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Sean Burke Discusses Brick-and-Mortar Retailing with Bloomberg

Clarkston Consulting Retail Lead Sean Burke was interviewed on the industry trends that continue to drive investment in brick-and-mortar retailing, specifically in light of the new RH Gallery in Manhattan. An excerpt of Sean’s interview and a link to the full article are below.

Bloomberg | September 13, 2018 

Gary Friedman, chief executive officer of RH (formerly Restoration Hardware), is betting big on New York—and on brick-and-mortar retailing. That’s 90,000-square-feet big. That’s the size of the RH Gallery that opened its doors to the public on Friday in the former location of Pastis restaurant where Little West 12th Street, Ninth Avenue, and Gansevoort Street intersect in lower Manhattan’s Meatpacking District. The store showcases the brand’s full complement of offerings.

The immense project, the 19th and largest footprint thus far for the Corte Madera, Calif.-based furniture retailer, took five years to complete at a cost of $50 million. Friedman says the location is expected to produce $100 million in annual sales once it’s up to speed.

Friedman is adamant in opposing the notion that physical retailing is dying due to e-commerce, and he has no interest in the “follow the herd” mentality that focuses online while allowing retail and catalog arms to wither.  “There’s been a lack of capital allocation and investment into physical retailing,” he tells Bloomberg. “It’s just rotted and died. Anything that you don’t invest in will atrophy.”

The CEO says all three retail arms—catalog, physical stores, and online—are essential to RH. “The web is the most democratic channel there is,” he explains, “but it’s hard to differentiate online, and you have to click 10,000 times to see the entire offering of something. It’s not a physical experience, with physical beats.”

The physical beats of the new space are situated over six floors (including basement) and take the form of curated room spaces, or vignettes, that display the entire RH aesthetic, from baby through teen to modern furnishings and outdoor settings.

There’s also a demarcated interior design atelier, a rooftop restaurant with outdoor terrace seating that offers views to One World Trade Center, as well as a separate barista haven, where weary shoppers can grab a coffee or a glass of wine while deciding on sofa coverings or lighting fixtures. The sound of gurgling water follows customers, emanating from working fountains dotted throughout the store.

The experiential factor, says Friedman, will be the key to the gallery’s success.

“Experience” is in-line with current industry trends, says Sean Burke, retail industry lead at Clarkston Consulting. “Whether it’s an in-person experience, online experience, or mix of the two, it goes back to how retailers entice customers to shop with them and build that consistent experience across platforms, be it in-store or online.”

Customers must see, touch, and perceive value in an item before buying, says Friedman, and presentation in physical showcases is paramount, regardless of price. “If someone presented milk in a more compelling way in a grocery store, they’d sell more milk,” he says.

To view the full article, visit Bloomberg’s original article here.