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The Container Store Reimagines Space

The Container Store has launched a new space program. And its target is not necessarily the moon, but to reach for that most unworldly retail destination these days: relevance.

The retailer that practically invented the idea of a store devoted just to the idea of storage and organization, only to fall victim to changing demographics and a bit of inertia, has more recently come back to life with an exciting prototype store concept, updated merchandising and a much better balance sheet.

Both shoppers and investors have taken note. In it most recent quarter it handily beat estimates on comp store sales, hitting a 4.7 percent rise on an overall sales increase of almost 7 percent. And its stock has nearly tripled over the past 12 months, moving from the dreadful under-$4 level up to as high as $12 this past summer.

For Container Store, this retail renaissance has to feel good. Long loved by employees – it consistently ranks as one of the top companies in the country to work at – and loyal customers alike, it has drowned in bad news since going public in 2013. Some people referred to as the best company that should have never stopped being private. That’s all changed over the past year, though it must be noted that the Container Store still turned in an unprofitable quarter earlier this year and has much work to do to roll out its new merchandising tactics across its 90 or so locations, as well as continue to ramp up its online business. But as it celebrates its 40th anniversary this year, it has undertaken a number of new initiatives that are contributing to the improving situation.

  • A new marketing campaign is built around the slogan “Where Space Comes From” that highlights both its philosophy and its product mix.
  • While company co-founder Kip Tindell – best known for both his strong commitment to “conscious capitalism” and his too-honest-to-be-a-CEO statement several years ago that the business was in a “malaise” – remains as chairman, active management for TCS has passed to company veteran Melissa Reiff who has made some dramatic changes in the way the retailer does business.
  • The new next-generation store in suburban Dallas near company headquarters was an existing unit — often considered its flagship – that was gutted top to bottom to present a new merchandising vision that is attempting to bridge the in-store and online worlds…with initial positive results.

Walking into the 25,000-square-foot-store, which opened this past June across the parking lot from the upscale NorthPark shopping center, one is immediately struck by the open floor plan and expansive site lines, two layout tactics that break from typical Container Store floor plans. “We wanted to be more approachable,” said Val Richardson, vice president of real estate and one of the key people in the development of the nextgen store. “We recognized that we might be giving the customer too much.” So, the store features lower fixturing and a pared down merchandise assortment with the SKU count reduced by about 15 percent, although all classifications are represented on the selling floor. “It’s a balance, the line in retailing is always about being comprehensive versus curating.”

The result, she said, is a more “playful” store with 18 digital screens – many interactive – throughout the selling floor. “The digital screens help organize the store,” she said, adding that some of these replicate functions a Container Store online shopper would find, bridging that holy grail equation that every retailer is currently seeking. “We wanted to envision what the future will be,” said Richardson, an 18-year veteran of the company.

The store also features several of what she calls “play spaces” that draw attention to specific organizational areas of the home, including kitchen and closets. An “organizational studio” workroom parallels an online feature.

Closets remain a central element of the Container Store merchandising strategy. “Closet domination is a real target for us,” she said. Using its Elfa brand – which Container Store bought in 1999 – as its anchor, “We wanted to create a beacon for our customers by placing it in the middle of the store” rather than off to the side as it is in many existing doors. “This is our milk and eggs.”

Right now, the Dallas store remains the lone nextgen location and both Richardson and Tindell refer to it as a “laboratory” to see what works and what doesn’t. “Four-wall EBIDTA will be the measure of the design,” Tindell said “and right now it’s still too early to tell. This new concept will be better than it is now in nine months.” Both said they expect to begin rolling out elements of this test store to the rest of the chain next year.

Tindell, who says his role now is “to stay out of the way,” never shies away from taking account of the company’s up and down fortunes. “We’re figuring out how to be a public company, remain a unique retailer and stay true to conscious capitalism. “We’ve experienced being the darling of Wall Street and then being the dunce. It’s much better being the darling.”

Warren Shoulberg believes he needs The Container Store to organize his entire life, not just his closet.

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