"RH is Eating the Italian Brands for Lunch!"
03/29/23 Edition Stephen Says Column

Dear Stephen,

I work for a luxury furniture retailer. We sell primarily Italian brands. We’re the equivalent of Design Within Reach (DWR), which sells mostly iconic American brands. During the pandemic, business was gangbusters. Everybody was staying home and wanted a nicer indoor and outdoor space. Furniture was flying off the shelf for everyone. Our management looked like geniuses for what was a no brainer at the time and the circumstances of the pandemic. Finally, the bosses here in the U.S. are starting to ask questions.

 We’re a product mostly specified by designers, but it’s common for customers to pull up to our Miami showroom in the Miami Design District with their Rolls-Royce and buy a $70,000 sofa for their condo in South Beach.

Now in 2023, our sales have started to slow up and I think I know why. I think that is because all our marketing and sales efforts are controlled by Europe and, over there, they’re clueless as to how the American consumer, or an architect or designer, in the United States does business. How would they know?

We make one of the finest products in the world in Europe, I know that — everything is hand stitched in Italy. No different than a beautiful Eames made by MillerKnoll, sold at DWR. But our market share (sales) is suddenly dwindling, and I think it’s because the American consumer has fallen in love with Restoration Hardware (RH). At least that is what they tell us. And we also see our longtime salespeople moving to work there.

 Just look at the RH stock price! Meanwhile, we’re a privately owned company, so we don’t have any shareholders to answer to. But, our leadership is not in the United States, and RH is opening its first gallery in #England in 2023, so it’s still foreign to them.

It’s not our price point that is deterring customers, because RH isn’t cheap either. In my market, Miami, we’re losing business to the beautiful RH store in West Palm Beach. They have a great restaurant and I’m barely able to offer someone a cup of coffee. Part of what people love about going to RH is that they feel like they’re at a party, they can sit down and have a meal, people watch. RH is a whole entire retail experience! And one thing about America is that we are a culture driven by consuming.

I’m passionate about furniture and I love the products that my company makes, but my sales team and leadership are a revolving door. I have many friends who’ve left to go to RH and are making 30% more in base than us, with great benefits, yet my company refuses to pay competitively. Even the fancy pants interior designers of Palm Beach are upset that their wealthy clients are pressuring them to change their specifications to RH. Their genius marketing mimics our luxury brand, while it mocks our management. I’m thinking of jumping ship. What would you do?

Fancy, Frustrated, in Furniture
Dear Fancy,

I’ve said it before and I’ll say it again, whether you’re at Design Within Reach, B&B Italia, #Luminaire, #Holly Hunt, or any beautifully crafted furniture brand — RH is eating your lunch!

It’s exactly as you described. The leadership at RH understands The U.S. consumer. They even understand The U.S. designer because they have a very extensive contract division which calls on architects and designers and offers them additional discounts. Would I have any of it in my house? I don’t think so. I love my B&B Italia sofa. I love my #Cassina Cab chairs. As well as my Eames and Womb chairs. Oh, and I love my Christian Liaigre bed. Yes, I know I’m a furniture snob. You can’t beat the luxury of any European or iconic American brand.

That’s why it kills me that these luxury brands are slowing up. Everyone was happy during the pandemic because everyone was selling furniture. It was practically selling itself, like you said. Now that the pandemic has ended, they’re seeing RH’s marketing might.  

@Gary Friedman, the CEO of RH, is a marketing genius, personally worth over a billion dollars. @Warren Buffet, of #BerkshireHathaway fame, is a big investor in RH. This should tell you something, if not everything.

RH is selling a lifestyle — and it’s managed to market the hell out of that lifestyle. It’s great to have European investment in quality design. But it’s time to have more of a U.S. marketing influence in leadership within European companies with regards to American customers.

Like you said, RH is starting its expansion into Europe for 2023. European manufacturers had better watch out or they won’t know what hit them.

To answer your question — if you’re thinking about it, I wouldn’t discourage you from going to work at RH. But you should understand, RH is a primarily retail environment, like #DWR, as opposed to the other trade showrooms you mentioned which are a trade and retail environment. It means more time on your feet, it’s a more physically demanding sales job. It’s more like a classic retail position, and there’s nothing wrong with that, if you think it’s a better option.

By the way, office furniture manufacturers in the midwest and United States, beware. You should really be worried if #RH decides to go into the contract furniture business. Watch this space!