Now, the company is trying to reach an even wider audience — and capture even more of shoppers’ dollars — by launching a new “mirror image” brand that has the same price point but a different vibe. It aims to stick with a strategy that largely focuses on bricks-and-mortar stores, unusual in an era when many retailers are pushing to boost their digital presences.
For Ikea fanatics, Restoration Hardware’s latest quarterly earnings report may be a bit of a shock: Revenue rose 15 percent and profit soared by a staggering 38 percent, the company reported last week. Over the past five years, its annual comparable sales — a measure that includes online sales and sales at stores open for more than a year — have averaged 25 percent growth.
Restoration Hardware typically has taken its design inspiration from the distant past. Its most recent catalogue, for example, showcases a sunburst mirror that, a product description says, evokes the “ornate splendor of a 17th-century Spanish colonial reliquary.” But the new concept is dubbed RH Modern, and it will be exactly what it sounds like. In a 21-minute video announcing the launch, the company showed off a lineup of contemporary items such as a shaggy chaise lounge, an eight-legged “spider table” and a coffee table that resembles a Tetris piece.
In some cities, such as Los Angeles, RH Modern will have free-standing stores. In other places, such as New York, Denver, Tampa and Austin, the concept will occupy one floor of the existing Restoration Hardware store.
The company will roll out the new brand this fall, with a dedicated Web site, the first physical store openings, and yes, its own 300-page catalogue that probably will be so hulking that you’ll have trouble hauling it from your mailbox to your front door.
Restoration Hardware chief executive Gary Friedman laid out the case for RH Modern this way: Consumer product design today has a decidedly modern feel, thanks to Apple and its many imitators. Millennials are moving into their prime home-buying years, and they are accustomed to the modern aesthetic that has defined their gadgets and their often tech-centric workplaces.
And then there’s the parents of those millennials: “My generation, the baby boomers, who have the greatest amount of disposable income, want anything but to grow old,” Friedman said.
Apparently, RH thinks it will find the aging antidote in hip furniture.
But if all of those trends are indeed reaching a confluence, might RH Modern simply cannibalize Restoration Hardware’s existing business?
Anthony Chukumba, a retail analyst with BB&T Capital Markets, doesn’t think so.
“The one concern I’ve heard is that Restoration Hardware has one look, that retro-classic look. So this, to me, expands the aesthetic,” Chukumba said.
If you haven’t set foot in a Restoration Hardware lately, the stores may look a lot different than you remember. A decade ago, the retailer’s relatively small shops could be found nestled in suburban malls next to the J. Crew and the Talbots, hawking a mix of furniture and tchotchkes that were roughly in the same price range as Pottery Barn or Crate & Barrel.
But the brand has repositioned itself in recent years, offering higher prices and a more antique-inspired aesthetic that it hoped would differentiate it from rivals.
Lest you had any doubt they aren’t exactly going hard after a middle-class consumer anymore, Friedman told investors last week that part of his strategy for deepening relationships with customers is “thinking about second and third homes and how we play into that life cycle and how we capture that share.”
The luxe branding has drawn some eye rolls, including in the form of a widely shared Web parody of its children’s furnishings, in which a blogger added snarky captions to real photos of impossibly tasteful bedrooms from the chain’s catalogue. (One caption under a photo of two cute kids having a slumber party read: “Isn’t it quaint pretending we’re poor and sleeping on the floor, even though you have four beds in your room?”)
Still, the move upscale has been successful for the company: Its stock is up 19 percent in the past year and 209 percent over five years.
The addition of RH Modern isn’t the only major change that Restoration Hardware is undertaking: It is also in the process of revamping its fleet of stores, moving them out of the regional shopping malls that Friedman recently called “archaic windowless boxes lacking any sense of humanity.”
Instead, the company is building sprawling outposts in high-design, standalone buildings. Its forthcoming Denver store, for example, will have four stories and feature 112 sets of French doors and “garden courtyards with trickling fountains,” Friedman promises.
It may sound a bit over-the-top, but the company says it will pay off. With six to eight times the selling spaces of its existing stores, the company expects these bigger outposts to generate two to four times as much revenue.
At a time when many retailers are slowing store growth and instead focusing on increasing their digital presences, this is something of an unusual strategy. But Restoration Hardware says the furniture business isn’t quite like selling a tablet or laundry detergent, for instance. It believes the customer wants to touch and feel the products before buying them, and bigger stores give it more chances to let shoppers do that.