Restoration Hardware has repositioned itself to be a luxury lifestyle brand. It has a great story. The brand was founded by Stephen Gordon in 1980 in Eureka, California. The idea for the company came while Gordon was restoring his Queen Anne style house. He had great difficulty finding period hardware. He recognized a need in the marketplace. The brand was initially about addressing the need for authentic period hardware. The initial store was founded in Gordon’s house in Eureka. Over time, Restoration Hardware expanded product offerings to include 1920s-themed lighting, bathware, curtains and furniture. Fifty percent of the business was novelty type items. The company expanded rapidly and went public in 1998. By 2001 Restoration Hardware was close to bankruptcy. Its stock had gone from $37 a share to $.50. It problems could be blamed on the lack of a focused merchandise assortment. In 2001, Restoration Hardware did not have a clear point of view.
Gary Friedman, former President of Williams Sonoma, stepped in and over time saved the company. He spent six years remaking the business, slowly and methodically getting rid of the novelty items and bringing in furniture, linens and lighting. He made Restoration Hardware relevant. Restoration Hardware repositioned itself as a retailer of luxury home furnishings. Restoration Hardware’s sofas, chairs, tables, bureaus and other products are largely modern updates of classical designs. Its target market: households with incomes above $200,000 or “aspirational” customers trading up from department stores and other retailers.
The company struggled when the housing bubble burst in 2008. The company was forced to restructure, close stores and went private in 2008. The company lost money from 2008 to 2011. The company went public again in 2012.
This year it announced plans to transform itself from a high-end brand in home furnishings to a luxury lifestyle brand. The brand has evolved to become RH, which is positioned to curate a lifestyle beyond the four walls of home.
Not only is the company branching into “curated” collections of contemporary art, antiques and kitchen ware, it also plans to launch RH Atelier, a luxury brand of apparel, accessories, footwear and jewelry. Key to Restoration Hardware’s ongoing transformation will be the opening of much larger stores called Design Galleries to better showcase all of its products.
Five full-line Design Galleries have opened since 2011 in Los Angeles, Houston, Scottsdale, Ariz., and most recently Boston and Indianapolis. With an average of 21,600 square feet of selling space, they are about three times the size of the company’s legacy stores, not to mention more productive.
The Boston outlet is the largest at 40,000 square feet. Besides displaying new product categories such as tabletop goods and “objects of curiosity,” the four-story historic building features a wine bar, beer pub, billiard lounge, library, club rooms and conservatory.
One strong point is the brand’s positioning. It’s above mass-market players such as Crate & Barrel, Williams Sonoma and Pottery Barn, but below top-end designer showrooms used by decorators.
The jury is still out whether the company can make a go of all of its ambitious undertakings. However recent results have been very positive. In the last quarter same store sales increased 26% and earnings jumped 48%. Its stock price has more than doubled since its IPO last year.
Have you shopped at a Restoration Hardware Store?