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Originally published Wednesday, January 31, 2007 at 12:00 AM

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Pioneering retailer in storage niche leaves rivals in dust

As New Year's resolutions propel more consumers through The Container Store's doors, the chain enters 2007 having vanquished another competitor...

The Dallas Morning News

DALLAS — As New Year's resolutions propel more consumers through The Container Store's doors, the chain enters 2007 having vanquished another competitor and surpassed $500 million in annual sales for the first time.

In 2006, the pioneer retailer of organization and storage products saw its best-known rival, the Hold Everything chain, go out of business, while its in-house experts increasingly flew the company's flag in magazines and on TV shows from "Today" to Martha Stewart Living.

While some may think of organizing home and office as a relatively new phenomenon, the privately held Coppell, Texas-based chain has been growing annual sales at an impressive 20 percent since it was founded in Dallas in 1978.

In October, it opened its first Los Angeles store in the Century City shopping center. Movie star Halle Berry and "Desperate Housewives" star Marcia Cross have been seen shopping there.

Its second Manhattan location opened in March across the street from Bloomingdale's. It occupies the ground floor of a new 55-story luxury residential tower that also houses the headquarters of New York Mayor Michael Bloomberg's Bloomberg LP enterprise.

This year, the chain is planning a second store in Denver, its first in St. Louis and one in Cherry Hill, N.J.

The Container Store has one Washington state location at 700 Bellevue Way in Bellevue, across from Bellevue Square in the Lincoln Square complex.

"There could be as many as six new stores in 2008," said Melissa Reiff, president of the chain. "We have more potential in the Los Angeles market and New York and several substantial-size cities where our real-estate team is exploring possibilities."

With 38 stores in 17 markets, lots of opportunities remain. The chain has only one store in Florida and none in the growing retail markets of Phoenix, Las Vegas or Charlotte, N.C.

The Container Store has the upper hand in where it wants to locate, experts say.

"They're considered a jewel tenant for anyone putting together a regional project, and they're offered the most favorable lease terms," said Frank Mihalopoulos of Corinth Properties, a Dallas-based shopping center development company.

"They go to the best location in a market and they won't just grow for the sake of growing."

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Bob Young, managing director of Dallas real-estate firm Weitzman Group, said the chain is definitely on every developer's A-list.

"If you get The Container Store to sign on to your project, you're in a market's sweet spot," Young said. "They give a project an air of exclusivity because they draw shoppers from a larger trade area."

A number of copycat stores have popped up over the years, but none has taken off.

Hold Everything even had the expertise of San Francisco-based Williams-Sonoma behind it.

The chain shut its stores, catalog and Web site in recent months as sales declined, despite a new strategy of adding more furniture to the mix.

Williams-Sonoma said it has shifted product categories sold by Hold Everything into its namesake kitchen chain and its Pottery Barn and West Elm stores.

Reiff said much of The Container Store's success comes from its focus on customer service. Sales at stores open at least a year rose 6 percent last year, above average in any retail category.

"Even during the busy holiday period, our customers expect and deserve a high level of customer service," Reiff said. "They want someone to be as helpful when they need to match paper with ribbon ... [as when they] put a closet together."

The chain is "constantly recruiting," Reiff said.

"It's expensive to have a capable work force. But we have to have it."

The Container Store has landed on Fortune magazine's "100 Best Companies to Work For" list for the past eight years, ranking No. 4 in the most recent list, released this month.

January is nearly as big as December for The Container Store, as shoppers flood in after New Year's, vowing to make their homes or workspaces better.

A big seller is Elfa shelving products, the store's best-selling line since it opened.

In 1999, The Container Store acquired Elfa International of Sweden, its longtime supplier of ventilated wire-shelving and drawer storage systems.

Kitchen and then home office follow the closet category, said Audrey Robertson, public-relations director.

Sales of clothes hangers alone have more than doubled in the last five years, and shoe-storage systems have tripled, she said.

Growth has accelerated since the chain's first Manhattan store opened in late 2003. The exposure has been huge.

"Last month the "Today" show called and wanted one of our experts to be on the next morning. We could do it," Robertson said.

Last year, The Container Store was mentioned in 1,450 print articles, and its products and/or experts appeared on 200 TV segments.

In the two weeks leading up to Christmas, its products were featured as part of educational segments on all three network morning shows.

Last month, local TV programs featured Container Store staffers in Portland; Chicago; Washington, D.C.; and San Jose, Calif.

This isn't paid product placement. The Container Store's staffers are sought-after experts.

Robertson said the chain is called on often because its experts don't come across as pushing Container Store products.

"We can be very noncommercial," she said. "We give general tips. Sure we want people to use our products, but we don't get on there saying you have to use Elfa or our bins."

Of course, when you're the Container Store, sitting at the top of your category, any information about getting organized drives sales at your stores.

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