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August 18, 2025
Should The Container Store Be Playing Hardball With Vendors?
The Container Store, which emerged from bankruptcy proceedings in January, is demanding price cuts from vendors as it continues to face cash flow problems.
“We know that we have been paying too much for virtually every product we buy,” wrote Martin Schumacher, the organizational chain’s chief commercial officer, in a memo to vendors attained by Retail Dive.
He added, “My advice to you is to take an objective look at your historical profit margin with us, recognize that for most of you we have many choices of where we source similar products, accept that your margin was artificially high because of a lack of strategic sourcing skills on our side, and understand that those days are over.”
The vendor threats come as Bloomberg reported that The Container Store retained Berkeley Research Group to help realign “inventory that’s missing the mark on customer taste and pricing that often remains at odds with consumer demand.”
The Bloomberg report also indicated The Container Store is working with A&G Real Estate Partners to assess its real estate portfolio.
Vendors Serving The Container Store Offer Mixed Reports
Vendors speaking to Retail Dive were more sympathetic to Schumacher’s comments in the memo about reworking assortments. He noted that mix had “become fragmented and drifted from our core customer promise.”
However, they were taken aback by his complaints over pricing, noting that traditional negotiations with The Container Store were similar to those enacted with other retailers. Several indicated they regularly gave the retailer favorable pricing given their strong past relationships. One vendor told Retail Dive, “The idea that up until now, Container Store buyers were sitting on their hands and just letting us price gouge them is so ridiculous.”
Some vendors also remarked that the harsh tone also ran counter to the shift toward partnerships in vendor relationships — and The Container Store’s co-founder and former CEO’s Kip Tindell’s message around “conscious capitalism.”
In his 2014 book, “Uncontainable: How Passion, Commitment, and Conscious Capitalism Built a Business Where Everyone Thrives,” Tindell wrote, “It’s hard to overstate how crucial these close relationships are to our success — it’s why our vendors give us exclusive, custom-made products, fast delivery, and high quality. And it’s why they give us great pricing. We can’t beat the mass merchants on volume, but we can always beat them on relationships.”
The Container Store’s bankruptcy was caused by heightened competition in organizational categories from Walmart, Amazon, HomeGoods and others — as well as a weak housing market, one that also led to the collapse of Bed Bath & Beyond and Tuesday Morning. As part of the reorganization plan, ownership of The Container Store was transferred to its term loan lenders.
Pricing negotiations between vendors and retailers have intensified in recent years as retailers attempt to offset inflationary pressures, and lately the impact of U.S. tariffs.
Discussion Questions
Is The Container Store being fair or too harsh in its pricing demands with vendors given its financial challenges?
What advice do you have over pricing negotiation tactics for both vendors and retailers?
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Many of the products Container Store sells are utilitarian items that play a backstage role in the home – they are not indulgences, nor are they on display. This naturally limits how much consumers are willing to spend. Unfortunately, Container Store’s assortment leans heavily toward more expensive brands, often creating a perception of poor value.
This is less about individual like-for-like prices being out of line and more about the overall price architecture. The company should have long since established a sharp opening price point, focused around its own brand. This would allow it to better compete with many other retail own brands, like Target’s Brightroom. As such, while playing hardball with suppliers may yield some better margins and/or small price reductions, it is not a complete solution.
Container Store also needs to take great care not to alienate suppliers: it is not a major channel of distribution and needs goodwill and cooperation from brands. A sensible and moderate attitude will play better than threats and demands.
Also, Tuesday Morning did not fail because of a weak housing market – as stated in the article. It failed because its rent expenses were high and when revenue plunged it faced a huge cash crunch. On top of that, despite being an off-price player, its stores were less an Aladdin’s cave of exciting treasures as a jumbled flea market of whatever buyers could get their hands on. A poor proposition and weak finances cause the demise.
J**** H C****: if I had a customer approach me with that attitude, my initial reaction would be to tell them to F*** OFF! Obviously I’ve no idea whether they’re “paying too much for virtually every product” or not – where have I heard that kind of bellicose victim playing before? – but if they are, who’s fault is that ? My advice to TCS is to either find a new CCO, or send this one to finishing school.
Given the fact that the Container Store has “inventory that’s missing the mark on customer taste and pricing that often remains at odds with consumer demand.”, I would argue they’re in no position to use such harsh languages with their vendors/suppliers.
As a retailer, Product and Price are the most fundamental elements of the business. If the Container Store is getting those wrong, then I’d say vendor pricing is not the burning platform. This sounds like they’re blaming their lack of competitiveness on the vendors instead of looking more critically at their market positioning and strategic competitive differentiators.
