Will RH Translate into the British Market?

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They love our movies, our music, and our Coca-Cola. They eat our McDonald’s, fly on our Boeing jets, wear our Levi’s 501s and, use our iPhones. But when it comes to our stores…well, the track record is decidedly more mixed.

As much as American culture and the businesses behind them have had enormous success around the rest of the world, it has been a decidedly different story for some U.S. retailers. For every company that succeeds in Europe or Asia, there are many more that sculk out in the middle of the night, their tails between their merchandising legs. Big-name U.S. retailing companies like Walmart, Home Depot, and Target have all flopped in at least some (if not all) of their international expansion attempts.

Which is why the opening this month of RH England, the upscale home furnishings chain’s first location outside of its U.S. home base has to be one of the most eagerly anticipated – not to mention most closely watched – retail developments of the year and perhaps the decade on the global scene.

And there are those out there who think that if anyone can break the pattern of failed retail exports, it is RH. Then again, perhaps no other retailer in the business invites more amazement and skepticism over its unorthodox moves under CEO Gary Friedman than RH. Since taking over more than two decades ago, he took a small failing store known for its hardware (let’s not forget its former name Restoration Hardware), cleaning products, and whimsical tchotchkes and transformed it into nothing less than America’s number one luxury furniture and home furnishings chain.

Gary, Gary, Gary

And now to the same choruses of “What’s Gary up to now?” – he is looking to replicate that success overseas. The new store, Anyo Park, about two hours outside of London in the Cotswolds, is the first of a planned series of locations in Europe – France, Germany, Italy, and Belgium. Then onto Australia where one has to think will be RH’s beachhead into the Asian market.

As anyone knows who has recently been to an RH store – excuse us, the company prefers to call them Galleries – in New York’s Meatpacking District, along Chicago’s Gold Coast, in Buckhead in Atlanta, and in most other major urban markets, these are impressive places…contemporary urban palaces. They range in size from 40,000-square-feet on up, have at least one restaurant, and every detail is impeccably designed, often housed in repurposed historic buildings.

So, is the case with RH England, located in a 17th-century castle on a 73-acre estate, complete with landscaped gardens, what the company says is the largest herd of white deer (anyone feel like counting?), a library with archival books and documents, a tea salon and, oh yes, a bunch of RH furniture and decorative accessories.

And that’s the thing: Anyone expecting an Anglicized version of the retailer’s signature merchandise or something scaled down to all those charming, quaint very British cottages will be disappointed. This new store…er, Gallery is full-tilt boogie RH. (Full disclosure, I have not seen the store in person yet, these observations are based on company pictures, press reports, and conversations with those who were there for the pre-opening party…itself a classic event worthy of RH lore.)

Retail Export Experts

Is RH’s venture the right way to approach opening a store outside your home market? You can essentially argue it both ways. On the one hand, England – and for that matter France, Italy, and elsewhere – doesn’t need another furniture store that looks and feels like the stores they already have…which this new RH most certainly does not. It’s the same strategy RH has used in the U.S., offering a discernibly different take on shopping for home furnishings. As much as Ethan Allen, Arhaus, or countless local independents target the same upscale shopper, it’s safe to say none of them look and feel like an RH.

Friedman is essentially assuming the customer for luxury home furnishings is no different around the world, just as customers are similar for other luxury brands like Louis Vuitton, Prada, Porsche, or even Apple. That would be consistent with his approach to position RH on equal footing with luxury brands, even if its path to those heights began downscale with laundry detergent and doorknobs.

Exporting a brand successfully to the U.S. is not necessarily just a luxury thing. Ikea has been enormously successful around the world with essentially the same model, tweaked for some local variances like sheet sizes and colors but with the same basic furniture, oddball product names, and meatballs.

More recently, mass fast-fashion brands like Zara and H&M, Uniqlo, Mango and deep discount grocers like Aldi and Lidl have all had successes in the American market with pretty much their standard operating plans.

Failure Is an Option

But the flip side of this retail coin is less of a success story. How many American retailers have succeeded overseas? More bluntly, how many American companies have tried to export their footprint largely unaltered – and fallen flat on their collective retail faces?

Walmart might be the poster child for this. The biggest retailer in the world – and undoubtedly one of the best at what it does – has failed miserably in one country after another, from Germany to South America to Japan to most recently…wait for it, England. And after each, Walmart has essentially said the same thing: we didn’t adapt well enough to the local market and kept thinking consumers would come around to our way of shopping. Walmart has had some successes outside the U.S. – in Mexico and China – but it would be the first to say it’s been a long grind to make it work.

And this is not always a matter of geographical distance. Target’s colossal failure in nearby Canada is one of the case studies on how not to listen to your new customers and try to force your way into the market.

Which is not to say it hasn’t worked. American chains like Nike, Gap, Victoria’s Secret, and, of course, Apple have all had successes overseas with their American models largely exported. It’s just that it seems there have been as many failures as successes.

But we are not just talking about American companies failing when going overseas either. There’s a long list of British supermarket chains that have come into the U.S. market and done, for lack of a better way to put it, rather miserable jobs. The upscale Japanese department store, Takashima, had a classic failure years ago in New York and who can forget Benetton’s invasion of seemingly every mall in America?

RHUK?

So, what does this mean for RH; what are the common denominators that define both success and failure? Retailing, as anyone in the business will be the first to tell you, is not an exact science. In fact, some will say it’s not much of a science at all… but that’s a topic for another conversation on another day.

If you look at what retail has exported itself into other countries and not gotten lost in translation, there does seem to be one compelling element: that retailer brought something to its new home that shoppers couldn’t get before

It wasn’t just another discounter with low prices or an apparel store with nice tops. And that may be what RH will bring to England and all the other places it plans to travel to. Its unabashedly full-on retail concept is unlike anything anybody’s seen there…just as it was here. Some Brits will respond and like what they see. Others will not…just as they did here. But they can be sure they haven’t seen anything like it. Call it the RH Factor…and it bloody well might work.

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