Restoration Hardware CEO Gary Friedman believes RH Modern, a new business set to launch this fall, will boost brand loyalty and support the company’s innovative, out-of-the-box thinking.
During Thursday’s first-quarter earnings conference call, Friedman explained to investors during a 21-minute presentation the company’s plans for RH Modern and goal of increasing revenue from $1.9 billion last year to $4 billion or $5 billion.
RH Modern’s “next-generation design galleries” will open in some major cities this year. Typically, these stores will be six to eight times larger than a regular Restoration Hardware location. In addition to the existing flagships in Atlanta, Boston, Greenwich, CT, and West Hollywood, CA, plans call to open four more in Denver, Chicago, Austin, and Tampa by the end of the year.
“We expect this to really open up the aperture of the brand to attract a lot of new customers,” Friedman said, according to Seeking Alpha. “And in many ways, we expect RH Modern to create kind of a new business in general, right. When we look at the Modern market today, we feel these trends that are … are going to set up the opportunity to make a market. If you were shopping for modern home today and you had to go out into the marketplace and you just built a new home or you bought a home or you remodeled your home in a modern aesthetic you had to say, you woke up in the morning and say, I need Modern furniture and home furnishings, where do I go? My sense is that you really draw a blank, right. It’s an even more fragmented market than the one that the core RH interiors business has been competing against. Because there is no one that has dominant assortments in any of the categories and then has multiple categories and integrates those categories into a lifestyle point of view.”
The company plans to mail a 300-plus page RH Modern catalog in the fall.
“And I think when you see that and you see if you see the store or any of the floors, you are going to see an entirely new visit,” Friedman said. “And as we look at these big trends and architecture or how the millennials live, the aging boomers want to stay youthful and the impact from the antique markets and the reproduction markets, which were influenced quite frankly by the estate sales and generations that passed, right, all these things coming together at one time, I believe create an opportunity to create a market. But if all those things happened and no one provided a complete shopping experience, the market could be smaller. I think with the combination of all the trends and what we are doing and what we are launching is going to create a whole new market.”
Friedman said that for many wealthy and affluent customers they own more than one home.
“So thinking about second and third homes and how we play in that lifecycle and how we capture that share is really key,” he explained. “The services that deepen the relationship and create an ongoing repeat customer, whether it is again another event like they’ve bought a second home or when they moved, the deeper relationship is built around a lot of ways. One is with the general service we gave them and experience they have and that’s affected by the new Galleries. Three years from now if somebody decides to move or remodel their home, I think they are going to think completely differently about us than they do today. And just as they think completely different about us in any market where we’ve done one of these new bigger galleries. So, we think that’s highly important thing than things like interior design services. And the investment we are making their and the different level of service and what you are going to see evolve.”