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Container Store's focus is on thinking inside the box

At least 266 hours of training. That's what a first-year, full-time sales employee at a Container Store goes through. Compare that with the retail industry average of seven to 10 hours of annual sales training.

Linda Campbell, a sales associate, arranging glass containers at the Cherry Hill store.
Linda Campbell, a sales associate, arranging glass containers at the Cherry Hill store.Read moreTOM MIHALEK / For The Inquirer

At least 266 hours of training. That's what a first-year, full-time sales employee at a Container Store goes through.

Compare that with the retail industry average of seven to 10 hours of annual sales training.

Stuart Nelson, 40, who works at the Container Store that opened in March 2014 at King of Prussia Mall, said the rigorous training enables him to be a jack-of-all- trades on the sales floor.

"We all do pretty much everything," Nelson said of his sales brethren. "Some days I help unload the trucks. Some days I work the register. Some days I design closets. And sometimes, I will run the floor and the business, since we need a sales floor leader at any given time."

Nelson said the company philosophy is "1 equals 3," meaning that one great employee equals three good employees.

During his training - equivalent to 33 days of his first year - executives from the corporate office in Dallas flew in to share information on honing sales techniques, Nelson said. And buyers came in and educated him about the retailer's many products.

This Olympics-like training regimen focused on customer service seems to be paying off for the specialty retailer,which became a public company, trading its stock on the New York Stock Exchange beginning on Nov. 1, 2013.

"I love this store," said Lan Nguyen, a closet aficionado from Cherry Hill, as she looked into designing a home closet with sales associate Shedlock Pancoast last week in the Container Store at Cherry Hill Mall. "I have redesigned a room closet before [with them] and now I'm doing it again."

The Container Store created - and dominates - the storage and organization category in retail when it opened its first store in 1978 in Dallas. Now, the company has 74 stores nationwide with more than 6,000 employees. On average, a store measures 25,000 square feet. It will open its first Delaware store in Newark on Oct. 17, across from the Christiana Mall.

Walk into any Container Store and you can find 750 types of office products - from file cabinets to pencil holders, more than 300 food storage items, ranging from a $3.49 storage jar to a premium stainless steel canister for $24.99. There are 70 styles of hangers and 50 types of hampers, among other things.

"Large assortment variety can increase consumer demand if the assortment does not become too confusing or overwhelming, and I think the Container Store does a good job in this domain," said Barbara Kahn, a marketing professor at the Wharton School at the University of Pennsylvania.

The company offers customized shopping tips and invitations to exclusive events in trying to meet the needs of several customer segments - ranging from college students, to new homeowners, to empty-nesters.

And, of course, women such as Andrea Hammond, 49, of Clementon, N.J., who has a lot of knickknacks and likes to keep them organized.

She recently visited the Cherry Hill location, which opened in 2007, to buy containers for her 6-year-old granddaughter's toys.

"We're giving her space in our basement," said Hammond.

Gina-Marie Brahms, general manager of the Cherry Hill store, said: "There are not a lot of items that you can pick up off the shelf and say, 'It is what it is, and this is what you are going to use it for.' "

That's because items are multifunctional, she said.

That's the reason for the in-depth sales training, she said. The goal is for employees "to really get to know our customers and their lifestyle." Each store has a team of 40 to 55 employees, including four managers.

The retailer depends on customers who are determined to be organized and touts the company slogan: "Contain yourself!"

On an annual basis, the Container Store Group Inc.'s financial results show slow improvement in sales and net income over the last five years. The company follows a fiscal year ending in February.

However, when viewed over the five-year period, the company's net income, particularly, depicts a dramatic turnaround. On Feb. 26, 2011, the retailer reported annual sales of $568.8 million but a net loss of $45 million. That compares with annual sales of $781.9 million and net income of $22.7 million for the year ended Feb. 28, 2015.

"Overall, the investment in employees, effective control of product assortment, and quality and methodical organic growth led to excellent results" after the retailer went public two years ago, said Ed Fox, a marketing professor at Southern Methodist University. "On the other hand, revenue growth has been less than impressive since the IPO and the stock price has been flat." (The stock peaked at $47.07 a share during the fourth quarter of fiscal 2013. Last year, the stock traded between $16.59 and $37.25 a share. Last week, the stock was trading in the $17 range.)

Casey Shilling, vice president of public relations and marketing communication, who helped write Container Store chairman and CEO Kip Tindell's book, Uncontainable: How Passion, Commitment & Conscious Capitalism Built a Business Where Everyone Thrives, said the chain's customers are time-starved.

"As the pace of our customers' lives accelerates, being organized is not a luxury but a necessity," Shilling said. "What our customers really want is more time to do the things they want to do in life, versus searching for their keys or favorite pair of shoes."

The retailer's comprehensive sales training goes a long way in keeping staff turnover low in a retail industry that typically suffers from almost constant staff changes. The company claims its turnover amounts to only about 10 percent a year.

Container Store officials attribute the employee retention to annual raises up to 8 percent, a company 401(k) retirement plan matching contribution up to 4 percent of workers' pay, and insurance coverage for employees' pets.

"A funny thing happens when you take the time to educate your employees, pay them well, and treat them as equals," Tindell said.

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