The Container Store

Our Special Relationship with elfa

Our Special Relationship with elfa
Melissa, Kip and Sharon on the floor of the efla factory in Sweden with elfa CEO Per Von Mentzer and Erin Hogue, Senior Merchandising Director elfa and TCS Closets.

*This post is part of Co-Founder and Chairman Kip Tindell’s Thoughts on Thriving Blog Series. Read other posts in the series here.

It’s remarkable that elfa is our number-one-selling product, because so many other retailers couldn’t sell it—they tried to sell it as a “closet in a box” without the service and customization (we know, because we used to wholesale it to other retailers). It’s component based, made in Sweden, and the salespeople at other stores were not sufficiently trained to explain why elfa is the greatest closet system ever devised: elegantly designed and strong and flexible enough to solve any storage problem.

In early 1999, we received word that our beloved vendor elfa was for sale. This came as a complete shock. Elfa had been by far our best-selling product, accounting for almost 25 percent of our sales. And by then, The Container Store was responsible for 40 percent of elfa’s sales. But now, suddenly, giant retail chains and housewares manufacturers were trying to acquire elfa, a small company of 300 employees. If any of them succeeded in taking the company over, it would be ruinous to elfa, and ruinous to us at The Container Store, too.

In short, The Container Store and elfa were deeply intertwined and highly dependent upon each other. Separate us and we would both die. Our companies were like heart and lungs. Worse, we had hardly any time to make an offer. Anyone interested in buying elfa would have to submit a bid within a week. There seemed no way we could make a plausible attempt. Trying to win elfa over those corporate giants would be like David taking on Goliath.

Our only hope lay in the great relationship we had established with elfa. We became very close friends with elfa’s management team, taking business trips and vacations together and sharing our lives with them. The owner of elfa at the time initially leaned toward maximizing his profit by selling to one of the large bidders, but the then elfa CEO and most of the employees were enthusiastic about wanting The Container Store to win the bid. They loved our company culture so much, they wanted to be part of it. And they agreed with our view that their company probably had no future if elfa was to be sold through mass merchants. At some point, it became clear to elfa’s owners that selling to anyone beside The Container Store would not only mean losing their best customer, but also that the hearts and souls of most of elfa’s management team and many employees were with us. It became an extremely risky proposition to sell to another bidder for a simple reason: There might not be anybody left there to run the company. In the final round of bidding, facing off against two housewares giants, we submitted a bid that was not as high as the others, but close enough for elfa to say yes! Somehow, miraculously, David and his slingshot had knocked out the giant.

And that is the value of good relationships. If you haven’t had a chance to check it out, now’s the time during Our Annual 30% off elfa Sale!