Catch our chat on how RH CEO Gary Friedman fuels sales growth with bold innovation!

Gary Friedman, Chairman and CEO of RH (formerly known as Restoration Hardware), has long been known for his bold, risk-taking approach to leadership. Speaking recently on CNBC’s Mad Money with Jim Cramer, Friedman provided insights into how innovation and calculated risks have powered RH’s impressive sales growth, even in challenging market conditions.

Betting Big on Innovation and Design

In the world of luxury retail, Friedman is not shy about making bold moves. “There is no big reward without big risk,” Friedman told Cramer, reflecting on RH’s willingness to invest during economic downturns. While others in the industry may have scaled back during tough times, RH doubled down, continuing to expand its product lines and physical presence. “We’ve been working on this product transformation and platform expansion unveiling, and it’s been a big investment,” he explained. The company’s forward-thinking strategy is paying off, as RH recently reported a 25% increase in sales.

Friedman attributed much of RH’s success to its commitment to innovation. “If you want to be the best in the world, you can’t be a follower; you have to be a leader,” Friedman emphasized. For him, leading means investing deeply in unique, immersive experiences for RH’s customers. One such innovation is the introduction of massive galleries that double as luxury showrooms and lifestyle spaces, complete with restaurants and wine bars. “History proves all of these bets are highly incremental and profitable,” he said, indicating that these expansions have been central to RH’s growth.

Taking Risks in a Challenging Housing Market

The housing market has seen its share of challenges in recent years, and Friedman acknowledges that this has made the environment more difficult. “This is the most challenging housing market in three decades,” he said, yet RH has continued to buy back stock, signaling the company’s confidence in its future. Friedman shared that RH has repurchased $3.75 billion worth of its own stock since 2017, further showcasing the company’s belief in its strategic vision.

Cramer noted that RH’s approach to weathering downturns by maintaining investment in design and innovation stands out in the industry. “You kept spending during the downturn, so when it turned up, you had the right merchandise and therefore the right profits,” he remarked. Friedman responded by saying, “We don’t make investments of that size without a lot of thought or confidence.”

Immersive Galleries: Redefining Retail Experience

One of RH’s most striking innovations is the development of expansive, immersive galleries. RH has redefined the retail experience by creating spaces that go far beyond a traditional showroom. “You have to think until it hurts so you can see what others can’t see, so you can do what others can’t do,” Friedman said. These galleries, some as large as 90,000 square feet, offer more than just furniture shopping—they provide a fully curated lifestyle experience, complete with restaurants, wine bars, and breathtaking views.

One example is RH’s Newport Beach location, which Cramer marveled at during their conversation. “You have a 90,000-square-foot property in Newport Beach, overlooking the ocean, with bars and restaurants. What is it?” Cramer asked. Friedman responded that there is no simple analogy for what RH is creating. These galleries are designed to inspire customers and provide a unique, high-end shopping experience that can’t be replicated online.

Global Expansion: The European Market Awaits

As RH continues to expand its physical presence, Europe is a key market for the company. Although RH already has some brand recognition among European designers and luxury consumers, Friedman knows that building the brand in Europe will take time. “The time to really focus on Europe is when we open London, Paris, and Milan,” Friedman explained. These flagship galleries are set to open in the next two years and are expected to play a crucial role in scaling RH’s presence on the continent.

The European galleries will follow RH’s successful U.S. model, integrating restaurants, wine bars, and other immersive elements. “We opened in the English countryside, a 17th-century estate on 73 acres, but that was more for conversation than commerce,” Friedman said, hinting that the major European cities will provide a more robust commercial opportunity for the brand.

Authenticity in a Digital Age

Friedman also shared his perspective on marketing in the age of social media, a space where RH has taken a unique stance. “We don’t have a marketing department, we have a truth group,” he said. Unlike many brands that focus heavily on influencers and social media campaigns, RH has chosen to focus on creating authentic connections with its customers through the quality of its products and experiences. “Let’s do inspiring work and let the world talk about us,” he added, explaining that RH doesn’t rely on paid influencers or flashy online campaigns.

Instead, RH prioritizes its investment in product development and gallery expansion, believing that these are the true drivers of customer engagement and brand loyalty. “You can’t be a leader if you follow the crowd,” Friedman asserted, underscoring RH’s commitment to innovation over imitation.

Overcoming Global Challenges

In a conversation that touched on global economic issues, Friedman also discussed tariffs and supply chain challenges. Despite these hurdles, RH has been able to adapt quickly, moving parts of its manufacturing back to the U.S. when necessary. “When the tariffs went up, we moved a significant part of our upholstery business back to America,” Friedman explained, highlighting RH’s flexibility and ability to pivot in the face of global challenges.

Leadership and Vision

Throughout his conversation with Cramer, Friedman returned time and again to the themes of leadership, vision, and perseverance. “We do what we love with people that we love, for people that love what we do,” he said. For Friedman, success comes from deeply understanding the market, taking risks, and never compromising on the brand’s core values.

In an industry where trends can change quickly and competition is fierce, RH’s focus on long-term growth through innovation, design, and immersive customer experiences has set it apart. As RH continues to expand globally and push the boundaries of luxury retail, Gary Friedman’s bold leadership is proving that risk, when backed by deep thought and data, can indeed lead to great reward.