A few weeks back, I mentioned premium brands – how premium brands can maintain a premium image in a down economy. Some of these brands have decided to give special deals and run limited promotions to stay afloat, but not Restoration Hardware – they are premium to the bitter end.
This week, Restoration Hardware will raise retail prices around 25% on average across their entire line of home furnishings in an effort to say, “We are premium!”
After seeing a near 20% drop in sales, a reflection of the down housing market, the strategy is to boost the brands reputation of quality craftsmanship and boost the price to match the quality. There is a fear across the industry about devaluation of brands, one that Restoration Hardware hopes to fight by building a campaign around design, the highest quality materials, and a relaxed high-end luxury.
To do this, Restoration Hardware has changed their media plan and will now be running ads in luxury publications like Architectural Digest, Haute Living, and Vanity Fair. The direct marketing efforts are changing too. Restoration Hardware is famous in the industry for their seasonal catalogs, and now they will be getting an upgrade – higher quality paper, full bleed, and unique page sizes will feature designers and their products carried by the home furnishings retailer.
So will it work? This new strategy will either push the brand to new heights and place it in the realm of Baker Furniture and Karges, or it will result in self inflicted brand death. There will always be a market for high-end products, but Restoration Hardware has not built its success on just well-to-do consumers, and this strategy may alienate one of the core targets. Even CMO, Ian Sears, suggests that if this radical approach doesn’t work, he’ll likely be out of a job without much delay. We’ll just have to wait to see how the brand does through the holiday season in to the new year!