Homeware store RH has built its brand on luxury multichannel retail offerings.
Location is key to establishing luxury. Historic buildings with large dramatic stores topped with upscale restaurants establish the brand identity.
RH also carries substantial inventory, as evidenced by large catalogs reminiscent of pre-internet days.
- Can Restoration Hardware Become a Global Luxury Brand? (Feb 13, 2021, CNBC)
- RH (Restoration Hardware) (Apr 21, 2014, Denise Lee Yohn)
- What is Servicescape ? (May 13, 2016, B2Bwhiteboard)
This post is based on the CNBC article, How once-quirky homeware store RH became a skyrocketing luxury stock, by Robert Ferris, February 17, 2021, and the YouTube videos in the Spotlight. Image source: Shutterstock / AlexRoz
1. Describe how the servicescape at RH locations influences the service-profit chain.
Guidance: Students should observe that RH creates a leisurely shopping experience. The atmosphere is dramatic and luxurious. The locations evoke a sense of history and elegance from days gone by. The restaurants allow for a longer shopping day making a trip to RH an experience to enjoy rather than endure.
Students should be directed to consider how they would feel as employees at RH. Would they be upbeat and positive in this environment?
Now, relate the impact on employees from this servicescape as a positive influence on the service-profit chain.
Similarly, how would students feel shopping in this environment? Customers and employees will be primed from this servicescape to have a positive interaction and thus the service-profit chain will be enhanced.
2. Describe your top five criteria for establishing an RH store location.
Guidance: Students should refer to the checklists for location decisions in their textbooks.
Criteria to consider: the buildings need to be large enough to be dramatic, historical, able to accommodate a restaurant, with transportation and parking that allow for many customers to visit, and capable of being upgraded with modern HVAC systems (not all older buildings make this task easy).
There are many other criteria to consider in finding a suitable location and renovating the building to suit RH needs. This is a good way to review the difficulty in finding a suitable location.