1. C O V E R S T O R Y
FROM LEFT: JOHN THRAILKILL, VICE PRESIDENT OF
STORES AND TOM BIRMINGHAM, CIO.
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2. internal development of Go Shop! Scan & Deliver in
2005. The system functions somewhat like a gift reg-
istry in that customers point a hand-held scanner at
products they wish to purchase and have delivered.
Same day delivery is offered anywhere in Manhattan
for $15. Scheduled deliveries are made until 2:00 a.m.
Store hosts inform customers of the service when
they enter. Assisted by an associate, customers who
opt for Go Shop! enter their credit card number and
relevant information into the Go Shop! system.
During shopping, product photos are displayed on
the scanner’s screen. When done, customers return to
the Go Shop! area to complete the sale. Go Shop! can
segment items the shopper may want to take home
immediately as part of the same transaction. It also
can split deliveries to multiple addresses and arrange
delivery outside of Manhattan though standard car-
riers. Customers who opt for delivery, says Thrailkill,
spend 10 times as much as others.
GoShop!,alongwiththeretailer’se-commercesite,
distribution center and all stores, is tied in to a real
time inventory system. Customers immediately learn
vendors. “Anything that gives us a strategic advantage
we design from scratch. Other things, like payroll, we
outsource,” he adds.
Key home grown initiatives include a full service
POS system, which was installed this past summer.
This joined two-year-old proprietary software that al-
lows consumers to “assemble” modular closet systems
and automatically order and arrange delivery while in
stores. These systems are tied to real time inventory
visibility solutions, also developed in-house.
MAXIMIZING INVESTMENTS
Aspartof“doingthingsthehardway,”TheContainer
Store does not invest lightly in anything. It expects
maximum returns from every dollar. While it oper-
ates only 41 locations in key markets, its stores are
among the most profitable in the retail industry.
Emphasis is on moderate and upscale products.
IT executives receive consistent, actionable feed-
backonproblemsandsolutionsfromallareasofbusi-
ness. “The conversation starts with the end user,” says
Thrailkill. “The beauty comes when we are visiting
with employees and discussing their experiences on
the back end or with customers.”
These types of discussions lead the retailer to de-
velop many of its proprietary products. The opening
of two Manhattan stores over the past five years, for
example, created challenges and forced the retailer to
“accelerate some new ideas,” says Thrailkill. Sales at
each high volume location are about $20 million an-
nually—roughly twice what other stores generate.
The new touch screen POS system was two years
in the making, says Thrailkill. It replaced a 10-year-
old, supermarket-oriented product. While the older
product was “still functional,” the fickleness and high
service demands of Manhattan consumers called for
a system with more capabilities.
“The new system accommodates combinations of
transactions that wouldn’t be possible through most
retailers’ systems, such as cash returns,” he adds.
“Manhattan customers change their minds a lot.
They’ll plan a closet system in white and decide they
want platinum. They’ll ask to make changes. We can
do that in a single transaction.” Enhancements are
made to the product every 60 days.
The popularity of delivery in Manhattan spurred
“
W
eliketodothingsthehardway,”noted
Sharon Tindell, chief merchandising
officer and a co-founder of The
ContainerStore,insummingupacor-
porate mantra that involves reinvent-
ing the wheel almost every day.
Reinvention permeates every aspect of the $600
million-plus specialty retailer’s business. It is applied
to processes that range from the development of orig-
inal store merchandise and award-winning personnel
practices to creation of proprietary technologies that
address unique, competitive needs. It also forms the
foundation upon which Coppell, Texas-based
Container Store developed its first-of-a-kind retail
concept back in 1978.
Then, Sharon Tindell, along with partners Kip
Tindell (chairman and CEO) and Garrett Boone (now
chairman emeritus), launched a store in which they
assigned household storage uses to products selected
from the Thomas Register of OEM components and
other commercial resources. Consumers quickly
caught on.
Today, whether a problem involves storing data or
storing sweaters, the retailer frequently applies a pro-
prietary solution. Depending on the scenario, this al-
lows it to be highly efficient or to differentiate from
the hordes of competitors that have sprung up over
the years. But whatever the challenge, nobody uses the
word“impossible.”NorareContainerStoreexecutives
concerned over whether or not a concept has yet been
tried by another retailer.
“The first thing many retailers ask is, ‘Who is doing
this?’”sayschieftechnologyofficerTomBirmingham.
