In another break from tradition, the chain is implementing a loyalty card with a blanket discount for
members and no regular promotional sales. The RH Grey Card costs $100 per year, but provides
members with a 25 percent savings on all full-priced purchases . Ninety percent of RH revenue now comes from Grey Card members, and since its implementation RH has seen growth in the average order size. The company also expects margins to grow due to deferred memberships and renewals from the program’s current members. It also expects additional new members to join every year.
1. RH’s CEO believes that the Internet is limited in its ability to facilitate differentiation among retailers. Do you agree? Which retailers do a particularly effective job at presenting their products through their websites?
2. Is it environmentally responsible for RH to produce and distribute such large paper catalogs? Are
there ways it could mitigate the environmental impact of this program? How could it best deal
with the likely negative reaction from “green” customers?
3. What are some other novel ways that retailers could define the role of their brick-and-mortar
stores to optimize their effectiveness in contributing to increasing firm revenues and profits?
