Reinventing Retail, One Experience at a Time

It was one of those rare kid-free afternoons. After having junked our white sectional basement couch that doubled as our kids’ second home, play area, and trampoline for the past 8 years, we needed a refresh.

We found ourselves at Restoration Hardware’s RH—a sprawling 70,000 square-foot, 4-level space. Dubbed a Gallery by RH, it can hardly be described as a store. It boasts 14-foot vaulted ceilings and room after room of recreated living spaces complete with plants, draperies, crystal chandeliers, and accents—as well as windows overlooking Hamptonesque decks. Oh, and there’s furniture. Lots of it.

We were greeted by a professional designer armed with an iPad upon entry and with our appointment scheduled for an hour later, we decided to have some lunch. But we didn't even make it out the front door, because the nicest-looking place to eat lunch in the mall was—you guessed it— the RH store’s own restaurant.

A Massive Shift

With appointments, espresso bars, mansion-like spaces, and trained designers as salespeople, RH has transformed the retail experience so dramatically that it deserves its own stage in the emerging theatre of experiential retail.

A lot of voices continue to celebrate the so-called slow death of bricks-and-mortar stores. But RH tells us that it’s very much alive. In a letter to his employees in the fall of 2018, RH CEO Gary Friedman agreed that many of the retail outlets out there are archaic, windowless boxes where plants go to die. But with RH, Friedman is attempting to blur the line between retail and residential by creating lifestyle experiences.

We felt that reinvention firsthand that day while eating our lobster salads at the RH restaurant right next to the RH wine bar (you know, in case you don’t have time for a whole lunch)—all before we laid eyes on a single couch.

This is all very intentional on Friedman’s part. In 2016, Restoration Hardware’s profits were declining, and their revenue was suffering. Friedman warned of trouble in the industry unless massive cultural change was affected. Three years later, there are some 85 RH galleries of various sizes—including a 50 million dollar, 6-level, 90,000-square-foot flagship store with a rooftop restaurant in Manhattan’s Meatpacking District.

Where I live in Toronto, Friedman closed down Restoration Hardware’s “old retail” stores with their high-end locations and well-established foot traffic. In keeping with the luxury lifestyle theme, he also decided to all but eliminate discounts or “sales”. Instead, he introduced preferred membership, where an annual fee gets you access to reduced prices.

Connected Shoppers

RH isn’t the only one upping its experiential retail game. Companies like Miele and Samsung have set up connected home concepts in their stores, where shoppers can go in and play with next-generation devices—or in the case of Miele, bake a croissant. This new wave is reinventing the retail experience to combat online shopping and reverse the death of retail.

This new retail is actually a rebirth; one with higher margins, more share of wallet, and—dare I say—loyalty. It’s something we can all learn from. And it’s just the beginning. For example, how crazy is the idea of AT&T driving more traffic to its stores than online? Could that strengthen the bond between customer and network provider? Done properly, I think so. And as for Home Depot and Best Buy, instead of featuring smart home devices on their shelves, they can up their experiential quotient by setting up connected home systems like Nest, Amazon Alexa, Hive, and Google Home in recreated home spaces to demystify these smart home devices for consumers by curating and selling them at a higher margin.

Sound simple? It’s not. There’s a lot of cultural change and bold decision-making to be done behind the scenes. But there is room for retailers to move up the value chain to create this kind of re-imagined experience.

Wondering what happened to our couch? We brought our basement tenants (aka our kids) back for the final selection. After manager-supplied milk and cookies, we finally decided on the one. But our RH consultant refused to let us put a deposit on it until we went home to measure the space it would have to fit through to its new home in our basement. And she ensured it did, via Facetime, after hours.

If only she could get our kids to stop jumping on it.