“We never ask that. We’ll do something if we think it’s
right. Many companies would also say it is difficult
to do certain things. We do something based on
whether or not it’s right for the business. This philos-
ophy applies to everything and has gotten us where
we are today.”
The Container Store uses a combination of brand-
ed and proprietary technologies. Most proprietary
products are what John Thrailkill, vice president of
stores, labels “creative resources” in that they address
issues intrinsic to the retailer and cannot be bought
on the general market. Technology systems that deal
with everyday functions often come from standard
WWW.RISNEWS.COM MARCH 2008 15
Whether storing data or storing sweaters, The Container Store
uses pioneering strategies to satisfy customers and associates
HARDWARE:
• NETWORK INFRASTRUCTURE: Cisco Systems,
Sun, HP, Comscope
• SERVERS: HP (in-store); HP & Sun (HQ)
• MOBILITY DEVICES: Motorola (Symbol) handhelds
• POS: Dell, Lenovo, IBM
• WIRELESS: Cisco Infrastructure
• PRINTERS: HP, Canon
SOFTWARE:
• DATABASE PLATFORM: Oracle on Solaris.
• BI: MicroStrategy
• SUPPLY CHAIN/MERCHANDISING: Merchandise
Management (a proprietary solution developed
on an Oracle platform).
• DC & LOGISTICS: Catalyst
• FINANCIALS: Multiview
• PAYROLL: UltiPro
• CRM, CUSTOMER LOYALTY: SAS
• POS: Proprietary solution developed
on an Oracle platform.
• WORKFORCE MANAGEMENT: Kronos
• ONLINE: ATG
1978LAUNCHED
FIRST-OF-ITS-KIND
RETAIL CONCEPT
2007ACQUIRED BY LEONARD
GREEN & PARTNERS
(PRIVATE)
2008FOUR NEW STORES
WILL OPEN
41
$600
10,000
25,000
STORES IN MAJOR URBAN
AND SUBURBAN MARKETS
MILLION-PLUS SALES
SKUS (HALF ARE PRIVATE
LABEL OR EXCLUSIVE)
SQUARE FEET, AVERAGE
STORE SIZE
BY THE NUMBERS
Innovation in a BoxInnovation in a Box
BY DEBBY GARBATO
14.coverstory_v3 2/25/08 9:37 AM Page 2

3. how many items are in stock—this is particularly im-
portant with the retailer’s exclusive brand of elfa mod-
ular closet systems. If a product is out-of-stock, Go
Shop! reserves it and indicates when it will arrive, says
Sonya Connelly,storemanageroftrainingattheSixth
Avenue Manhattan location. Delivery transactions
represent more than 30 percent of the two Manhattan
stores’ total sales.
Go Shop!—along with the inventory system—is
linked to the elfa Design Center, which also is propri-
etary. Four years ago, the Design Center replaced a
labor-intensive grid paper design function. Company
wide, more than 25 percent of total sales come from
elfa closet organization products.
Customers, who provide closet dimensions and
type (walk-in, etc.), work with a design center employ-
ee to choose rods, drawers, racks and other closet com-
ponents. The Design Center can take into account ob-
structions, such as columns or cables. The average
closet system, says Connelly, costs several hundred
dollars. The Design Center is used in all stores.
On the back end, The Container Store is working
on a replenishment system. It began this project three
years ago. Part of this proprietary system was created
by John Galt Solutions. To date, 40 percent of The
Container Store’s vendors, which represent about 60
percent of total volume, are on the system. More than
85 percent of products can be forecasted as far ahead
as a year.
“We have every piece perfectly planned,” says
Birmingham. “This allows us to carry more distinct
products. We can tell the customer there are three in
the store, two coming on a truck tomorrow, another
20 in the DC and 50 more in a vendor shipment that
will come to the DC in three days. They will be on
the truck and you can have them on this date. You
can also see other stores’ inventory. In the call center,
they can also sell anything in a store. It’s really pow-
erful.” Everything is shipped out of a Dallas distribu-
tion center. The retailer stocks about 10,000 SKUs;
about half are private label or exclusives.
VENDOR TECHNOLOGIES
Technologies offered by traditional vendors play a
majorroleintheretailer’sbusiness.Inmanyinstances,
they are used to monitor functions or to keep track
of various pieces of information.
