In Bloomberg Businessweek, Kyle Stock’s article, “Container Store Cleans Up After IPO Party”, discusses the recent success The Container Store has had with investors. Within the company’s first day of trading on the public markets, its share price doubled. The original IPO was 12.5 million shares selling at $18 each. This valued the company at $828 million. The store has been growing at an annual rate of 7%, and there is room for substantially more growth. There are currently 62 locations in the US, which leaves room for many more. There have also been demands from The Container Store overseas, specifically: Australia, India, Mexico, Germany, France, Japan, Switzerland, Russia, and England.
However, the container store seems to be having trouble making profits from its business. The company has actually lost money in the past five years due to expansion costs and troubles paying off debt. Also, they have been subjected to fierce competition, such as Amazon. Nevertheless, the store’s products are still in high demand, partly due to the cultural push to combat clutter. How can The Container Store restructure costs in order to post positive profits? The level of demand suggests that there are buyers willing to consume the goods when they are available, however the company is losing money due to the cost of expansion. Perhaps The Container Store could benefit through creating strategic partnerships with companies who already have an infrastructure in place and could sell their goods. This way, The Container Store would be able to provide the demanded products for fewer costs to the company. This structure would be similar to what Cinnabon is already doing. In short, the container store could utilize the larger company’s economies of scale and already established capital and infrastructure instead of paying money to create or buy their own.