Berkshire Hathaway Adds Luxury Retailer RH To Its Portfolio

What this move into high-end furniture retail means for the bedding market.

Last week, it was announced that Berkshire Hathaway—the multinational conglomerate holding company owned by Warren Buffet—had bought more than 1.2 million shares of RH, the furniture retailer formally known as Restoration Hardware. As the first high-end store in the company’s furniture retail portfolio, the purchase of RH speaks to the revenue-generating potential of the luxury retail space. With the furniture sphere shifting its focus to more artisan branding, lavish quality and aspirational price points, it logically begs the question: will the bedding market follow suit?

RH is not the first foray into furniture retail for Berkshire Hathaway, which already owns shares of Nebraska Furniture Mart, RC Willey Home Furnishings, Jordan’s Furniture and Star Furniture. What is notable about this investment is the fact that the RH brand is decidedly more high-end than the other furniture retailers in its portfolio. In 2018, the rest of Berkshire’s furniture segment brought in an estimated $2.1 billion in sales—while RH generated $2.5 billion alone.

When Restoration Hardware rebranded itself as RH two years ago, it also reinforced its positioning as a uniquely high-end retail destination. Today, RH defines itself as a “curator of design, taste and style in the luxury lifestyle market,” offering “collections of timeless, updated classics and authentic reproductions [that] provide a unique point of view and an unmatched combination of inspired design and unparalleled quality.”

Part of this evolution included opening roughly 70 museum-style boutique stores called “RH Galleries.” It also incorporated a membership model into its repertoire, along with consultation with its in-house interior design team—two services that have become popular amongst luxury retailers. This rebrand has already been successful for RH, which has seen its stock rebound by more than 40% in 2019. Following the Berkshire Hathaway announcement, shares in the brand increased by an additional 7.6%.

While the mattress market has been dominated by entry-level price points for some time, this renewed interest in the luxury furniture segment may signal a shifting tide. As one of the leading investment companies in the US, Berkshire Hathaway’s co-sign feels significant. And with the recent anti-dumping determination falling on the side of American-made manufacturers, it is clear that the industry is making strides to push back against ultra-low-cost mattress options.

This news also reminded us just how important it is to keep an eye on where the money is going. While it will always be vital to monitor trends at the consumer level, there’s no denying that investment companies like Berkshire Hathaway play a major role in steering the direction of the wider furniture retail industry. Any wins or losses that occur within that sector will inevitably have an effect on the more niche mattress category.

With RH now poised for continued growth, it is evident that there are still greater opportunities to be achieved in the luxury market.

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This story originally appeared in eNews. Click here to get Sleep Retailer eNews delivered straight to your inbox.