The Thursday Show: RH makes a big change. Plus: What's behind the rise of hidden kitchens?

15:01Kaitlin Petersen:You know, when RH pivoted aesthetically in 2014, 2015, 2016, they really left those traditional designs behind. Those designs disappeared from their catalog. And I think this conversation on this earnings call really was kind of reckoning with the fact that by taking that product out of the assortment, they were leaving a lot of money on the table. And so for the first time, bringing back these traditional leaning styles is additive and really, you know, expands the breadth of what the company is able to offer.

15:32Fred Nicolaus:Yeah, Gary talked on the call about how it's like something like 60 % of American high-end architecture or some stat is traditional leaning. He said something that left maybe a billion dollars of money on the table by not having traditional selection. So there's clearly an opportunity there. You know, I'm really interested to see how it actually does. They're betting a lot on it. It's a specific version of traditional kind of feels like California traditional to me. and it's also like the quality is a really interesting piece and they talk about how these pieces are really well made I've gotten a hands on look at some of them although I was at the party in Milan and I was definitely definitely having cocktails and shrimps but it seems like it's poised to be one of their more high quality releases and I know that's always been something that people talk about with RH speaking of what people talk about with RH let's talk about the other big part of the call which was the discussion of designers in the interior design trade now it's interesting because Gary made this analogy to the Cold War.

16:24Fred Nicolaus:He was talking about how Ronald Reagan was telling Mikhail Gorbachev to pull down the Berlin Wall. And he was like, we're going to pull down the wall around the high-end design trade. And as I'm listening to this on the call, I'm thinking like, oh, designers aren't going to like this. Like, this is exactly the knock on our age from the trade perspective. But then he went on to make a really interesting announcement. The team jokes around, because every time I get a high point, if someone comes up to me and says, you know, like, I love your brand. oh my god and you know please please help us make money you know let us make money on your brand and you know we haven't offered and incentivized the design trade you know even you know the mother of my girls you know who was here consulting us 10 days ago two weeks ago it did give us the insight of it you know i am she runs a design firm and she said yeah she said listen do i buy rh of course i buy RH.

17:16Fred Nicolaus:Do I want to expect that first? No. A lot of times, you know, my clients will say, hey, look, okay, do your designs in the primary living room, in the primary bedroom, in the primary dining room, but like do RH for the family room and the media room and all the rest of the bedrooms. And she was saying like, okay, I will. And, you know, she said, but I'm thinking to myself, I can't make any money. You know, like interior designers have a markup model and an hourly model. But, you know, they kind of need both to make the business work. Yeah, so that was a little clip from the Q &A, but in the letter to investors, they made explicit they are unveiling a new trade program for Arch that will have incentives for designers in it.

17:58Fred Nicolaus:Now, we don't have any details, but presumably that means incentives means money, which is definitely, you know, a big change for how they've done business over the last decade. What did you make of all this, Caitlin?

18:08Kaitlin Petersen:The conversation around this announcement, I think was some of the most riveting minutes of this call to me, because, again, there was sort of another reckoning here. Gary talked about the fact that, you know, when the company switched to a membership model in 2016, he was the one who pulled the plug on RH's trade program. And I think the thinking at the time was, you know, that if we launch this membership program where everybody gets 30 percent off, you know, we can change the model. We can change the way people access furniture. And I think that sort of tracks with where the design industry was at the time.

18:44Kaitlin Petersen:I mean, I remember coming to BOH in 2017, so a year later, and there was a lot of conversation about maybe we don't need the market model anymore. You know, transparency was starting to become the buzzword in design firms. And there was a sense that, you know, your design fee could be your only profit center and that passing along your discount or, you know, not making money on product was maybe the way of the future for design firms. This announcement, this backdrop, to me feels like a real win for the markup model, but also a real acknowledgement by RH that their way of working has really made it harder for designers to embrace their product and to embrace consumer enthusiasm for what this company is doing.

19:29Fred Nicolaus:Yeah, I think really great points. And I mean, I do think there are, you basically acknowledge in the clip we just heard that there is this sort of tortured relationship between the trade and RH where you have, you know, the company has been so good at defining like luxury for the average consumer. So of course they go to their designer, they want to buy RH and the designer's like, great, I can't make a margin. I hate this. And that creates a lot of resentment. I mean, there was this clip that was going around sort of virally on both of our Instagram feeds about this one person talking about how RH is on the verge of going bankrupt, which I candidly do not think is anywhere near true.

