The Container Store Could Soon Close as It Stares Down Bankruptcy

The Container Store could be the latest in a long line of companies to shutter permanently, according to a recent CNN report.

Despite having been thrown a lifeline by Beyond — the parent company behind Bed Bath & Beyond, Zulily, and Overstock, as Retail Dive outlined — the company’s future remains uncertain, as does the offer on the table from Beyond itself.

The Container Store’s Marie Kondo Effect May Have Worn Off

As CNN reported, The Container Store enjoyed a boost in traffic and popularity in tandem with the takeoff success of Netflix’s “Tidying Up” in 2019 and 2020.

The show, helmed by decluttering guru Marie Kondo, promoted many products that naturally fit into the niche market that The Container Store was already set up to serve. And in 2021, the retailer launched a formal partnership with Kondo, having her design products exclusively for the chain.

The following years haven’t been as kind to the retailer, however, and much of that initial luster appears to have dulled. Per CNN, credit rating agencies currently rank the company as one of the most distressed in the retail sector.

Quoting Tim Hynes, the global head of credit research at Debtwire, CNN indicated that bankruptcy was almost certainly on the horizon for The Container Store.

“I don’t see any dramatic increase in holiday sales that will change the situation. They are already pretty far down the line,” Hynes said.

The Deal With Beyond Could Be Scrapped

On Oct. 15, as Retail Dive explained, it was announced that Beyond would be investing $40 million into The Container Store in exchange for a 40% equity stake. However, this deal was contingent on The Container Store undertaking debt refinancing or amending the terms of its outstanding debt with lenders.

That deal could be off. On Nov. 21, the retailer issued a report stating that it did not believe it would be able to live up to its end of the bargain. In such an eventuality, it’s unlikely that Beyond would continue to pursue a purchase of any equity stake.

“While we continue to believe in The Container Store’s brand and business fundamentals, the proposed financing terms we have reviewed to date fall short of what we believe is necessary to complete the transaction,” Beyond Executive Chairman Marcus Lemonis said of the situation.

Competition Coming From Amazon, Temu, and Others Could Seal The Container Store’s Fate

Finally, The Container Store is facing fundamental challenges to its core business from other, larger retailers like Amazon and Temu.

With The Container Store pricing some of its items at a premium as part of a “white glove” experience, as CEO Sahish Malhotra told ModernRetail in a July interview, it may be unsurprising that the company is struggling to compete against retailers enjoying much greater economies of scale.

This line of thinking was reinforced by Neil Saunders, RetailWire BrainTrust member and managing director at GlobalData Retail, who told CNN that The Container Store’s business model may not be matching current consumer expectations.

“Most households want cheap solutions, and Container Store delivers relatively expensive solutions,” Saunders said. “That’s out of kilter with where the consumer is right now.”