Restoration Hardware Changes Mix, Raises Prices to Stand Out
Restoration Hardware management is a) crazy like a fox or b) just plain crazy.
The upscale home furnishings chain has decided it wants to differentiate from the competition and to do that, it is taking prices up between 20 and 30 percent on average.
Ian Sears, chief marketing officer for Restoration Hardware, told AdAge.com that the chain’s initial decision to aggressively price promote as the economy turned down was a mistake.
"When that happens, and you end up discounting as much as we did and as much as our competition did, you, over time, begin to create some level of devaluing your products," Mr. Sears said. "Everyone is talking about value. It’s a code word for, ‘I’m making cheaper products.’ … In our mind, it necessitated some level of change in our product mix."
This past spring, Restoration Hardware began to tinker by adding higher quality and priced goods to its store mix. The success of its test gave management the proof it needed to take a more upscale approach and revamp the products it sells and the presentation in stores and its catalogs.
In the company’s fall catalog, CEO Gary Friedman wrote, "While many in our industry are focused on reducing quality in an effort to lower prices, we’ve set our sights in the opposite direction, pursuing an even higher level of craftsmanship and design."
Discussion Question: Has Restoration Hardware made the right choice upgrading its product mix and raising prices?