19:57Fred Nicolaus:But so many people from the trade were like, yes, RH has done this and done that. And I feel like a lot of it stems just from this not having a trade program. And so this, you know, this really could change the sort of RH designer relationship. Now, I don't, I don't know. And then he also, candidly, it's never been that bad. It's like 20 % of their businesses to the trade, a lot of designers spec RH anyway. But certainly this is a big, a big change. I'm really curious to see what the numbers are, like how deep the discount goes, or whether it's like a cash back thing or what it actually consists of.

20:23Fred Nicolaus:But I think this was a really interesting element of the call. As you pointed out, he was talking about his first marriage to who's to an interior designer. And I feel like it's a big change for RH. And I'm very, very curious to see how it plays out in the world that we're in, because it's a big difference.

20:38Kaitlin Petersen:Interestingly, in addition to the debut of this trade program, the company also announced two additional programs that you'll have access to as a trade program member and also that RH customers have access to if they work with RH's interior designers, which are incredible new amounts of customization that RH hasn't offered in the past. So they're going to roll out a program called RH Bespoke, which is going to give you basically like to the inch or made to measure options for a lot of their dressers, dining tables, case goods, and also a couture upholstery program. They're going to have custom sizing for upholstery and COM for the first time.

21:16Kaitlin Petersen:Those also feel kind of paired with that trade program, like a real opening up of this RH universe to the interior design world in a way that they really haven't been open to in the past.

21:30Fred Nicolaus:Yeah, it's fascinating. We'll have to see how it plays out in the market. I could say so much more here. And I know Dennis is just right now listening to this going, I have some other things to say. I have thoughts, yeah. Which I'm sure we'll hear about next week. But in the meantime, let's move on to a story from BOH's print magazine.

21:46Kaitlin Petersen:In our spring issue, we took a look at leadership. And Fred, you spoke to five couples who run their firms together about how they're navigating their partnership. What did you find?

21:55Fred Nicolaus:I found a lot of sort of sweet stories and talk about therapy. There was a lot. It was a little bit like couples therapy to have these conversations because I would do the interviews with both people together, in most cases anyway. And there was a lot of people kind of looking at each other like, is that true? Is that OK? OK, yeah, cool. Right. Good. I don't know. This topic has always sort of interested me because I feel like it's something we don't really talk about openly in the design industry. The fact that there are so many couples that work together. But there are. I mean, you know, when you're out there in the world, you encounter this a lot of, oh, yeah, my spouse does this.

22:26Fred Nicolaus:My partner does this. My even boyfriend or girlfriend does that. And I think it's an industry that's uniquely situated to work that way. It's like a lot of small businesses. It's very trust based. You really want to trust the person you're working with closely. And it can be a flexible place. Some people told me that, like, you know, their husband left their sort of more corporate job because the flexibility of running a design firm allowed them to, you know, go mountain biking and go run marathons, which was harder to do when you're working for 3M or whatever it is. So this is just a phenomenon that's happening a lot.

22:55Fred Nicolaus:And I kind of wanted to put the B-O-H lens on it, which was why I pitched the story. Now, Caitlin, why did you say yes to the story?

23:02Kaitlin Petersen:I said yes, because I liked that you were really looking at this with the goal of blowing up the stereotypes about how some of these relationships work. I thought it was interesting that of the couples that you chose, most of them didn't set out to be firm partners. They didn't set out to work together. And it was a synergy that they found later. You know, some of the firm husband-wife actually was a designer and an architect, perfectly named for the story. You know, they were both in the design industry and I think kind of swore that they never would work together. And then it turns out that they were, you know, perfectly suited to found a firm together.

23:38Kaitlin Petersen:I think you uncovered really nuanced takes on what it means to work with your spouse, how you create boundaries, how you create systems, and really how you create zones of responsibility.

23:50Fred Nicolaus:Yeah, and it's interesting. And I think just to indulge in the gender cliche that we all probably know, the assumption is that it's a married couple and the wife is the designer who does all the creative work and the husband runs the books and does the operations. And that does happen. That cliche exists for a reason. That dynamic does exist out there in the world. But there's so much more nuance to that when you actually get in and talk to people about what they really do in their firms. Like I think of Summer Thornton and Josh Thornton, who like are, you know, the couple have been together since very young.

24:22Fred Nicolaus:They do everything together. Josh weighs in on the marketing and the photography. Summer has opinions on the business stuff. She was also like a lot of people, I think, come to me thinking like, OK, because I'm a woman, I'm going to be the nice one when one of my employees has some issue. And she's like, no, you want Josh for that. I'm going to tell you how it is.

24:38Kaitlin Petersen:But she's the one who negotiates contracts, right?

