RH Expands Upscale Brand as Demand for Home Furnishings Tumbles
The market for home furnishings is “likely getting worse before it gets better.”
So said RH Chairman and CEO Gary Friedman Wednesday (March 29) during the luxury home furnishings company’s quarterly earnings call.
Persistent inflation, record-high interest rates, an underperforming stock market, an unexpected banking crisis and a 45% year-on-year drop in luxury home sales have taken a toll on demand for home furnishings, Friedman said during the call.
Those pressures come at a time when the market for home-related businesses had already plunged from the highs seen during the pandemic to a slowdown that led most home furnishings retailers to return to discounting their products, Friedman said.
“It’s times like these that businesses tend to move in herds, pursuing broadly adopted short-term plans that lead to mostly similar outcomes,” Friedman said. “It’s also times like these that present opportunities to pursue long-term strategies that result in strategic separation and significant value creation for those teams willing to take the road less traveled and pursue their own unique path.”
For RH, that means continuing to move upscale, elevating its products, expanding its platform and aiming to become a fully integrated luxury home brand, Friedman said.
In pursuing this strategy, the company will roll out more new products than ever before this spring and summer and is expanding the brand to new markets both in the United States and globally — focusing on those in which “the wealthy and affluent live, visit and vacation,” Friedman said.
It is also building an ecosystem that includes products, services, a content platform, fully furnished luxury homes, and travel and hospitality experiences.
“These immersive experiences expose new and existing customers to our evolving authority in architecture, interior design and landscape architecture,” Friedman said. “This leads to our long-term strategy of building the world’s first consumer-facing architecture, interior design and landscape architecture services platform inside our galleries, elevating the RH brand and amplifying our core business by adding new revenue streams while disrupting and redefining multiple industries.”
These moves come at a time when luxury brands in other categories have reported no slowdown in product sales. For example, Hermès said Feb. 17 that it had a “particularly robust” 2022.