What’s more troubling is the departure from its corporate culture. The tone of the vendor message is significantly different than what a “conscious capitalism” represents.
I get it: things are tough for specialty retailers. Online competitions and big box retailers are gobbling up more market share. Consumers increasingly demand better selection, higher quality products at lower prices while the costs keep going up in multiple areas.
Instead of trying to squeeze more from the vendors, why not think more strategically about how a brick and motor organizational products retailer can differentiate itself from the big box and online companies? How about:
There are many ways to bring the business back on track. Collaborating with vendors rather than bullying them would be the right way to go.
Sure it’s great to utter tough words at the beginning of a negotiation, but never confuse threats with actual leverage.
The Container Store (or any retailer, really) cannot expect to haggle its way to profitability.
It would do well to streamline its assortment and collaborate with vendors to develop more exclusive product features and designs. (Can anyone say “TikTok-worthy”?) This might help upgrade its value story and rekindle shopper excitement.
As one explores a few locations and each aisle, it becomes apparent that The Container Store has been reduced to a shell of its former self. The shelves in every store we visited were empty in a number of places, as was what appeared to be the same or very similar merchandise throughout the stores. There is something amiss, and it may have to do with vendor relations and pricing. There is no purpose for the Container Store without a full stock of “containers.” Both parties must meet face-to-face to grasp the big picture and resolve pricing issues.
The Container Store’s ultimatum to its vendors appears to be a desperate last-ditch effort that will accelerate its decline. Savvy vendors will likely reduce their involvement, leaving the Container Store with lower-quality products and weaker relationships—precisely the opposite of what it needs to differentiate the stores. This letter reveals a fundamental failure in their procurement process and signals the potential self-destruction of the company, all disguised as decisive action.
““We know that we have been paying too much for virtually every product we buy,”
That sounds more like a consumer statement, than a B2B negotiation.
Container Store’s does have a choice… to upsell quality or to position as equiv of Temu stockist.
Agree, that internal company process needs to be worked out, rather than lashed out.
There is a difference between being “too harsh” and being fair, but the line between the two is blurred. It’s expected that The Container Store offers competitive pricing, just like any large retailer; therefore, they should demand the best prices from their vendors. However, that doesn’t mean “beating them up.” Some of the best price negotiations happen when the retailer asks the vendor, “How can we be better customers that would allow us to get better pricing?” (Or some form of that question.) Are there different terms, delivery options, quantity discounts, etc., that aren’t being taken advantage of? Is there a new process or procedure that could save money? Get creative. Many years ago, Ford demanded it suppliers cut costs by xx%. However, the goal wasn’t for the supplier to make less profit. The goal was to find a way to lower costs with minimal, if any, impact on profit. That’s a good starting point for a price negotiation.
I hear my father’s voice in my head – “No law against asking.” I suspect many vendors will reply with a very loud indifference.
When retailers project their issues on others, vendors, partners, or even customers, a sure sign that all is not well on the home front.
So to answer the question, “where did this jerk get dragged in from?”, Schumacher served at METRO Cash & Carry – a couple years in Germany and then 5 years in Moscow and 5 before that in Kiev. Kind of explains the combative attitude.
Yeah, he isn’t going to be in this role for much longer.
Throwing your merchandising staff under the bus, AND offending your supplier base, all at the same time, does not seem like a path to a turnaround. Tough but fair is the way to deal with suppliers in a normal retail business, but when you are facing the possibility of liquidation, perhaps articulating a path to profitable growth and making a fair ask for support from your suppliers might be the better approach.
I have a potential scripted answer for how vendors can respond to The Container Store’s negotiating approach. “Go pound sand.”
It’s easy to be partners when you’re winning. You find out who your real friends are when you’re losing. This is a memo to vendors, not to partners. Vendor relationships, in my view, are short-term and transactional in nature. Partnerships are long-term and invested in the mutual success of both parties. In a partnership, a risk to one party is a risk to both– and the partners can work in concert to address those risks accordingly. “Hey, I need some help here..” is a simple enough ask. “When I get back on my feet, I’ll remember that you helped me, and it will be good for both of us.” But that’s not at all the tone that’s taken in this memo. Whatever concessions the CS team gains from this approach, they will be short-lived, and the relationship and reputation damage will be far-reaching. Add to that the fact that casting aspersions on prior agreements doesn’t improve morale of your own team. Not a great look.