In an era of retail pop-ups and massive downsizings, RH, formerly known as Restoration Hardware, creates palaces.
Call it counterintuitive, a renegade strategy, or better yet, taking “the road less traveled” as Gary Friedman, the chairman and chief executive officer of RH says, referencing Robert Frost.
It’s Friday, opening day for the six-level, 90,000-square-foot RH Gallery, at 9 Ninth Avenue in Manhattan’s Meatpacking District, and Friedman is seated in the outdoor section of the rooftop restaurant with views downtown to the Freedom Tower.
It’s one of Manhattan’s biggest retail openings in a long time, a seminal project for RH, and it’s apparently taken a toll on Friedman, who is under the weather and running on NyQuil and cough drops. Yet he’s effusive, explaining the RH Gallery “experience,” how hospitality has become central to it, that he sees Earth as a planet of neutrals and little color, and how New York’s new RH Gallery — the largest in the chain of 85 in North America — advances the format. “It’s the bridge,” Friedman said. “A global calling card,” meaning a prelude to international expansion.
“We have said that we are looking internationally and that we want to get there. It’s a huge step, but this needed to come first. If we didn’t have an RH Gallery in New York, they really wouldn’t know in Europe who we are. New York from Europe is by far the most traveled city. It’s not even close. We have been looking [overseas] for awhile. We have three compelling spots. I think London is the right bridge to New York, and then Paris and Madrid.”
It’s just hours away from his flight to Europe to check out real estate, and Friedman, looking casually chic in a Brunello Cucinelli denim jacket over a Double RL white T-shirt, gives the impression that an announcement on the first overseas site is close. Sometimes, in securing real estate, “You have to be opportunistic. Now we have an opportunity in London. That is my top priority.”
RH Gallery spaces transcend traditional retail settings by putting a premium on food and beverage, comfort, design and style, and creating dazzling, chandeliered interiors that exude luxury. The merchandise — furniture, fabrics, window treatments, lighting, rugs, beds, bed and bath linens and hardware — ranges in style from traditional to modern along with transitional styles, and bears a decidedly neutral color palette. Interior and exterior design services are offered, pieces can be customized with different fabrics and sizes, and the pricing scheme deviates from the industry’s incessant promoting by encouraging memberships that offer discounts.
The Meatpacking site, a contemporary steel-and-glass structure, rises five floors through the original historic landmarked building with a brick facade. It was owned in the late 19th century by John Jacob Astor, who died on the Titanic.
Inside, there’s a soaring central atrium, stacked cast-iron columns, a striking glass elevator, a barista bar and a rooftop restaurant that opens onto a landscaped park and wine terrace. The site, designed by Jim Gillam of the firm Backen, Gillam and Kroeger, elevates the RH Gallery concept by not only being the largest location, but the first with an RH interior design firm, private design presentation rooms and a restaurant with indoor and outdoor seating. The first RH Guesthouse hotel will be nearby.
On the Gallery’s main floor, core items, like the Maddox sofa in vintage velvet with bolster armrests as well as the lacquered finished bamboo tables and armoires, are set alongside Greco-Roman statues and Kate Schermerhorn landscape photography.
Above a grand two-sided staircase, there’s a dramatic installation, “New York Night” by Allison Berger, with 120 handblown crystal pendants that dangle like teardrops at different heights starting from the ceiling 90 feet above.
There’s also an RH Design Atelier where clients, designers and architects can reimagine interiors; the outdoors is brought indoors with topiaries and fountains gracing level four for outdoor collections, and there’s an outdoor design atelier with performance rugs, textiles and furniture finishes. The lower level houses the baby, child and teen collections.
Friedman said his company spent $50 million on the project and it was seven years in the making. “The developer spent more than we spent. The developer built the core structure. We leased it. Our rent starts at $8.5 million and our lease monetizes the investment.”
For the neighborhood and its concentration of smaller specialty stores, the RH Gallery feels formidable. Is bigger better? “Not necessarily. It’s what’s appropriate,” Friedman said. “This galley is sized appropriately to the market.”
But bigger can be better. “We know when we take a legacy store, 6,000 to 7,000 square feet of selling in a mall — and we [re-create] that into a design gallery from 40,000 to 50,000 square feet, we can double the retail sales in the market and more than double the profitability.”
It really boils down to two things: “To create a deeper connection and experience,” Friedman said. “We have always tried to blur the lines between residential and retail and create spaces that are more ‘home’ than ‘store.'” And with the addition of restaurants and baristas, “The next logical step was to further blur lines between home and hospitality. The idea is if you are going to have somebody in your home, you are going to be hospitable. You’re going to offer them something to drink, to eat and then they generally stay longer and you can develop a deeper relationship with them, and that’s really how we think about the hospitality.”
