. RH has no social media accounts to promote the brand. They continue to use mail catalogs, which they call “Source Books.” Furthermore, while items do go on sale, they’re somewhat limited. Dressers won’t be 75% off on Labor Day.

Instead, RH has a membership model. For just $100 annually, customers can save 25% off all full-priced items and 20% off all sale items, which can easily pay for itself in one purchase.

Reality VS Budget

Many millennials wouldn’t dream of stepping into a store filled with furniture that exceeds not only their budget, but also the size of their living space. However, a closer look reveals RH is more affordable than its reputation would lead one to believe—if you know how to shop the store. While the brand’s signature Cloud Sofa can cost up to $15k, the RH Teen line of sofas is more affordable, better suited for an apartment in terms of size and have the appearance of being designed for adults.

The Future Of RH

The company isn’t limiting the hospitality aspects of their business to galleries. The plan is to open up what the brand calls Guesthouses. The first RH Guesthouse will open in 2019 at 55 Gansevoort Street adjacent to the New York Gallery. Friedman told trade publication Business of Home, that RH Guesthouse will have “little to no RH product inside.” He also said, “People think, ‘Oh, it’ll be a showroom for your products.’ I mean, there might be a couple sconce lights that we carry, but even the bed, I’m going to purposely design a bed for the Guesthouse that we don’t sell.”

So, will all of this make millennials go to RH for the hospitality and ultimately stay for the product? It’s certainly looking that way.

 

 

This post first appeared on Forbes.com. To see the original, click here.