Will RH Contemporary help Gary Friedman climb the mountain of luxury? Time will tell us.


During HR
During the December 2020 third quarter earnings call, Gary Friedman announced the launch of the RH Contemporary collection, originally slated for a late spring 2021 arrival. Described as a collection that “bridges the gap between RH Interiors and RH Modern,” he promised it would elevate the brand and expand its market.

However, throughout 2021, Friedman held back on the collection, deciding that it was not yet ready for prime time. And with each subsequent earnings call, he became increasingly hyperbolic about the quality of the collection and what it would mean for the company.

Claiming it as “the most compelling and potentially disruptive product introduction in our history”, Friedman just announced that the long wait is over at the last first quarter 2022 results call.

Now the collection is available to everyone with the release of its 300+ page Contemporary HR Catalog on the website. Introducing the collection, Friedman wrote, “We do what we love with people we love for people who love what we do,” and called RH the “Love-Style Brand.”

RH Contemporary represents the culmination of its global vision of taste at scale for lovers of the RH brand – “Our goal [is] position HR as the arbiter of taste for the home” through an HR “Ecosystem of Products, Places, Services and Experiences”.

Friedman rightly observed, “There are those with taste and lack of scale, and those with scale and lack of taste”, but he does not address the biggest problem. How does he intend to change HR tastes as the brand rises into the upper echelons of luxury? And the even more important question is whether RH Contemporary is the vehicle to do this?

Not believing I had the appropriate level of taste to pass judgment on the RH Contemporary range, I contacted Tom Mirabile, who certainly does. He is the founder of Springboard Futures, a consulting firm specializing in the furniture industry. He has spent over 30 years navigating the domestic market.

On the plus side, he praised mixed material selections that speak the language of luxury, such as travertine marble tables, wool and silk rugs and the choice of exclusive Holland & Sherry wool construction for all upholstery.

And he felt that the contemporary side of the collection reached the high point of today’s furniture market. “Modern and contemporary are the most popular styles right now, according to the International Furnishings and Design Association survey. So with those two, you cover about a third of the market,” he explained.

These features aside, his expert assessment was not so positive. “It’s all monochromatic monotone monotone,” referring to the burlap brown color used throughout the catalog. “Going from room to room in the catalog, I felt like I was inside a mushroom.” Maybe my stylistic sensibility is not as weak as I feared.

But we are only a sample of two. The real test will come when catalogs hit mailboxes and the collection appears in RH Galleries, now in San Francisco and later this month in New York.

As it rolls out across the country, approximately the first third of gallery space will be devoted to RH Contemporary. “That’s how confident we are in this product line,” Friedman said. He went on to explain that the company would begin to see an impact on revenue in the fourth quarter, ending in January 2023.

Comparing this collection to RH Modern, which was introduced in 2015 and is now a roughly $1 billion business, he said, “Contemporary will have a bigger impact on this company than Modern and not just from a from a design point of view, but from a quality point of view. point of view.”

Quality must be there for the consumers to whom the Contemporary collection is aimed – the Top 1% who earn more than $500,000 a year and represent only 1.5 million of approximately 130 million American households.

“Minimalist styles, especially contemporary ones, are far less forgiving than more embellished designs. Every flaw is visible,” Mirabile said. any kind.”

In terms of quality and service, RH has its work cut out for it. Of nearly 100 complaints filed with the Better Business Bureauit only scores 1.17 on a five-point scale.

According to Consumer.guru, its Net promoter score (NPS), which measures customer loyalty and the likelihood of returning for a repeat purchase, is only -9, like IKEA. In comparison, Louis Vuitton gets 40 and Gucci 45.

In terms of price, RH Contemporary is on average 35% higher than Modern, which was priced 50% higher than RH Interiors. The starting price for a contemporary sofa is under $10,000 and travertine coffee tables start at around $5,000, though paying members of its loyalty program ($175 per year) get a $175 discount. 25%, but delivery is extra.

Targeted high-end customers will not blink an eye on the price, although it can be said that the prices are not high enough. However, they can push back the cookie-cutter look of the pieces.

Scaling up taste to this level requires individual items to blend well with other styles so the customer can create their own personal look. For example, Chanel can mix with Hermès, Louis Vuitton with Lora Piana, and Levi’s jeans can go with all of these.

“People can love a brand, but when you see someone walking down the street in all Gucci or all Versace, it shows no originality. flexible style,” Mirabile explained. “RH talks about curation, but they curate for someone who wants their style out of the box.”

Describing the introduction of RH Contemporary as not just an evolution, but a game-changing transformation for the brand, Friedman said, “It’s almost a new venture within the company.”

This begs the question of all the clients who have grown up with RH over the years. Friedman has an answer. RH leaves them behind losing “less valuable market share as we continue to improve quality”.

He explained, “As we climb the mountain, we’re giving a hand to the people below us because we’re pushing this brand forward.”

Mirabile put it more bluntly: “Their existing customers are just the trash left on the mountain.”

Friedman acknowledges the potential dangers as he moves the mark through the thin mountain air, but perhaps the summit of luxury Mount Everest is still out of reach or not even worth the pain of the climb.

“If you lose about 70% of your current customers, who is going to talk about you? RH is entering the stratosphere, but it’s a very unknown environment that works in unknown ways,” Mirabile said. “The atmosphere at the top of the mountain is very different in terms of service, quality and customer expectations.”

“It’s not true when Gary said ‘Never before has a brand tried to climb to the top of the mountain.’ The truth is that many brands have tried, but no one has done it successfully and there should be a lesson to be learned from this,” he concluded.

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