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Restoration Hardware has always been a fun and inspirational place in which to shop. It’s filled with wonderful stuff that you don’t really need—such as Russian submarine clocks—but its vast and unique assortments are necessary for creating an exceptional customer journey, known to its shoppers.

In recent years, we have seen many furniture and other larger-format stores downsize or modify their strategy to reduce their footprint. Often these retailers will open up smaller or “urban store” formats in an effort to counteract raising rents and appeal to changing consumer tastes, especially in city centres. Take Swedish retailer Ikea for example, who announced at the end of last year that they plan to open up to 10 smaller outlets across Canada in 2015, which will be one-tenth of the size of current stores and serve primarily as pick-up locations for e-commerce customers. Other well-known retailers have taken a similar approach. Walmart continues to open locations for its chain of “Neighborhood Market” stores across the United States. Whole Foods recently announced that it plans to open a smaller chain of stores to be named “365 by Whole Foods Market.”

On the contrary, Restoration Hardware’s expansion plan consists of building bigger, not smaller, stores. We recently visited one of Restoration Hardware’s “gallery concept” stores in the City Creek Centre, Salt Lake City, Utah. Their design gallery concept store is huge—yes, huge! There is just room after room after room of luxurious furniture and accessories (see pictures below). And, even more impressive, sales associates confirmed that sales are up over 20%! The company also reported a 15% increase in revenues for the first quarter of 2015.

So, how is Restoration Hardware able to pull this off?

  • A solid strategy that focuses on experiential retailing and resonates well with their target customer in the luxury segment, from décor to quality products to customer service. Like other luxury retailers, this allows for higher margins.
  • A great deal of items are at popular or affordable prices, especially for on-the-spot purchases, both in-store and online. These items appeal to a broader market, which means more sales!
  • They have heavily invested in their catalog and online businesses. In the last fiscal year (2014), 50% of total sales came from these two channels. They use these massive “design galleries” as showrooms for their products.
  • A continued emphasis on innovation. Last week, they announced a new concept, RH modern, which will include more modern and minimalistic offers compared to classic collections.

Restoration Hardware proves that you can achieve exceptional sales growth by defying the status quo.

Restoration Hardware, City Creek Center (Salt Lake City, Utah)

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Written by: John Williams, Senior Partner, Strategy and New Concepts at J.C. Williams Group

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