What's Selling in America: part 5 of 5.

"The Lamest Question in Retail Is, 'Can I Help You?'"

It's not every day that both the chairman and the CEO of a $300 million retailer choose to dress up in amusing costumes -- one as Andrew Carnegie, the other as a cub reporter from a newspaper -- and put on a show for their new hires. But then not every company is quite like the Container Store, a Dallas-based chain that specializes in selling storage products for the organizationally challenged -- and that's organized around a radically different theory of how to sell.

The big trend in retailing today (call it Wal-Mart Nation) is to drive big sales by offering a vast selection, slashing prices -- and basically leaving customers to fend for themselves. The Container Store's two founders, chairman Garrett Boone and CEO and president Kip Tindell, aren't buying that formula for growth. They believe that helping the customer is the same as selling to the customer, that service is a powerful force for boosting volume.

So far, the numbers bear them out. Since it was launched in 1978, the Container Store has racked up 20% to 25% annual sales growth, year in, year out, with mind-numbing regularity. In 2001, when most retailers were steamrollered by the terrorist attacks and the recession, the company actually posted an earnings increase of 75%. Heading into last year's holiday season, the Container Store posted a 96% earnings jump over its performance in October 2001. This is a business that has its act together.

On a Friday in late October, the day before the grand opening of their San Francisco store (the company's 28th), Boone and Tindell gave what amounted to a two-hour teach-in on their business model to the new staff. The pair have worked together since 1969, when they first met in the paint department of a Montgomery Ward. After 30 years of partnering, they pretty much speak with one voice on matters of strategy, growth, and leadership.

Both men have a theatrical bent, and they have occasionally donned wigs and costumes to lay out a set of "foundation principles" that are slightly hokey but strategically critical, since they are the signposts to future growth for the company. The talk that Boone and Tindell gave was part serious, part silly -- and all business.

Here are some notes on what they said.

Fill the other guy's basket to the brim. Making money then becomes an easy proposition.
Garrett Boone: Andrew Carnegie is supposed to have said that, and it really gets to the core of our business philosophy. It means that we use all of our energy and creativity to craft a mutually beneficial relationship with that vendor, bank, landlord, or UPS driver. The only way that we can come into the housewares world and duke it out with the Wal-Marts is to have much better relationships with our vendors than those other mass merchants do. Instead of nickel-and-diming our vendors to death, we build a relationship that helps both them and us. We can't compete with Wal-Mart on volume, but we can compete on building true, long-lasting partnerships with vendors.

Kip Tindell: Why are we the only housewares retailer in America that pays its bills on time? We pay our bills in 30 days; all of those others pay in 60 or 65 days. We pay on time because we can -- we're a retailer, and we get paid immediately when we sell products. We're the largest customer for many of our vendors, and many plan their entire cash flow around our invoices. Paying our bills on time allows us to achieve merchandise discounts that are far greater than the industry average. It allows us to work with manufacturers to create products that are unique to us. We have no reason to exist if we're selling the same stuff as everyone else. By filling others' baskets to the brim, they fill our basket to the brim.

Serve the man in the desert.
Tindell: You know the story: A man who's been lost in the desert for three weeks stumbles into an oasis, and the first person he meets gives him a glass of water and sends him on his way. That's how most retail organizations operate -- and they pat themselves on the back for providing adequate service. But the selling philosophy that we try to teach is to give that man in the desert some water, some food, some shade, maybe some aloe for his sunburn. In other words, give him solutions to all of his problems. The same goes for customers: If you wimp out and let the customer go home with just a shoe rack -- the equivalent of a glass of water -- and she still has a mess of a closet that's driving her nuts, then you really haven't solved her problem. If you're not offering her the opportunity to buy more of what she really needs, you're cheating the customer.