Friedman said people shop for furniture once every five to 20 years, generally. He wants people showing up much more frequently. “The hospitality component, the restaurants, the barista bars, the wine bars, give people a reason to come here. They see the inside of a Gallery, walk past some beautiful things and get inspired about redoing the living room, or hanging that chandelier over a dining table. Otherwise, they don’t really get a chance to be inspired unless they were looking through a magazine or went into a hotel.”
Three years ago, RH opened its first restaurant in its Chicago Gallery. “It was such a success so we conceptualized putting a restaurant on the roof here and we added an addition for a kitchen that was actually a park,” he said.
At RH’s investor day the week of the Meatpacking opening, someone questioned why Friedman didn’t just lease out the top floor and roof to a restaurant operator. “I said it wouldn’t be a reflection of our brand and our values. This is all about controlling the conversation and the experience to the customer and rendering the RH brand more valuable.”
RH Hospitality, the division that runs the food and beverage operations, is profitable, Friedman said. “I never thought it was going to run profitably. My goal was always just to augment the experience and drive more traffic into a Gallery.…If you think about beautiful high-quality food that you can eat every day in a magnificent environment, it really doesn’t exist,” except at RH Gallery, to Friedman’s way of thinking. “It’s a unique experience that we find really works. We thought the Chicago restaurant would maybe do $1 million. It’s doing $6 million.”
Friedman said the RH team travels the world looking for great experiences. “It could be anything, like Scorpios in Mykonos, a beach club that redefined how the world thought of a beach club. I took the whole team there two years ago to see how to redefine something. They created a global conversation. The whole ethos of the food and music is so beautifully integrated.”
On the same trip, Friedman took the team to a store in Ibiza called Sluiz, which he discovered while vacationing with his girlfriend and her family. “We are driving along and the driver, Santi, says there’s a very famous store that people from all over the world come to see. So we’re in the countryside, but then I see these cows on the hillside, and as I get closer, I notice they’re turquoise and white. They’re not real cows. Then I see this big turquoise banner that says, ‘Hermès, Prada, Louis Vuitton, Gucci…and at the end, it says, ‘We don’t sell.’ Then it says, ‘London, Paris, Tokyo, Beverly Hills — No!’ We pulled up a little gravel road to a parking lot and it was a series of buildings, an old farm. This couple from Amsterdam created this store that integrates home, apparel, food and housewares in the most creative presentation I had seen in a long time. I spent two hours just looking and observing, typing notes to my team — someone took a farm in the middle of Ibiza and created a store that created a global conversation. Beautifully done. I had to just study it and take it in.
“We are always interested in where are things going. It’s never really about where it’s at now. It’s trying to figure out what’s next and looking for those clues and dots to connect.”
Friedman, who got booted out of junior college his first year and started his career as a stock boy at the Gap, believes the last two decades were bad ones for retail. He calls it, “the lost generation of retail,” believing that “so many retailers spent all their resources trying to shift their businesses online. Everybody thought the online business was more profitable. It’s not. Now everybody is starting to realize it. They forget that we are physical beings, social creatures. If we weren’t, people wouldn’t go to the movies anymore. I’d rather see a movie with a bunch of strangers and kind of feel I can share an experience with everybody even if I don’t talk to anybody.”
Not that web sites don’t count.
About 45 percent of RH’s total volume, or $1 billion in sales, is online, though the physical experience helps fuel it. Retailers should have spent “reasonable amounts of capital to create web sites and then put capital into reimagining their retail spaces,” Friedman said. “We all want to know what’s new. We all want to be inspired. So many people let physical retailing rot.
“But we are opening these big galleries and more than doubling our retail sales. It’s funny: People don’t study what we do. Don’t be afraid to take the road less traveled because that is where you are going to learn the most. If you ask most people in business why they do what they do, the answer is, ‘it’s the way we have always done it.'”
Next year, the company will bring color to the palette, which has been neutral to the nth degree.
“You didn’t seen any blues. You didn’t see any yellows, right? We are neutral-based. That’s because it’s the biggest part of the market. If you walked into a hundred homes, 80 to 85 percent of them would be neutral-based. Color creates complexity. It can easily throw off the structure and balance [RH Gallery layouts and merchandising underscore symmetry and balance] — and the reason why we believe neutrals do so well is because for the most part, we are all neutral. Every human is some shade of neutral color, from light to dark. We are comfortable seeing that. Where do you see color in nature? Some flowers, something blooming, something growing, an apple. If you look at the earth, it’s neutrals or green. The oceans aren’t really blue. The water is clear. It’s reflecting the sky.” At RH, “We try to reflect the color structure that is of the earth and the majority of humanity.”
Still, come next spring, “We are going to do color in a very structural, architectural way, with the same kind of rigidity and principles you see here,” Friedman said, noting that RH Color will launch with its own source book and occupy a middle of a floor to demonstrate how pieces can be colorized. “Over time, RH Color can add 20 to 30 percent more volume — but we have to do it our way.”