Justine Griffin/Tampa Bay Times – The mammoth four-story Restoration Hardware gallery store at International Plaza was billed as one of the most high-profile stores to open in Tampa Bay this year — maybe even in the last couple of years.
But walk around the 60,000-square-foot gallery store, and it may not feel very busy. I was there on a Thursday afternoon and was the only customer in the entire place for a span of several minutes. RH, as the high-end San Francisco home furnishings brand likes to be called these days, had employees stationed on every floor. Some were quick to approach me to see if I needed help. Others sat in chairs or desks on their macbook pros. I caught one guy streaming a video.
A few people trickled in behind me. From what I could tell, no one was there to buy a $3,000 chandelier.
Maybe that’s the trick. RH merchandise is expensive, so perhaps all it takes is one or two sales a day to keep the lights on. Though with a store that big, I bet the electric bill is pretty pricey.
RH shares dropped more than 20 percent last month in response to the company’s disappointing fourth quarter earnings. The company had said it would earn $718 million in net revenues for the period of October through December in 2015 — the busiest months for retail sales, usually — but it turned out to be $647.2 million, according to the earnings report.
Making matters worse, RH CEO Gary Friedman sent out a bizarre, rambling internal employee memo around the same time. In it, Friedman complained about late orders and poor customer service before devolving into a caps lock rant about “THE GOAL IS DELIGHT.” He threatened to fire employees that don’t “DELIGHT THE CUSTOMER.”
“WE CANNOT AFFORD TO LOSE ONE SINGLE CUSTOMER. NOT ONE,” Friedman wrote.
Then last Sunday, RH ran an advertisement in the New York Times A section over two full pages. Both pages are gray in color, true to RH style, and in it Friedman pens a letter to customers urging them to sign up for the RH Grey Card. For $100 a year, members get 25 percent off savings among other perks. In Friedman’s letter, he paints a picture of a busy, tech-driven world, one that RH is desperately trying to make simpler.
Is it hard to sell a variety of gray-scale, high-end furniture? Or has RH taken on more than it can chew right now?
The furniture company has opened a slew of gallery stores, really unique, enormous showrooms in cities like Atlanta, Boston and Los Angeles. Some spaces the company owns. Some were old, historical buildings that were refurbished. In Tampa, RH built a new building off the edge of International Plaza’s Bay Street that opened in November.
It all sounds very expensive.
“I’m always skeptical about any store that expands their prototype rather than shrink it,” said Jeff Green, a retail analyst in Phoenix. “There’s no merchandise to pick up there. They have no back room, everything you buy is delivered to you. So once you’ve been there, you’ve been there.”
I did notice during my recent trip that while the display rooms hadn’t changed, RH had added accessories customers can buy and walk out of the store with such as gold and silver necklaces (for $75 and up) on the RH Child & Teen floor and gold-tinted iPhone cases.
“There seem to be mostly designers shopping in there, not necessarily the public. So they get a lot of contractor business,” Green added. “It’s basically just a showroom, not unlike what you’d find in any design district.”
Even though there was some hype that came with RH’s grand opening in Tampa, the store opened with a whimper. There were no crowds that streamed in to oggle at the lamps, rugs or couches. Most people at the store’s grand opening seemed to work there.
“Furniture sales are actually performing well in retail right now. And RH, they fill a specific void in the market,” said Faith Hope Consolo, chairman of the Retail Group at New York City-based Douglas Elliman Real Estate. “The gallery store is an experience and RH is a brand people know and trust. It’s a long-term business decision to open these stores, and I predict that in a year, the Tampa RH store will be one of the most successful in the chain.”
In all fairness, that Thursday seemed slower than usual at other stores in International Plaza, too. But Crate & Barrel still had a steady stream of customers.
So what does that mean for the big, gray building at International Plaza? And RH in general?
“It’s one of those things where you’re the hottest thing right now and by tomorrow, things turn pretty fast,” Green said. “This isn’t the kind of stuff you’re going to buy often.”