France is home to more than a $ 26 billion furniture market (Exhibit 1) and it may reach the

$ 30 billion milestone by 2026. Restoration Hardware is growing super fast in North America
as it reported the strongest two-year growth in its history (net revenues were up +19% to
$1.006b YoY, and up 49% Yo2Y) (from their Q3 results). RH already outlined its
international expansion by envisaging the establishment of RH England. Applying
Ghemawat’s CAGE framework to the expansion of RH to France, the following
recommendations can be summarized

Cultural
 Design Trends: France is one of the European nations that follow western and
modernized trends in its lifestyle and home furnishing. Minimalist designs are the
most popular nowadays. Besides, Parisian décor is rooted in historical design
incorporating vintage appeals such as gilded gold mirrors and crystal chandeliers.
Furniture Teak is also popular in France. All of these are clear signs that RH can
make an appeal to the French furniture market as they have a wide collection of
vintage furniture, minimalist designs, and huge collections of teak.

 Similar Standards: The furniture industry does not have any issues with standards and
compliance like cars or electrical appliances and the products would not affect the
cultural or national identity of consumers. Moreover, furniture products do not carry
that much of country-specific quality associations.

 Ethnicity & social norms: Although the majority of the people speak French instead
of English, France is home to people from varieties of ethnicities and immigrants like
the USA. In terms of ethnicity and social norms, the distance between North America
and France is not too much. Furniture products do not have high linguistic content.
Therefore, language would not be an issue for RH to do better in France.

 Less entrenched taste and Home bias: France is having its local renowned brands like
Conforama, But, and Maisons Du Monde. Interestingly Swedish brand IKEA is the
major player (Exhibit 2). Therefore, French consumers are not having any entrenched
taste in the case of the furniture products and also they do not have a bias to home
products.

 Similar Buying Trends: The popularity of buying furniture online is growing fast in
France (Exhibit 3). RH can definitely intrude the furniture market through its online
shopping experience.

Administrative

 Shared monetary and political association: Both France and the USA are historical
friend nations. They share almost all international associations including ICSID. Both
countries have several bilateral trade agreements and tax treaties making the trade and
investment ties strongest. Current French President Macron has taken several reform
programs to ensure ease of doing business by offering investment incentives.

 Stable political environment: France is a democratic country with a stable political

environment encouraging liberal trade and economic policy.
  Less Corruption & political hostility: France is ranked 22nd best on Transparency
International’s Corruption Perception Index. Overall it can be considered as one of the
least corrupted countries and there is no major political hostility in recent decades.

 No Government involvement: There is no government involvement in the furniture

industry in France. There is no subsidy for local furniture companies. Therefore, RH
would not have challenges to compete with the local players.

 Government’s Carbon-free Initiative: French government is encouraging the use of

wood to ensure carbon neutrality. They signed the Climate and Clean Air Coalition
(CCAC) in 2012. RH’s wood furniture can definitely get advantages from this.

Geography

 Distance: France is in the EEA and EU. Therefore, distance will not be a major
challenge for RH to expand their business as they are already planning to make their
footprint in Europe.

 Common Border: France is in Schengen Area sharing borders with 25 more European
countries that would beneficial for RH’s plans to expand in the entire European
region.

 Access to Seaports: France is geographically in an advantageous position having

numerous seaports that are extremely important for the furniture business as it
requires a lot of shipping.

 Strong Transportation channel: France is renowned for its communication and

transportation system. It has a network of 11,882 km of roads. Besides, its railways,
air, and marine communication are one of the most developed in the world.

 Size of the Country: The size of the country is relatively average with a good amount
of people making a good fit for the business expansion of RH.

 Climate: Since wood is sensitive to the climate more specifically the moisture, it is a
matter of concern for the RH’s business in France. Fortunately, the difference in the
climate between North America and France is not too high.

Economic

 Strong purchasing power: France is ranked 26th having more than $ 45,000 per capita
GDP (Purchasing Power parity). That is a clear sign that the market is having a strong
class of consumers like North America.

 Natural Resources: RH heavily relies on oak wood to manufacture its wooden

furniture. France is one of the top countries for oak. Besides, neighboring countries
like Germany and Austria produce a significant amount of hardwood necessary to
manufacture furniture.
 Human Resources: France’s education system and leading universities make a strong
workforce for its market. RH would have no issues hiring local people to run their
business.

 Financial Resources: France has some strong financial institutions and banks such as
BNP Paribas. It ensures the appropriate financial resources for doing business there.

 Strong Infrastructure: France has a strong infrastructure. Its transportation systems,

communication networks, sewage, water, and electric systems, telecom, internet, and
satellite communication system make it a strong fit for any kind of business.

Exhibit 1

Furniture Market of France (Source: Statista)

 Market Leaders of Furniture Market in France (Source: Statista)

Share of Online Furniture Purchase in France (Source: Statista)