When it comes to retail, RH doesn’t know what the word “small” means.
True to form, the brand perhaps best known by its old moniker, Restoration Hardware, just opened its latest gallery in San Francisco’s Bethlehem Steel Building on Thursday, inviting the public into the historic 80,000-foot neoclassical space. squares.
Nestled in the trendy Dogpatch neighborhood, the structure was designed by famed American architect Frederick H. Meyer and built in 1917 for Bethlehem Steel.
“We are both humbled and honored to play a part in restoring San Francisco’s historic shipyards and reimagining the iconic Bethlehem Steel Building as a place open to the public for the very first time,” said Gary Friedman, CEO. of HR, said in a statement. “It was a rare opportunity to do what we love, in a city we love and call home.”
Indeed, the new Gallery is just minutes from the company’s headquarters in the city’s Design District. While convenient, the backyard location wasn’t the motivation. The building’s industrial and artistic history and roots were irresistible to Friedman, as they fit into his vision to transcend traditional retail environments.
Meticulously restored, the sprawling SF Gallery took years to build, with a keen eye set on opulence and glamor across its five floors. RH’s signature neutral palette offers a luxury sensibility that’s both classic and modern.
Attention to detail also extends to services, with an HR interior design firm and studio, its largest yet at 10,000 square feet, residing on the lower level. Housing the company’s in-house designers, the section serves as a creative space where customers can customize products and view samples and materials – such as wood finishes for furniture, stones, upholstery and fabrics – as well as an RH rug showroom.
The company’s two brand extensions, RH Interiors and RH Modern, also welcomed a third through a San Francisco exclusive. Conceived as a way to bridge the gap between the two, with the more traditional aesthetic of the former and the modern design of the latter, the new RH Contemporary brings a global vision to furnishing. It marks its spring 2022 debut at the Bethlehem Gallery, which is currently the only place the public can view the collection.
But pushing or promoting a product is never quite the goal of reproductive health facilities. Hospitality is just as much, if not more, a priority.
The space here is anchored by the Palm Court Restaurant, a live dining establishment with a glass roof or skylight, while two on-site wine bars tempt guests with a global selection, including offerings from renowned winemakers in neighboring Napa Valley. Guests can also stroll through the indoor and outdoor spaces, including a rooftop park, to take in sweeping waterfront and city views.
This effort is reminiscent of RH’s historic opening in Manhattan’s Meatpacking District four years ago. The space has become a standout destination in New York since then, and it’s clear the company hopes to repeat that success in its native Bay Area by following the CEO’s long-held vision.
As Friedman told WWD in 2018, HR’s commitment is to “create a deeper connection and experience,” with less emphasis on selling furnishings and more on making people feel at their home. This theme now extends to a growing portfolio of dozens of galleries across the United States and Canada.
It comes down to “our ability to transform our legacy stores into multi-dimensional design galleries that double our retail revenue and profitability in every market,” he explained during his Q1 2021 earnings call.
He shed light on this business philosophy in subsequent calls. The CEO believes that delivering inspiring experiences in physical locations generates a greater sense of value for products. It also builds brand awareness, allowing the company to capture more market share at lower advertising cost.
The sentiment isn’t new to Friedman, but it stands out right now as the retail industry as a whole rethinks its approach to physical locations. Opinions are divided on whether stores should downsize or close, move to showrooms, or simply serve as glorified distribution centers for a booming e-commerce economy.
In this context, Friedman’s bet on physical spaces and the focus on unique experiences that cannot be replicated online may offer an important test. But analyzing the success of this strategy is difficult, especially lately.
The sector exploded during the pandemic, as people stuck at home focused on arranging their spaces. Spending on furniture, appliances and equipment jumped $12.1 billion — and that was just for the second quarter of 2020, according to a Comscore e-Commerce and m-Commerce Measurement study. Research firm Earnest has predicted five-fold growth from pre-pandemic levels, up to 50% over this period.
But these days, demand seems to be weakening. Meanwhile, issues such as supply chain issues and Russia’s invasion of Ukraine have disrupted several industries. It remains to be seen what consumer appetites will look like as more vaccines come out and more restrictions ease.
Last year, HR’s annual revenue rose 32% to $3.76 billion, with fourth quarter revenue up 11% to $903 million – which has showed growth, but fell short of expectations. What happens next seems unpredictable.
Again, if consumers feel like going out, there’s something quite logical about offering them unique experiences and destinations to visit.
Either way, Friedman moves on. During the last earnings call in March, he pledged that “our plan to open immersive design galleries in all major markets will unlock the value of our vast assortment, generating revenues of $5-6 billion in North America. North and 20 to 25 billion dollars worldwide. .”
His belief that galleries provide a major competitive advantage to the brand is unchanged, as he now hosts the “most extraordinary new bespoke gallery yet” in San Francisco – which, whether successful or not, proves one thing: Friedman apparently has nerves of steel.