The Container Store Business Information, Profile, and History

Company Perspectives:

The Container Store is the nation's leading retailer of storage and organization products. Through its legendary customer service, The Container Store's mission is to offer its customers multifunctional and innovative storage and organizational solutions designed to save them space and ultimately, save them time.

History of The Container Store

The Container Store is a leading retail chain specializing in home organization products, such as wire shelving, plastic shower totes, shoe bags, food packaging, knife and peg racks, and bins. Based in Dallas, Texas, the company has 21 stores--nine in Texas, four in Illinois, two in Georgia, two in the Washington, D.C. area, two in California, one in Colorado, and one in Florida. The company planned to open its 22nd store in White Plains, New York, in the fall of 2000. In addition to its retail outlets, The Container Store also sells merchandise through several catalogs. In 1999 it purchased Elfa International, a European-based wire shelving company. The Container Store attributes much of its success to its employees, who are specially trained to offer customers superior service. The company pays its employees above-average wages and has an employee turnover far below the industry average. The Container Store placed first in Fortune magazine's '100 Best Companies to Work for in America' survey in 1999. The company is owned by its founders: CEO Garrett Boone and President Kip Tindell. Since inception, The Container Store's sales have increased about 20 to 25 percent a year.

A New Concept in 1978

Garrett Boone and Kip Tindell decided to go into business together while working in a paint department at Montgomery Ward. The entrepreneurs initially hoped to open a custom-made furniture store. But when they tried to get a lease at Olla Podrida, a craft mall in northern Dallas, their business plan was rejected; management believed their furniture store was too similar to a woodworking store already in the mall. Shortly after, Boone and Tindell noticed stackable Akro Bins at a trade show. According to the Fort Worth Star-Telegram the two men looked at the bins and thought, 'There's a need for storage pieces. There might be business in this.' Boone and Tindell knew that busy people needed more time--and that having a place to keep things saved time. According to the article, 'Boone firmly believes a chunk of lifetime is wasted looking for car keys.' The men decided to open a home organization product store--an idea that was easier said than done. At that time organizational products were sold only for commercial use. Boone and Tindell had to persuade each manufacturer to sell their products to them, so they could in turn sell them to the general public. Eventually they succeeded. The duo opened their first store in northern Dallas in 1978.

Expansion in the 1980s

The first Container Store was a big hit. Boone and Tindell coupled a unique strategy of offering a wide selection of products with outstanding customer service. They offered many different products--so many that its customers were amazed. Employees at The Container Store were trained to problem-solve, so they could better help customers with organizational problems. 'We are best known for our highly trained experts that we have on staff. We provide customers with exceptional customer service like no other retailer. What is even more outstanding about our staff is that they will develop effective storage solutions,' said Casey Priest, marketing manager in a company press release. 'They will take the time out to sit down with each and every customer.'

When it came to organization, Boone and Tindell practiced what they preached. Boone, who has been described as being 'quite tidy,' lived in a house full of elfa shelves and had a Skandia, the company's modular wood shelf product, in every room. According to the Fort Worth Star-Telegram: 'Enter Boone's house by the kitchen door, the entryway the family uses, and find a row of white plastic shower caddies with handles, lined up and labeled, one for each member of the family. `It saves time,' explained Boone. `When you're psychologically organized, you save time.'

The Container Store succeeded in boosting sales during the holiday season, typically a slow time for home organizational product sales. The company offered a host of packaging products in addition to ribbons and wrapping. 'We can package everything from a diamond ring to a bicycle,' said buyer Mona Williams in an article in HFN.

Rapid Growth in the 1980s and 1990s

After carefully evaluating locations, the company opened other stores in Texas--it had seven by 1989. In 1990 The Container Store opened its first out-of-state store in Atlanta, Georgia. During the same year it opened another in Texas. In time the company expanded into California, Illinois, and Colorado.

Although the company expanded quickly, it thoroughly researched an area before opening a store. It makes sure that the demographics match its typical customer profile. In general, the company opened stores in areas where the average household income is about $50,000 or more. Boone and Tindell believed that the company's careful selection of location was one of the reasons its stores were so successful. 'We looked for nine years in Houston and it took that long to find our location,' Tindell said in the Dallas Business Journal.

