RH’s new location is a ‘luxury compound’

Discussion
Photo: RH
Dec 17, 2018
Matthew Stern

RH (formerly Restoration Hardware), in its pursuit of the luxury customer, has built an experiential one-off location in Napa Valley, a popular luxury destination, that’s so big they’re calling it not a flagship, but a “compound.”

RH Yountville is made up of five buildings in an idyllic setting, with garden courtyards tying together such offerings as a two-story wine vault, boutique design galleries and outdoor areas for wine tastings decorated with antique artifacts. One of the centerpieces of the luxury complex is an indoor-outdoor restaurant with a glass roof, chandeliers and seven-foot-tall fountains.

Such a high-end concept in a global destination demonstrates the chain’s focus on exclusivity — a strategy that seems to be working for RH. The company has experienced a rebound over the past two years as it has launched a couple of upscale-targeted initiatives.

RH successfully rolled out a membership program which, for $100 per year, offers significant discounts as well as services like interior design consultations and concierge order management. The chain also launched its high-end hospitality brand, RH Hospitality. Upscale Instagrammers have demonstrated that they’re big fans of the rebranded RH, making the Chicago location the seventh most Instagrammed café in the U.S. in 2017.

RH's new location is a ‘luxury compound’
Photo: RH

The RH Yountville location isn’t the only opulent experiential location the chain has recently opened. In September, RH opened a glitzy six-story location in Manhattan’s meatpacking district, as reported in Architectural Digest. But an appearance in Napa Valley raises the prospect that the chain might be planning similar moves in other areas heavily trafficked by wealthy vacationers.  

Other luxury retailers have likewise been working to create unique experiential flagships that appeal to today’s luxury shoppers.  

Bergdorf Goodman, for instance, undertook a revamp of its 5th Avenue flagship store with an aesthetic that the company geared specifically to luxury Instagrammers, according to Fast Company. Barneys took a similar tack with a visually striking spiral staircase in its Chelsea location.

And Tiffany’s is planning a similar full overhaul of its flagship, building on the success of its Instagram-friendly Blue Box Café, which opened in the fall of 2017.  

DISCUSSION QUESTIONS:  Is such a “luxury flagship compound” as the RH Yountville location in Napa Valley a worthwhile investment for RH? Which luxury or other home furnishing retailers might benefit from opening these types of experiential one-off locations and what destinations would make good places for them to leverage?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The opportunities for cross-branding are endless ... catering by French Laundry? RH has come a long way from selling drawer pulls."
"The theater of shopping lives within RH."
"Rather than taking baby steps toward higher-end experiential retail and hoping customers notice, RH is going all in and really doing it right."

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20 Comments on "RH’s new location is a ‘luxury compound’"


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Cathy Hotka
BrainTrust

Here’s another prime example of moving beyond product into experience. Well-heeled residential and corporate customers can enjoy an immersive and aspirational day here. The opportunities for cross-branding are endless … catering by French Laundry? RH has come a long way from selling drawer pulls.

Ryan Mathews
BrainTrust

Well as with any of these prototype units you have to wait and see what actually happens as opposed to what pundits believe will happen, but given the success of RH’s other upscale efforts it looks — at least at first blush — to be a natural. I suppose one could make an argument for lots of other brands adopting a similar approach and the possible location list would look like a compendium of the elite’s playgrounds. BUT the elite don’t want to party and relax in a freestyle “mall” of elite retailers. Napa wouldn’t have quite the same appeal if every upscale retailer in America ran in and built their own compound — not to mention what it would cost them to “buy in” or complications getting building permits through hostile zoning boards.

Art Suriano
BrainTrust

A luxury compound of this nature is a bit risky and hard to know long-term if it will be successful. There is a curiosity at first which will attract customers because customers are always looking for what’s new and different. In this case the RH luxury compound has a lot to offer, but will those customers be returning? That has yet to be determined. Depending on costs and the value the customers feel they’re getting for their investment is essential along with what the next big thing will be. So I would caution RH from investing into any other new ventures until they know for sure their luxury compound will be a winner long-term.

Ian Percy
BrainTrust

It’s not that this isn’t a great idea for RH. Your phrase “at first” is the key. This could be a “Best Before” caution that RH should pay attention to. Well said Art.

