Sounding Board: Not boxed in

The CEO of The Container Store says loyalty—to employees, customers and vendors—is the linchpin of the retailer’s success.

By Len Lewis

How would you like to have a 26% compounded annual growth rate over three dec­ades, growth during a recession on a 30% reduction in inventory and minuscule employee turnover—even during good times?

This is not pie in the sky—although they can sell you a place to put the pie. The company is The Container Store, a 30-year old company that has a lock on one of the most unique niches in retailing. Its 49 stores do not just sell stuff. They sell you things to put stuff in.

But the interesting story is not what but how they sell. It is a tale of an open corporate culture that values innovation and loyalty to employees, customers and vendors above all else—a textbook example of how to succeed in business.

I first became aware of The Container Store in the early 1980s in Houston. Since then, it has beaten back literally hundreds of would-be competitors. However, I did not understand the depth of the company’s commitment until I recently spoke with its founder and CEO Kip Tindell whose laid back, but highly focused leadership style would be anathema to any command and control executive.

Tindell, who also sits on the board of Whole Foods, got his start at the old Montgomery Ward chain, a name that was long ago relegated to the retail history books. The Container Store and Whole Foods are both majority owned by Los Angeles private equity firm Leonard Green & Partners—an association which, to some, makes their independent thinking all the more unique.

“It is funny. The economist Milton Friedman believed that the reason a corporation exists is to maximize shareholder returns. With all due respect to Milton, if you put employees first they take better care of customers. And if both of them are happy, shareholders will be too,” he told me.

It is interesting how a mental picture of someone pops into your head. I had this image of an Ivy League-educated good ol’ boy with his Larry Mahans propped up on the desk and offering a business philosophy that is more front porch than Harvard Yard.

However, Tindell, one of the most successful, well-liked and respected executives in retailing today, walks the talk. He is a guy who gets excited about an innovative new shoebox that sells for $1.49 and is capable of spreading the enthusiasm throughout the entire company.

But the essence of the company’s success, and one worth emulating, is an open culture that gets people out of their corporate comfort zones and delights in breaking down silos that inhibit both innovation and communication. This is a company in which the chairman offers as much information at staff meetings as he does at directors’ meetings.

Putting employees first is no mere platitude. If you visit the stores, you can see what an engaged and enthusiastic employee looks like. Of course, some things can appear to be a silly waste of time to outsiders—like turning Valentine’s Day into a celebration of its employees with balloons t-shirts and gift boxes of products from vendors to all of the chain’s 4,000 employees. But it works, and has helped The Container Store solidify its place on Fortune’s list of best companies to work for more than a decade. He is also proud that during the recession the company found ways to cut expenses instead of jobs.

Clearly, one of the things that put the company in a retailing class of its own is training. It invests 260 hours of training for first year employees secure in the knowledge that great employees are the ones that are engaged in the business, knowledgeable about the products they sell and are aware that that what they do—and do not do—really makes a difference.

This is all part of a philosophy that Tindell calls “wake”—as in the wake of a boat. The idea is that every action someone takes impacts everything else. Tindell says there is no better metaphor for this than one of his favorite movies, It’s a Wonderful Life, where the main character George Bailey is given a glimpse of what life would have been like if he never existed and never took the actions that affected others.

It is funny how a guy who spends so much time trying to make a better box spends even more time looking outside of it.

Len Lewis, a regular Grocery Headquarters columnist, is a veteran industry journalist, commentator and editorial director of Lewis Com­munications, Inc. He is the author of The Trader Joe’s Ad­venture—Turning a Unique Approach to Business into a Retail and Cultural Phenomenon. He can be reached at lenlewis@optonline.net or at www.lenlewiscommunications.com.

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