In 1999 the company opened its first store in Florida. Located in Miami, the store was 25,000 square feet and stocked with typical Container Store offerings. 'Miami is an ideal place for one of our stores as it offers a hot and happening venue,' said marketing manager Casey Priest. The Container Store planned to open its 22nd store in White Plains, New York, in the fall of 2000.

Recognition and Elfa in 1999

In 1999 The Container Store entered Fortune magazine's survey for '100 Best Companies to Work for in America' and placed first. Fortune acknowledged the company's in-depth employee training program of more than 180 hours, above average wages, and the sabbaticals it offered employees who had been with the company for ten or more years. The Container Store also was praised for having exceptional communication between managers and employees. Managers typically shared daily sales reports with employees, so everyone was aware of how and what the company was doing. 'Since the very beginning, The Container Store has always seen its employees as its single most important element,' said Boone in a company press release. Management noted that its philosophy regarding employees was simple: it promised to treat its staff like human beings. In return, managers asked the staff to focus on 'being Gumby.' In other words, employees were asked to be flexible and go outside of their regular job to help other workers and customers. Management followed this practice, too; even Boone and Tindell were occasionally seen unloading trucks and helping customers.

The company's fair management practices created an incredibly loyal staff. In 1999 The Container Store had an employee turnover of only 25 percent, far below the industry average of 73.6 percent. The company's turnover for managers was only 5.3 percent, compared with the industry average of 33.6 percent. Also in 1999 The Container Store received the Retail Innovations Award from the National Retail Federation.

Dr. Leonard Berry, an expert on customer service, included The Container Store in his book Discovering the Soul of Service. Dr. Berry's book profiled 14 companies with exceptional customer service.

In May 1999, The Container Store purchased Elfa International, a European manufacturer of wire drawer and shelving systems. The acquisition included Elfa International in Sweden, Denmark, Finland, Norway, Holland, Germany, and France, along with working capital and brand names. Prior to the acquisition, The Container Store was the North American distributor for Elfa, which had been its best-selling product since the company's inception in 1978. 'There is a closeness between Elfa and The Container Store, a synergy. Our philosophies and cultures are aligned,' Tindell explained in HFN. As of 2000 the two companies continued to operate as separate entities.

In August 1999 the company launched its first television advertising campaign in more than a decade. 'Garage' took a humorous look at over-organization. It showed an impeccably organized garage--even the family dog was placed neatly on a shelf. A mother and son tried to balance the car on one wall as if they were hanging a picture. A voiceover asked, 'How will we inspire you?'

Clustering in 2000

The Container Store believed that malls were declining in popularity around the turn of the century and that people would rather shop at a cluster of specialty stores. The company began 'clustering' its stores with other stores in the same category. It announced plans to open stores near Crate & Barrel stores in Chicago, Dallas, and, possibly, Washington D.C. Crate & Barrel was a popular home furnishings store that sold quality-made casual furniture, bakeware, and cookware. Crate & Barrel products complemented The Container Store's products, and the two companies believed they could attract more customers if their freestanding stores were located next to each other.

The idea struck fear in some employees, who worried that Crate & Barrel would steal the company's business. 'At first, maybe people said, `They'll take business away from us or they'll compete for employees.' But we've convinced everyone that, long-term, this will be great for us,' Tindell explained in Inc.

As of 2000 The Container Store continued to thrive. In 1999 it had sales of $160 million. The company faced growing competition, however, from home improvement stores, discount stores, and even grocery stores selling organizational products. Tindell asserted that the company's main line of defense against its competition was its depth of selection. 'We don't just have a handful of paper towel holders, we have 20 different kinds in wood, metal, and plastic in a wide range of price points,' he said in HFN.

Principal Competitors: Lechters, Inc.; Linens 'n Things, Inc.; Organized Living; Totally Organized.

Chronology

• Key Dates:

• 1978: Entrepreneurs Garrett Boone and Kip Tindell open their first store in northern Dallas.
• 1990: The company opens its first out-of-state store in Atlanta, Georgia.
• 1999: The Container Store purchases Elfa International; company places first in Fortune magazine's survey of '100 Best Companies to Work for in America.'