As a cloud of uncertainty hangs over housing prices and rising interest rates are taking a bite out of buying power, the case for staying in place is as strong as it’s been in years.
It’s a scenario that is not only prompting consumers to make the most of the space they already have but one that is also fueling an uptick in demand for anything that can bring organization to cluttered and frenetic homes and offices.
Enter The Container Store (TCS), the Texas-based operator of 94 retail locations and an eCommerce site that just defied the inflation and logistics problems plaguing all of its peers and booked its first billion-dollar year since its founding in 1978.
“We are very pleased with our stronger than expected fourth quarter performance which capped off the best year of sales and profitability in company history,” CEO Satish Malhotra said of the quarter and full fiscal year that ended April 2, adding that the results demonstrate the progress the retailer is making toward its goal of doubling its sales to $2 billion by 2027.
Although Container Store’s stock has been cut in half in the past six months, the record results and release of its “path to $2 billion plan” were cheered by investors after the report came out Tuesday (May 17) afternoon, who bid up the shares by as much as 10% in extended trading.
Although the specialty retailer has been in business for nearly half a century and has a very loyal assortment of customers and followers who thrive on organizing, for the past 14 months the company has been in the hands of a new CEO. As such, Malhotra appears set to use his 20 years of prior experience at Sephora, where he last held the role of COO, to give Container Store its own extreme makeover of sorts.
To that point, a long list of changes that have already been made and appear to be working, or are set to be rolled out over the coming five years, bundled into three strategic pillars: deepening customer relationships, expanding reach and strengthening capabilities.
On the first front, the new management has belatedly but quickly launched its first mobile app and begun to do things like adding greeters to the front of its stores, partnering with influencers and also undergone a full rebranding.
“[The rebrand campaign] was really important coming out of the pandemic to just make sure that we were connecting with our customers in a much more emotional way than maybe functional like we had done in the past,” Container Store CMO and 25-year company veteran Melissa Collins told PYMNTS in a recent conversation. “We exist to transform lives through the power of organization,” she added, before pointing to the brand’s new “Welcome to the Organization” messaging campaign kicked off in late February on the most organized day of the year, 2/22/22.
Additionally, Container Store has also enjoyed great near-term success with its foray into social media.
“The [Welcome to the Organization] campaign resonated with new and existing customers across our channels and resulted in a record-breaking sales day on 2/22/22,” Malhotra said on the call, “and our TikTok hashtag challenge, #ShowUsYourDrawers, was also well received and resulted in over 8 billion video views,” he added.
By Container Store’s own research, the rebounding retailer has plenty of head room to grow and expand as it currently has only a 5% share within a total addressable market for home storage, organization and custom closets that it pegs at $20 billion.
On the latter point, the company has also completed its acquisition and integration of Closet Works, and now employs nearly 100 advisors that offer custom design consultation — half of which it says booked more than $1 million in sales last year.
Like most retailers, Container Store is cautious on the economy and the impact that inflation is having on consumers in the near term but is also planning to accelerate its store expansion plans once the present turmoil subsides. Specifically, the company intends to nearly double its store count with the addition of 76 new locations over the next five years that will have a smaller footprint than its existing properties.
In addition, the company is also looking to diversify its predominantly female customer base via an appeal aimed at men and organizing outdoor space.
“We also plan to expand our product offerings in the garage category, where we are currently underpenetrated as this is a key area of the home that also benefits from storage and organization,” Malhotra said, pointing to a range of new product offerings and elevated in-store display plans that take advantage of newly freed-up floor space.
NEW PYMNTS DATA: THE TAILORED SHOPPING EXPERIENCE STUDY – MAY 2022
About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are getting it right and where they need to up their game to deliver a customized shopping experience.
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