24:40Fred Nicolaus:Exactly right. Right. And there's so much stuff like that where, you know, you the gender stereotypes get broken down. People do a little bit of everything and couples learn a lot about themselves and their marriage by doing this. But I was really delighted by how it really did not fit along the path that we all kind of think in our head when we put the put the stereotype together. So it was really fun to get into the weeds on that.

25:00Kaitlin Petersen:There were some beautiful stories of really playing off of each other's strengths. I think, you know, the two partners at M2 Design Lab, you know, one billed himself as kind of cautious and measured. And the other said, you know, he's the more expansive thinker, the risk taker, you know, and really just how they've tailored their business to capitalize on that, to use that as a strength, I think was a really inspiring read.

25:23Fred Nicolaus:Yeah. And there's lots of like little sweet stories like that. I also think, you know, if you're listening to this and you're thinking, OK, well, I don't have a spouse who's interested in my business or I don't have a spouse. What does this matter? I think what you kind of learn by talking to these people is what really makes for a good partnership is a clear definition of who does what. You know, all these people talked about how what we really learned over the years is that I'm not good at that. My spouse is good at that. You do that. But you can apply that same logic to a business partner, right?

25:51Fred Nicolaus:Or even employee, an employee. You know, I think so much of what makes a good partnership in any context is clearly defined roles. And it's only when, you know, I think being married sort of ups the stakes. If things go wrong, they go really wrong. And it can be problematic. And I was thinking about interior designer Ashley Montgomery, a very talented designer who had her husband was her business partner. And it partially fell apart, I think, because he started trying to get involved in the design a little bit more, which didn't work. And their roles were kind of conflicting. They ultimately got divorced and split their firm up.

26:20Fred Nicolaus:I think it's at this point, they're both in a much better place. But I think that's when it starts to break down. And I think that logic applies, whether it's your spouse, partner, or just, you know, someone that you're in business with. So I think there's a lot of individual lessons to learn there. But, you know, talking about sort of sweet stories, Caitlin, you're mentioning that the sort of Josh Summer Thornton relationship is so interesting, because, you know, I mean, I think most people with their partner, it's like, you kind of know what they do in their job. And you know, the people at work, they don't like, because you hear about it, you know, over dinner, but like, actually seeing your significant other do their job and do it well is a really cool thing.

26:54Fred Nicolaus:And I feel like that was sort of the heartwarming thing that came out of the story for me anyway.

26:59Kaitlin Petersen:I could not agree more.

27:00Fred Nicolaus:Let's move on to hidden kitchens. For the New York Times this week, a design journalist and a former guest of the podcast, Leonora Epstein, wrote about a growing trend, luxury kitchens that camouflage everything, stoves, fridges, you name it, they're all hidden. This was news to me, Caitlin, but you are familiar with this trend. What do you make of this?

27:18Kaitlin Petersen:Well, I think we got a little taste of this at KBiz in the Cosentino booth. They have a new product called Eclose, which in addition to being silica-free, one of its key properties is that it can withstand high heat. And so they partnered with a company called InvisiCook, and we're demonstrating this completely invisible, you know, induction cooktop situation where you're basically like putting a pan on your countertop and it gets hot. But then you lift up the pan and you can put your hand right where the pan was, and it's like lukewarm. You know, and this idea of, you know, no coils, no burners, no glass induction top was pretty compelling.

27:57Kaitlin Petersen:You know, as you're walking through all of the new introductions at KBIS, this article really cataloging, you know, that trend on steroids was a pretty interesting, you know, thing to see when you think about, okay, like, what's possible if we want to hide every single shred of function in the kitchen? Cool, right?

28:15Fred Nicolaus:It is cool. And I think like Leonora's article, like pointed out some really extreme examples. There was this one thing, a company that makes like almost like a sort of 2001, the movie style black monolith that's in the middle of your kitchen where the fridge pulls out of, which was, you know, she described it in funny style as Leonora's way. But yeah, this is definitely like a thing. I'm curious, like, why is this happening? There were a few takes in the article about what's driving this invisible kitchen trend. But what, what, which one resonates most with you?

28:44Kaitlin Petersen:I mean, I think there's three main things happening here sort of coalescing at the same time. I think one of them, you know, the maybe most unrelatable part is that, you know, in the high, high end, you know, these are homes with multiple kitchens. And so this, you know, hidden kitchen is really the show pony. This is for entertaining. And you have a scullery or you have a caterer's kitchen where the actual mess is getting made. And so you don't need the function to be front and center. You just need it to be beautiful. I think that's one piece. I think the second thing is just that a lot of homes today have open floor plans.