Later this year, for example, the retailer will imple-
mentastorelaborsolutionfromKronos.Birmingham
says the product will take sales goals for particular
days and allocate labor coverage for the next several
weeks.Inadditiontocreatingappropriatestaffinglev-
els, it will ensure that people with the right skills are
working at the right times.
In its 725,000 square foot distribution center, The
Container Store has been using RedPrairie’s labor
management software since 2006. The product helps
define labor standards for various tasks, including
what needs to be done and how
long each step should take.
Expectations are communicated
to employees. Thrailkill says the
product has had a “huge impact”
on performance and consistency.
The Container Store moved into
its present Dallas/Fort Worth area
DC in 2004.
Last year, The Container Store also installed flat
panel screens from Symon. Scattered throughout the
DC, these wall-mounted screens make real-time infor-
mation regarding the status of various tasks visible to
employees. Screens keep employees abreast of each
other’s progress. They let workers know what tasks
they need to execute, where they may be falling behind
and where there may be a problem. “It shows if they
are falling short,” says Thrailkill. “A supervisor can
then go investigate any bottle neck and help the em-
ployee solve the problem or ask for another employ-
ee’s assistance.”
On the data side, the retailer uses MicroStrategy to
convert large volumes of merchandise data into ac-
tionable information for buyers. Buyers can access
SKU data via an extranet and segment inventory pur-
chased by store, time and product.
A Buxton/SAS system allows the retailer to create
“predictive”marketingmodelsbasedonconsumerde-
mographics and purchasing histories, says Thrailkill.
“There is a huge correlation between the number of
departments and categories that a customer shops
and the frequency,” he adds. The retailer does about
60 targeted direct mail pieces annually; certain pieces
go to certain customers.
Looking ahead, The Container Store plans to keep
innovating, just as it has done for 30 years. Even when
the company was up for sale, it bucked convention by
continuing to invest in key technology areas. The
Container Store was purchased by Los Angeles-based
LeonardGreen&Partnersin2007.LeonardGreenalso
owns stakes in David’s Bridal and Petco. The Tindells
continue to manage the business.
Under the new owners, there are no plans to gen-
erate quick cash by putting a store on every corner.
Thrailkill says Leonard Green wants the company to
maintain its traditional 15 to 20 percent annual
growth rate (roughly one to two new stores annual-
ly). The sale, he said, resulted simply from the Boone
family’s and other private owners’ desires to liquify
investments. “There wasn’t a cash infusion in this,”
headds.“Wedidn’t—andstilldon’t—needoutsidecap-
ital to accomplish our goals.
By continuing to innovate on every front, The
Container Store also can maintain and grow its com-
petitive edge. Today, most mass retailers offer house-
hold storage products. But few companies have been
able to compete in the mid and upscale sectors that
TheContainerStorespecializesin.Andnonehavebeen
able to offer the breadth and depth of sub-categories
andassortmentsthatTheContainerStorecarries. RIS
16 MARCH 2008 WWW.RISNEWS.COM
Proprietary technologies
address issues intrinsic to
The Container Store’s business
C O V E R S T O R Y
THE IDEAL
WORKPLACE
At The Container Store, a unique corporate
culture is more than corner office blather.
Employees are treated so well and picked so
carefully that, for the eighth straight year, The
Container Store has been on Fortune’s 100
Best Companies to Work For list.
An anomaly in the business world, The
Container Store’s culture has thrived as the
company has grown. While employees receive
good pay and benefits, the company demands
and receives expertise and perfection from
them. Stores, for example, are known for their
comprehensive one-on-one customer service.
“Our culture makes us the most innovative and
is the holy grail behind how you motivate a busi-
ness,” notes chief technology officer Tom
Birmingham. “Perfection is ingrained into that.”
The Fortune listing, which is proudly dis-
played in stores, involves some of the following
(sometimes astonishing) statistic
• EMPLOYEES: ABOUT 3,000
• VOLUNTARY ANNUAL TURNOVER: 19%
• AVERAGE PAY, SALARIED STORE SALES ASSOCIATES
(ALL ARE NON-COMMISSIONED): $42,630
• AVERAGE PAY, DISTRIBUTION CENTER: $30,508
• ANNUAL NUMBER OF JOB APPLICANTS: 36,000
• NUMBER OF APPLICANTS HIRED: 6 PERCENT
• TRAINING: 241 HOURS PER EMPLOYEE
• EMPLOYEE DISCOUNT: 40 PERCENT
(50 PERCENT ON ELFA PRODUCTS)
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