How did I define the CEO of RH, Gary Friedman? As a true radical, and more. Perhaps even an iconoclast.
Friedman is unique and complex. A conversation with him can be surreal; he’s a philosopher, an uber-character, energizer bunny, stream-of-conscious rambling brilliant visionary, and unstoppable (until he hits a wall traveling at the speed of light – which is rarely). He’s the poster child for all radicals.
And he didn’t just become a radical; he’s been one his entire career. Sometimes he’s flirted dangerously close to failure, but more often to resounding success. In his own words, Friedman represents the best of radical retail thinking, “The lessons and learnings, the passion and persistence, the courage required, and the scar tissue developed by getting knocked down ten times and getting up eleven leads to the development of the mental and moral strength that builds character in individuals and forms cultures in organizations. Lessons that can’t be learned in a classroom, or by managing a business, they must be earned by building one. Or, by reaching the top of the mountain.” And reaching the top of the mountain is table stakes for Friedman.
Friedman is unique and complex. A conversation with him can be surreal; he’s a philosopher, an uber-character, energizer bunny, stream-of-conscious rambling brilliant visionary, and unstoppable.
He describes the current iteration of RH, “The first two decades saw us evolve from a nearly bankrupt business with a $20 million market cap and a box of Oxydol laundry detergent on the cover of our catalog, to the leading luxury home brand in the world with a market value approaching $10 billion.”
His philosophy and leadership catapulted RH out of near bankruptcy in 2016/17. In true Friedman style, he says: “We believe in the rules of the jungle, where the big do not always eat the little, but the fast always eat the slow, and on Team RH, fast is as slow as we go. Leaders are taking people somewhere they’ve never been, doing things they’ve never done. They’re building things and they’re building value.” That’s the RH leadership ethos and the culture of his company.
Friedman’s marching orders for his management teams and employees, during the downturn in 2016/17 was, “We have to be willing to march through hell for a heavenly cause.” So, this was his clarion call, and the implementation of which has driven RH to its current winning model, enough so that The Robin Report has awarded RH as one of our 2022 Retail Radicals.
RH Manifest Destiny
Friedman’s vision going forward is to continue to expand his ultra-majestic lifestyle empire with galleries, (currently around 100 in the US, and never to be called stores), Guesthouses, luxury travel, and destinations. As he said in his shareholder’s statement. “Our strategy is to move the brand beyond curating and selling product to conceptualizing and selling spaces, by building an ecosystem of Products, Places, Services and Spaces that establishes the RH brand as a global thought leader, taste and place maker.”
Pam Danziger, (LINK) TRR reporter describes the four pillars of Friedman’s vision for the brand:
- Products: Interiors, Modern, Contemporary, Color, Beach House, Ski House, Baby & Child, Teen, and Waterworks
- Places: Galleries, Guesthouses, Restaurants and Residences
- Services: Interior Design, Architecture and Landscape Architecture
- Spaces: Plane and Yacht Design and Charter
She adds, “It’s a grand – some would say grandiose – plan to transform a furniture company into more than a lifestyle brand and into a ‘World of the RH ecosystem’ that is immersive and multi-dimensional. And now he is making good on his promises, first with the opening of the premiere RH Guesthouse (a.k.a. hotel) in New York City. And most recently in Aspen, CO, where RH is investing $105 million to develop the first RH ecosystem combining an RH Gallery, Guesthouse, Bath House and Spa and restaurants with the first-time, full-furnished RH Residences.”
TRR reporter Warren Shoulberg covered RH launch of RH Contemporary: “The rap against RH was that it was a one-trick pony, with just a single design look that wouldn’t allow it to grow beyond a limited base. With the introduction of its new RH Contemporary program this month – which may become its single largest collection ever – you can’t say that anymore. RH Contemporary is the long-awaited addition to the upscale home furnishing retailer’s assortment, a massive collection that consumes 320 pages of a virtual catalog that will is now joined by a print version that just dropped.”
Shoulberg also covered RHs new Guesthouse in New York: “You can’t really check in…but you’ll never want to check out. The RH Guesthouse, the (very) boutique hotel property that was years in the making is only the latest manifestation of the home furnishings retailer’s quest to become a luxury brand across any number of formats and disciplines. It also represents the newest entry into the hospitality space for companies in the home and fashion sectors looking to continue to build out their connections with their uber-upscale customers. RH Ups the Private Guest Experience Uber-upscale only”
The RH Lifestyle
Similar to the Ralph Lauren brand, RH has carved out its distinct lifestyle imagery, which means anything that Friedman conjures up. The RH ecosystem is not defined by a single product or category. Rather, it can expand and include any product or service that fits and mirrors his opulent worldview. In his words, “We believe most retail stores are archaic windowless boxes that lack any sense of humanity. There’s no fresh air or natural light, plants die in a department store and they’re not optimal for humans either. That’s why we don’t build retail stores. We build inspiring spaces that are a reflection of human design; they are a study of balance, symmetry and perfect proportions. They blur the lines between residential and retail, indoors and outdoors, home and hospitality. They are filled with natural light and fresh air, with garden courtyards, and rooftop parks. Many have seamlessly integrated restaurants, wine vaults and barista bars.”
Let the Good Times Roll
RH’s performance has been up and down like a roller coaster for over a decade. But Friedman stuck to his vision with a vengeance, even as it went through several life-threatening stages.
The numbers prove why RH has been included in TRR pantheon of retail radicals. Financial results for 2021 include a three-year CAGR of 14.5 percent with a profit margin last year at 18.3 percent. The return of assets in 2021 was 16.3 percent. RH out outperformed industry standards across the financial indicators.
What’s impressive is that Friedman and his RH lifestyle brand are shaping a new world, aspiration for some and necessities for others that connects emotionally. RH is perfectly positioned to live long and prosper.
A March to a Drummer
And a final word on Gary’s leadership philosophy: “We believe leaders have to be comfortable making others uncomfortable. We value team players, people who are more concerned with what’s right, rather than who’s right. None of us is smarter than all of us, and, we have to get all the brains in the game and the egos out of the room.” The term finally is incorrect. He’s just beginning. And all of this is why RH has been awarded a 2022 Retail Radical.