Anne Howe
BrainTrust

The RH locations are spectacular experiences, and I’ll be sure to visit the Napa Valley compound next June when I’m there for a wedding! My only hope is that they have a very robust watering system to stave off the next set of fires!

Min-Jee Hwang
BrainTrust

This is a good idea for RH, as it appeals directly to their target audience and gives them another way to market their products outside of online catalogs. It certainly creates brand buzz and gets the headlines. Other retailers that could create something similar would be Williams-Sonoma and any company that has a seasonal or holiday focus, as these experiential locations perform well during critical buying periods.

Carol Spieckerman
BrainTrust

I love what Gary Friedman is doing at RH. Rather than taking baby steps toward higher-end experiential retail and hoping customers notice, RH is going all in and really doing it right. Furniture and furnishings are an infrequent purchase. Framing RH’s concepts with a high-end, residential vibe and incorporating wining, dining and helpful services promises to change that. RH certainly is taking brick-and-mortar by the horns.

Brandon Rael
BrainTrust

Experiential retail and Instagrammable moments simply do not happen on their own. RH and other luxury, lifestyle, beauty, fitness fashion and even mid-level retailers are making significant investments and strides in transforming the retail space into a shopping journey. RH has become the leading experiential brand in the home furnishings space and has aspirationally driven the brand to a higher luxury status.

Essentially, we are seeing that the physical space is being leveraged as a place to connect with the brand beyond the products and transactions. More often than not, the new retail showroom/experiential center is becoming a more accurate reflection of the theater of our lives. The blending of the art and science has always been a fundamental part of retail, and now the shift to an experiential curated model only cements this fact. This evolution is a welcome development and proves that physical retail is as relevant and meaningful as ever.

Bob Amster
BrainTrust

When Ralph Lauren wanted to showcase his lifestyle, he opened THE flagship store in the Rhinelander mansion on 72nd Street and Madison Avenue in New York (just blocks away from his biggest customer; Bloomingdale’s). The store exceeded its budgeted cost by at least twofold and its budgeted sales threefold. It is entirely probable that RH can do the same with this true flagship.

David Weinand
BrainTrust

The Manhattan Store is a true experience in an urban environment and it looks like RH has matched the aesthetic for the Napa locale. So kudos for them for adapting to their environment. To be able to offer add on services like celebrity designers as speakers, workshops, wine and cheese events will all go a long way to help cement the brand into their upscale target customer’s psyche.

Ian Percy
BrainTrust
Well the medium is still the message so in that regard at least, this is a congruent move on RH’s part. But a couple of things seem iffy to me. First, are Instagram references really a reliable measure of success? To me it’s still along the lines of the daily requests I get from people I’ve never heard of to “Like” their Facebook page as if that would be a measure of value. Second, I take it the idea is to put such opulent destinations in locations “heavily trafficked by wealthy vacationers.” I had no idea that’s what wealthy vacationers love to do. Going to a spiffy cafe is one thing, going there to look at really expensive doorknobs and Belgian rugs while on vacation is another. It’s not that the wealthy have nothing else to do. That’s why my vote today was for this being primarily PR. Third, “opulence” on its own is a strange energy. There is no end game; there being unimaginable levels of opulence, luxury and exclusiveness. Mind you, I do… Read more »
Gene Detroyer
BrainTrust

I am not a RH fan. I find their associates lacking, their customer service unacceptable and I get annoyed by the ridiculous catalog they send that never makes it past the recycle bin. But the “compound” is impressive and I certainly think this is part of the future of retailing. We will see more and more of these types of developments.

Ken Morris
BrainTrust

It is all about the experience and the emotions felt during the experience directly transfer to the brand perception and image. Consumers love the theater of shopping and retailers recognize that the experience is often more important than the products they sell. RH’s luxury flagship compound is a destination that will attract thousands of visitors (shoppers) and will elevate the brand image.

This luxury destination concept can work for most luxury brands and I am sure we will see a lot more of these pop up in the next few years. The key for RH is the exclusivity, the designer experience, the soft sell and the quality — Palm Beach, The Hamptons, and La Jolla are just a few state-side locales that might work. The theater of shopping lives within RH.

