Restoration Hardware 2015 Annual Report Download - page 8

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5
Source Books
We produce a series of catalogs, which we refer to as Source Books, to showcase our merchandise assortment. In fiscal 2015,
these included our Interiors, Outdoor, RH Modern, RH Teen, RH Baby & Child, Small Spaces, Bath, Linens, Rugs, Lighting and
Holiday Source Books. Our Source Books, which showcase nearly our entire product assortment, are one of our primary branding and
advertising vehicles. We have found that when we display a greater merchandise assortment in our Source Books, we experience
increased sales across all of our channels. As in our retail stores, our Source Books present our merchandise in lifestyle settings that
reflect our unique design aesthetic. Our Source Books also feature profiles of select artisan vendors and other compelling editorial
content regarding home décor. All creative work on our Source Books is coordinated in-house in our RH Center of Innovation &
Product Leadership, providing us greater control over the brand image presented to our customers, while also reducing our Source
Book production costs.
Our Source Book mailings serve as a key driver of sales through both our websites and retail stores. Our customers respond to
the Source Books across all of our channels, with sales trends closely correlating to the assortments that we emphasize and feature
prominently both in our Source Books and in our stores. We continue to evaluate and optimize our Source Book strategy based on our
experience.
We maintain a database of customer information, which includes sales patterns, detailed purchasing information, certain
demographic information, geographic locations and mailing and email addresses. We mail our Source Books to addresses within this
database and to addresses provided to us by third parties. The database supports our ability to analyze our customers’ buying
behaviors across sales channels and facilitates the development of targeted marketing strategies, and is maintained in accordance with
our privacy policy disclosed on our website. We segment our customer files based on multiple variables, and we tailor our Source
Book mailings and emails in response to the purchasing patterns and product needs of our customers. We focus on continually
improving the segmentation of customer files and the expansion of our customer database.
Our Source Books, in concert with our e-commerce channel, are a cost-effective means of testing new products, and allow us to
launch categories in a disciplined, expeditious and cost-effective manner.
Phone Orders
In addition to making purchases in our stores or online, customers, including those from our Trade and Contract businesses, can
place orders over the phone by calling our customer service associates. In fiscal 2015, phone orders represented approximately 11% of
net revenues.
Trade and Contract
In addition to our core channels, we continue to expand into professional services channels, including Trade and Contract. In the
Trade channel, we work directly with independent interior designers purchasing for their businesses. Separately, we sell directly to
customers who make purchases with the assistance of their own interior designers or decorators, which we refer to as “designer-
assisted sales.” Our Contract business services hospitality, real estate development and other business clients. These channels offer
additional avenues for reaching new customers, including both businesses and individuals.
Marketing and Advertising
We employ a variety of marketing and advertising vehicles to drive customer traffic across all our channels, strengthen and
reinforce our brand image and acquire new customers. These include targeted Source Book circulation, promotional mailings, email
communications, online and print advertisements, and public relations activities and events. We maintain a database of customers,
which includes sales patterns, detailed purchasing information, certain demographic information, geographic locations and mailing
and email addresses. We use our customer database to tailor our programs and increase productivity of our marketing and promotion
initiatives. We leverage our marketing and advertising expenses across all our channels as we seek to optimize the efficiency of our
investment.