29:19Kaitlin Petersen:One of the knocks on those has always been that your mess, your kitchen mess, your sink of dirty dishes is visible from the dining room. You're throwing a dinner party, but all of the work that you did to get ready is very much on display. And this could be a reaction to that, this idea that if your countertop sort of slides over your sink to hide that sink full of dirty dishes. You know, that's a better visual and a better experience. And finally, you know, Athena Calderon's kitchen was really what opened this piece. And I think it's pretty notable that her Brooklyn, you know, townhouse was kind of ubiquitous on the internet a decade ago for having open shelving, for having everything be visible.

30:00Kaitlin Petersen:And her new Tribeca home that just got published in Architectural Digest, which feels like it's everywhere on the internet, is really closing off some of that function, you know, maybe in reaction to how much openness we've had in kitchens in the last decade. I think it's kind of all of those things mixing together, and you get this really kind of avant-garde, you know, aesthetically function-free kitchen space.

30:29Fred Nicolaus:Yeah. I mean, this all ties into my unified theory of interior design, which is that everything is downstream of Athena Calderon. So I think that there's probably some truth that I think a technological angle probably also as part of it is that some of this technology is just getting it's getting pushed forward by the design trend and the you know the k-shaped economy of people having five kitchens and so manufacturers like well we can do this now so that pushes the technology forward and it kind of becomes a trend that's all working together to push things you know in one direction i guess my question and i'll get to my own take on this at the end of this segment but what do you think how do you think designers feel about this you put up a poll on instagram what was the what was the response to this trend among your followers

31:06Kaitlin Petersen:Designers very much sorted themselves into two camps here. Interestingly, my question was, are clients asking for this? And the answer was no. I think Tiffany Skilling in Indianapolis is a great example where she said, no, this is a designer thing. We're pushing this trend forward. This is us. I think you see that in small ways. Susie Novak told me that clients are asking to hide compost and paper towels. Panel-ready appliances are sort of a standard thing at this point. You're tucking your appliances into the cabinetry. Nobody wants to see their toaster anymore on their countertop. Those small steps kind of prime you to say, well, what if we hit everything?

31:44Kaitlin Petersen:You know, in the other camp, Jillian O 'Neill and Charlotte told me that, you know, she's a home cook and she doesn't want the statement range to disappear. You know, she wants to see a pretty sink. You know, I think there were there were people in my DMs with sort of a passionate, you know, request to keep the function in these kitchens to really celebrate cooking. I think that works if you have a client who cooks. And I think that actually may secretly be the real divide here.

32:11Fred Nicolaus:Yeah, exactly. And it's funny because, you know, the original inspiration for the Leonore's article is Athena Calderon. And she pointed out in the piece that like, actually, she does cook a lot. And it's like these sliding doors that are open most of the time for them to actually use the stove. It's just that they close them when they have parties for design people to come and gawk as I as I myself have done. Yeah, it's really interesting. I don't know why I just have and I'm this show isn't really about my opinions, but like, sure it is. I mean, it might as well. me. I feel like I just have a negative reaction to this.

32:42Fred Nicolaus:I sort of feel like the kitchen is one of the most human rooms in the house. It's warm, it's cozy, it's inviting, there's stuff on the stove, it's bubbling. All of my best memories about going to parties, it's like someone's in there and you come by and you have a conversation. And I feel like trying to make a kitchen sort of feel like a design showroom or like a salon or something, you just lose something human and warm in having a kitchen that's bustling and moving. But I don't know, if I had three kitchens, Maybe I'd feel differently. I don't know. This may be that. Do you have a reaction to this?

33:12Fred Nicolaus:Do you think it's cool? Do you think it's bad? I mean, I think it's cool that they can do it. I just sort of feel like should they? What do you think?

33:18Kaitlin Petersen:I very much got that middle of the road, all things in moderation take. Personally, I will say that like that invisible induction cooktop like has lived rent free in my brain since KBiz. And I would not be mad about just being able to wipe down my countertop and never having to clean a stove grate ever again. So like, I see, I mean, not only aesthetically, but just functionally, you know, the appeal of some of those kinds of things. I'd love to blend my dishwasher into my cabinetry, you know, I don't really think my fridge is adding anything to the design story in my kitchen. But I think when you push beyond that, like some of that monolithic black marble thing in the middle of your kitchen that secretly houses a fridge but is art sculpture, like not for me.