Ian Percy
BrainTrust

Points well made, Ken and you hit on something I don’t think has been mentioned elswhere in this discussion. You said, “the experience is often more important than the products they sell.” That is often the kiss of death, especially in the luxury category. I suggest by far the vast majority of visitors to this RH experience are just that — visitors — and have no intention of being shoppers. Folks love to experience what the wealthy experience but that doesn’t equal sales. There’s an $8 million home not far from me that has an “open house” every day. It is so amazing I love taking visitors there. The developers haven’t exactly seen a surge in sales due to my visits.

Doug Garnett
BrainTrust

There’s no question it’s a good investment. First, it’s experiential retail the way it should be: displaying product in a world that’s attractive, interesting, and good shopping for consumers. Second, the flagship experience addition to the brand will help the remaining stores – even if they don’t have the full experience. It makes this experience part of the brand.

That said, I will complain about “RH.” We have seen an incredible number of very poor “re-brands” and new logos over the past few years. Where iconic, clear, memorable, and valuable names are jettisoned for dull, unmemorable letters (like RH or boring visuals like Burberry).

As Byron Sharp observes, brands must maintain distinctive brand assets — they’re the only way consumers use the brand. So I’ll give RH tremendous kudos for these stores and very poor grades for the new name.

Casey Golden
Guest
The irrational connection between a brand and consumers is every luxury brand’s goal. The industry works by creating desire for the brand affiliation as much as the product. Allowing an aspirational and loyal consumer the opportunity to feel the brand is always worth the investment, so long as the objective is achieved. Gary Friedman is on the right track, however he is not the first and with any hope he will not be the last. RH is making these social locations to engage with the brand a permanent lifestyle destination vs. a pop-up shop and it resonates well with today’s “accessible luxury” initiatives. Armani has hotels, Ralph Lauren has restaurants, Gucci opened a cafe, and Roberto Cavalli owns several. RH is creating a brand culture that is more than a physical product and should perform better than a Facebook ad or Google Adwords because people want someplace to go other than a traditional department store or Starbucks. It’s a long play strategy that is more expensive but it has the chance to reap unprecedented returns… Read more »
Camille P. Schuster, PhD.
BrainTrust

The integration of RH with the setting that attracts people to Napa is a big part of the appeal. Adding wine tasting and a wine bar in a setting featuring RH products makes it work. Not every luxury retailer could create the right ambiance with their products. Creativity of concept and integration with the location and reason for travelers to be there is necessary for success. Exclusivity is also important. As Ryan says a ”mall” of luxury stores is not likely to be successful.

Cynthia Holcomb
BrainTrust

Modern sleek meets ornamental. A fabulous vision into the current world of look-alike home improvement and home furnishing offerings, all variations on the same theme. Upscale vacationer or current consumers are tired of variations of the same “look” at every retailer. RH is carefully testing how much to move the needle to the new modern, sleek ornamental vision of home furnishings and in turn, home finishes.

Smart move. Merely opening experiential one-off locations does not make a success for any retailer. RH is carefully morphing a new consumer “taste” profile into a fresh approach versus the current redundancy across the home furnishing category. Excellent move, grounded in RH quality built products.

Cate Trotter
BrainTrust

This is certainly an impressive concept. I think RH is really reinventing our perception of buying furniture and home furnishings. Its spaces are becoming somewhere to go and to be inspired and to hang out. It’s not what you’d do with most other retailers in that field.

I also like the fact that they’re doing different things with each of their spaces. RH is putting its money where its mouth is when it comes to experiential retail, while so many others just talk the talk. Yes there’s a cost involved, but when you’re giving people so many reasons to visit there’s a good chance that it’ll pay off.

Craig Sundstrom
Guest

Without knowing the cost, it’s difficult to decide whether it’s worthwhile or not, but it sounds like — at worst — these are permanent structures that can always be sold or repurposed if RH decides they aren’t working out … however they might measure that. So a low-risk idea.

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Braintrust
"The opportunities for cross-branding are endless ... catering by French Laundry? RH has come a long way from selling drawer pulls."
"The theater of shopping lives within RH."
"Rather than taking baby steps toward higher-end experiential retail and hoping customers notice, RH is going all in and really doing it right."

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