The furniture company Restoration Hardware is trying to boost revenue by moving away from regular, loudly hyped sales, to a paid-for membership program. For $100 a year, members get discounts on all of their purchases.
Restoration Hardware’s CEO, Gary Freidman, told investors last month, “much of how we behave promotionally is left over from the Great Recession.” He complained about spikes in volume at sales time, high numbers of cancelled orders, and the impact of sales on the brand’s high-end image.
The membership program is the company’s solution to classing up discounting.
“It’s not what I would call a membership,” said Kit Yarrow, a consumer psychologist at Golden Gate University, “ it’s more like a paid discount.”
Retail analyst Carol Spieckerman said it’s a strategy that could work by playing on customers’ desire to get the most out of their $100 buy-in, “getting them to say, I’m just going to stay here. I’m going to buy things at Restoration Hardware that before, I wouldn’t have bought there.”
But the value may be limited. Because how many thousand-dollar dressers does a person really need?