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Costs for Containers

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.


  1. reilly reilly

    If I were The Container Store’s CEO I would be a little upset with the company we used for the IPO… If the stock price doubled a day after the initial price offering and no news that completely wowed investors had come out… I could have sold 6.25million shares for $36 dollars each and made the same as selling 12.5million shares for 18 dollars… or better yet sell 12.5million shares for 36 dollars.

  2. gormanm14 gormanm14

    How does The Container Store differentiate itself from its competitors? You mentioned Amazon was one competitor. Lowe’s offers an extensive selection of personal organization goods. Is The Container Store’s only draw the variety of containers it offers? If so, making strategic partnerships with other companies that have the infrastructure to sell containers would not have much of an incentive to sell The Container Store containers, especially if they are no different from a Lowe’s container.

  3. paulsen paulsen

    This seems to be a niche market to some degree. Do you think that the firm can survive by expanding its physical locations, especially with competitors like Amazon who save tremendously by not maintaining physical locations?

  4. winn winn

    Do you think that there will be profits in this industry for the Container Store. It has not earned profits because of expansion in the past five years — now that the company’s expansion is slowing, will we start to see a cost-cutting strategy instead of expansion strategy? Will this be an effective alternative?

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