34:04Kaitlin Petersen:I think that might be a bridge too far. And I think you're right that part of the joy of the kitchen is making a mess and then cleaning up again. And I think a kitchen that just sort of eliminates function, that eliminates mess really does also kind of eliminate some of the heart and soul.

34:22Fred Nicolaus:Yeah, and what about all the appliance companies that have spent the past decade making their appliances beautiful somehow? I kind of feel like it's just too bad for them, although I will say toaster is the one thing. It's hard to get a beautiful toaster. I've tried. Anyway, that's it for the news, but there's plenty more to check out on businessofhome.com, including a recap of Atlanta market and takeaways from three days of design.

34:46Fred Nicolaus:Newport Brass is renowned for its exquisitely crafted solid brass faucets and fixtures. Continuing its legacy of creating designs that feel both relevant and timeless, Newport Brass has unveiled two new collections this year, Kimball Bath and Party's Kitchen, each rooted in craftsmanship. Formed and finished in-house in Southern California, both collections reflect the brand's enduring commitment to material integrity, precision, and lasting design. With complete kitchen and bath suites, from faucets and fittings to accessories, available across all 22 finishes, Newport Brass gives designers the freedom to realize a fully considered vision without compromise.

35:28Fred Nicolaus:Visit newportbrass.com backslash new to explore the latest collections. Lalloy continues to invest in the practical side of the design business with dedicated sales reps, multiple showrooms, and a streamlined website designed to make sourcing easier when timelines are tight and projects are moving fast. With a broad in-stock assortment available throughout the busy summer design season, Lalloy helps designers find the right pieces quickly and confidently. You can browse collections, connect with a sales rep, or find the showroom nearest you at laloyrugs.com.

36:09Fred Nicolaus:And we're back. We're getting to the end of the show here, but before we go, we like to take a second to highlight anything going on in the industry that might have caught our eye. Caitlin, what caught your eye this week?

36:18Kaitlin Petersen:Some important industry lists have debuted in the past week or so. So Elle Decor published its annual A-list and congratulations to everyone who was on it. And House Beautiful celebrated its latest Next Wave class. so I got to stop by the Next Wave cocktail celebration at 200 Lux last week and it was just so lovely the energy was so infectious and there were so many alums of my 50 states project series who were on the list this year so it was just really nice to see all these great firms get the recognition that they deserve and have this experience of spending a couple days in New York together a lot of them said they really felt like they'd met kind of like forever friends you know I think you get all these people in a room and their businesses are all sort of growing at the same time in the same direction.

37:05Kaitlin Petersen:And there were just like a lot of synergies in that room on that list that were really, really neat to see.

37:10Fred Nicolaus:To make a spreadsheet for every El Decoré list. Yeah, I'm not sure if I'm going to do that, but it was fun to do that for the AD100. Anyway, 100%.

37:20Kaitlin Petersen:What caught your eye this week, Fred?

37:22Fred Nicolaus:Well, if you're in New York City or you are aware of people who are in New York City, you know that this last week has been entirely dominated by the Knicks. They won the finals. I'm not a basketball guy, but I'm led to believe that that was a huge accomplishment.

37:34Kaitlin Petersen:And certainly in five, a quick moment here.

37:37Fred Nicolaus:Exactly. And it was it was definitely a huge it turned into a like a crazy party in New York the night that they won. And to tie into the design industry, Herman Miller did kind of like a flash campaign. I think the week before they won where they had Spike Lee sitting in an Aeron chair on the Brooklyn Bridge. And of course, Spike Lee is so associated with the Knicks. And I just thought it was a great ad campaign. It was probably really quick to pull together. You just get Spike Lee out there. You get an air on chair on the Brooklyn Bridge, but you really capture the cultural energy of the moment.

38:04Fred Nicolaus:I saw it all over my social feeds. I saw it like Adweek did a story about it. And I just feel like, you know, more furniture brands need to be plugged into the zeitgeist. You know, we need to, we need, the home industry is cool. We need to be out there doing cool things. I thought that was very cool of Herman Miller to pull together. I know Miller Noel has been in the news for other reasons recently, but this was a really welcome, super fun campaign. And I hope it's a sign of, a sign of stuff to come. All right, that's all the time we have today. Thanks so much for listening. If you want to keep up with the latest news, browse job listings, or take a workshop, visit us online at businessofhome.com.

38:35Fred Nicolaus:If you want to get in touch with the show, write to us at podcast at businessofhome.com. This episode was produced by me, Fred Nikolaus, and Caroline Burke, and edited by Michael Castaneda. I'm Fred Nikolaus. Have a great weekend, and we'll be back with you on Monday.