Restoration Hardware, often referred to as RH, is an American home furnishings company that was founded in 1980. The company started as a hardware store that specialized in period architectural fixtures and other home hardware accessories. Over the years, RH has evolved into a luxury home furnishings retailer that offers high-end furniture, lighting, textiles, bathware, decor and outdoor products. The company has gone through many changes and challenges over its 40+ year history. Here we will explore what has happened to Restoration Hardware from its early days as a hardware store to its current status as a leading luxury home retailer.
The Early Days as a Hardware Store
Restoration Hardware was founded in 1980 by Stephen Gordon in Eureka, California. Gordon had a passion for antique fixtures and hardware. He opened the first Restoration Hardware store in Eureka as a place where people could purchase affordable antique doorknobs, hinges,fixtures and other architectural salvage for their homes. The timing aligned with a growing interest in renovating and restoring older homes. In the early days, Restoration Hardware focused on selling salvaged and antique hardware, plumbing fixtures, doors, windows and other home parts and accessories. The product mix gave home renovators access to unique vintage and antique pieces that added character to their homes.
By the late 1980s, Restoration Hardware was gaining popularity and started opening more store locations. While hardware remained an important part of the product offering, the company started to expand into some basic home furnishings like tables, chairs and lighting. By the 1990s, Restoration Hardware had grown to over 20 stores across the United States. The company went public in 1998 and continued its expansion efforts over the next decade, eventually reaching over 100 stores.
Pivoting to Luxury Home Furnishings
In the early 2000s, Restoration Hardware started to shift its focus towards more high-end home furnishings. This marked the beginning of RH’s transition from hardware store to luxury brand. Under the leadership of former CEO Gary Friedman, RH introduced more contemporary and upscale collections. The product mix started to include luxurious furniture, linens, lighting and decor. RH also began showcasing its products in elegantly designed retail store galleries, moving away from the cluttered warehouse store layout of the early days. The new positioning allowed RH to differentiate itself from other home furnishings retailers.
Over the next decade, RH continued to refine its brand strategy and offer even more premium home collections. Gary Friedman brought in world-renowned designers to develop exclusive product lines for RH. The company partnered with prominent names like Clodagh, Martyn Lawrence Bullard and Jonathan Adler. RH retail galleries were redesigned on a grander scale to mimic luxurious home settings. Spaces included furniture vignettes, coffee bars and rooftop restaurants. RH shifted to a membership model in 2016, requiring an annual fee for preferred pricing and services. This helped further cement its status as a luxury retailer.
Challenges and Controversies
Despite its efforts to go upmarket, RH faced some challenges in the late 2000s and 2010s. The 2008 recession hurt sales and resulted in store closings and layoffs. There were also controversies around RH’s product quality and marketing tactics during this time. Some critics felt the company’s products did not warrant luxury price points. There were complaints about damaged merchandise and poor quality control. Additionally, RH faced backlash regarding its oversized retail spaces and lavish catalogs being out of touch following the recession. The company persevered through these setbacks and continued elevating its brand image.
RH ran into further controversy in 2019 when it filed a lawsuit against business partner Gary Friedman. Friedman had been instrumental in RH’s reinvention during his time as CEO from 2001 to 2018. However, the company alleged that Friedman’s new role as CEO of RH competitor Friedman Living was a conflict of interest. The lawsuit accused Friedman of copying RH’s business strategies for his new venture. The legal battle highlighted Friedman’s vital contributions to RH’s success. The companies eventually settled out of court.
The Luxury Strategy Pays Off
Despite challenges, RH continued improving its product collections and brand experience throughout the 2010s. The focus on luxury and exclusivity helped differentiate RH in an increasingly crowded home retail market. By not chasing mainstream home trends, RH appealed to those seeking ultra-high-end fashion for the home. While still not inexpensive, RH price points were more accessible than pure designer offerings. The curated selections created an obtainable luxury experience compared to other high-end retailers.
RH also capitalized on the booming high-end real estate and remodeling market. Its products resonated with luxury home builders, designers and upscale homeowners updating grand estates. Partnering with influencers and publications like Architectural Digest providedvaluable exposure to these affluent demographics. RH galleries offered immersive shopping experiences that drove sales despite high price tags. The RH brand became associated with premium quality, exclusivity and fashionable taste.
The success of RH’s elevated positioning is evident in its recent financial results. RH hit record sales and profits in 2021, even while navigating pandemic disruptions. Revenues were up over 70% from 2020. Operating margins also expanded to over 25%. RH’s stock price rose over 400% from 2019 to late 2021. The company continues opening new galleries, including a RH Guesthouse in New York City. These results demonstrate that RH’s transition to luxury has paid off financially while also evolving its brand image.
The Future of Restoration Hardware
Today, Restoration Hardware bears little resemblance to its origins as a hardware store. Gary Friedman’s vision successfully transformed RH into a leading high-end home retailer. As the company looks to the future, the focus remains on the luxury market. RH is expanding into new categories like apparel to offer a complete lifestyle brand. The retailer also aims to integrate hospitality into its locations through restaurants and hotels. International expansion provides additional growth opportunities. RH plans to continue leveraging its success at the very top end of the home furnishings space.
However, RH still faces challenges in differentiating itself in an increasingly competitive luxury sector. Rival retailers like West Elm and Pottery Barn have launched more upscale lines while discount brands offer high-end style at lower price points. Online players also make high-end furniture more accessible. RH must ensure its products and experiences continue feeling exclusive and novel. Capturing new high-income consumers will be critical as the luxury home market evolves.
Over 40 years, Restoration Hardware has undergone an astonishing evolution from hardware store to luxury juggernaut. The company has overcome challenges and controversies by maintaining its focus on exclusivity. As RH looks to the future, it will need to continue finding new ways to reinforce its premium positioning. The next decade will determine whether RH can build upon its success at the pinnacle of the home retail world.
Frequently Asked Questions
When was Restoration Hardware founded?
Restoration Hardware was founded in 1980 by Stephen Gordon in Eureka, California. It started as a small hardware store focused on antique fixtures and architectural salvage.
How has Restoration Hardware evolved over the years?
RH began as a hardware store, then grew into a home furnishings retailer focused on vintage and antique style in the 1980s and 1990s. In the 2000s, RH began pivoting towards more contemporary, upscale offerings. The company reinvented itself as a luxury brand over the past two decades under former CEO Gary Friedman.
What challenges has Restoration Hardware faced?
RH faced declining sales and store closures during the 2008 recession. It also dealt with controversies regarding product quality and accusations of its catalogs being out of touch. In 2019, RH sued former CEO Gary Friedman over a conflict of interest with his new company.
How has the focus on luxury impacted Restoration Hardware?
RH’s transition to a luxury retailer helped differentiate it in the home furnishings market. By focusing on exclusivity and fashion, RH has appealed to high-end home renovators, designers and affluent consumers. The luxury positioning has driven substantial sales and profit growth in recent years.
What is in store for the future of Restoration Hardware?
RH plans to continue expanding its presence in the high-end home market. It is growing into new categories like apparel and hospitality services. International growth also provides opportunities. However, RH faces challenges in competing in an increasingly crowded luxury retail space.
Conclusion
Restoration Hardware has undergone a dramatic evolution from its start as a hardware store in 1980 to its current status as a leading luxury home retailer. The company has strategically transformed itself over the past two decades to focus on exclusivity and premium fashion. This transition has allowed RH to find success catering to high-end consumers and stand out from competitors. However, RH still faces challenges in differentiating itself as the luxury home market becomes more competitive. Continuing to offer novel, exclusive products and experiences will be key to RH’s future growth and maintaining its status as a top luxury brand.