Coming to a mall near you: a green alternative to Home Depot

Junkyards are the end of the market, the graveyards for products that have been broken and forgotten, replaced and abandoned. They’re also where Garrett Boone, the Texas businessman who co-founded The Container Store, discovered his first big retail idea.

“I was wandering around dumps and wrecking yards, taking pictures, and I started noticing all these old commercial storage products,” he recalled. “They were pretty cool, and as I looked at them through the camera, I started to view them in a new light. Instead of seeing them as commercial products, which was how they were sold and marketed, I saw them as consumer products. What if consumers were allowed to buy and use them?”

Over the next few years, Boone transformed that question into a business model. The Container Store, which opened its doors in 1978, took modular, mass-produced storage – long a staple of offices, factories and retail stores – and made it available to the general public.

Eventually, The Container Store created a self-sustaining loop: as customers learned about the store’s offerings, manufacturers took notice – and began designing products specifically for it.

“With The Container Store, we created a category,” Boone explains. “Manufacturers looked at it, saw a growth category, and offered more products. That lowered prices. In the early 2000s, our prices were the same or lower than they were in 1978, when we opened,” he said.

A brand new (green) bag

Three decades after he opened The Container Store, Boone brought his experience with creating retail categories to another market: sustainable home improvement. In 2008, he and a group of fellow businessmen were lobbying the Texas legislature on behalf of clean energy legislation. “I was walking the lobby, and all of a sudden, a question occurred to me: ‘Where the heck do you go if you want to make your home more efficient? Where do you buy this stuff?’” he said.

There was a hole in the market, he realized. Mainstream home-improvement stores like Lowe’s and Home Depot usually stock a selection of sustainable, green and energy-conscious products, but their offerings tend to be inconsistent, anemic and poorly organized. Worse yet, their salespeople are often undereducated about the products that they sell, which can lead consumers to buy unnecessary products or install them incorrectly.

In 2009, environmental consultant Jason Ballard approached Boone with the idea for TreeHouse, a home improvement retailer that would focus on sustainable, environmentally friendly, energy-efficient products. Boone agreed to invest in the proposal – and, eventually, he signed on as chairman of the board. The store, in Austin, Texas, opened its doors in 2011.

Like The Container Store, TreeHouse is attempting to transform the market by giving the general public access to a wider array of products. “For years, progressive architects and designers have been leading the charge to make efficient, well-designed sustainable building products increasingly available for commercial use,” Boone said. Unfortunately, most of these products aren’t available to the average consumer. Ballard and Boone hope to change that.

Established model, new market

TreeHouse’s biggest challenge is similar to the one that The Container Store faced in 1978. Like the storage retailer, it’s building a new market that consumers may not completely understand. Currently, customers interested in reducing their electric bill or cutting their carbon footprint are faced with a baffling array of products and options, some of which are outstanding – and many of which are not.

To make matters worse, if customers want accurate, up-to-date information on sustainable products, they usually have to do a lot of research on their own. That combination of limited access and a dearth of information creates hurdles that turn many consumers off.

The solution that Ballard and Boone developed is twofold. To reduce the confusing plethora of options, TreeHouse curates a limited collection of products.

“We’re making pre-decisions,” Boone said. “We’re giving customers three choices instead of 10.” That small selection – which TreeHouse categorizes as “better, best or exceptional” – offers a balance between price and performance that customers can easily decipher.

Another part of TreeHouse’s careful curation lies in its interior design. The store carries most of the items that one would expect of a home improvement store, but organizes them very differently. Rather than arranging its products by function – plumbing, painting, carpentry and so forth – TreeHouse divides most of them into either “design” or “performance”. Ballard compares this to a “designer/engineer” division.

“On one side, we have products that are focused on maximizing the performance and operations of a home,” he explained. “On the other side, we have products that are focused on how a home looks and feels.”

Another major aspect of the TreeHouse model is education, both of customers and employees. Every employee in the company receives 110 hours of training per year to ensure that he or she is up to date on the latest sustainable home improvement products, Ballard said.

Even with that level of education, however, it takes about two years for workers to get completely up to speed. “We want all of our employees to know about our products,” he said. “We joke that our warehouse guys know more than most retailers’ salespeople.”

This educational focus also carries through to the store’s design. At the center of the TreeHouse store, Ballard has set aside a large area for education and product demonstrations.

While giving up a prime space on the sales floor was a controversial decision, he emphasizes that the education space is key to differentiating TreeHouse from other home improvement retailers. “The Home Depot model doesn’t work for us,” Ballard explains. “We have education-based selling. We don’t just sell products. We educate our customers.”

Expanding stores and standards

Ballard’s goals are ambitious: he plans to have TreeHouse in every major market within five to 10 years. “Within 20 years, we want to be in every market,” he said.

It’s an aggressive goal, particularly for a company that – at present – only has one store. However, there’s little doubt that the market is there.

Since 2012, the construction industry has seen a year-over-year growth rate of more than 10% – and that rate has reached 13.5% in the last year, said Libby Bierman, an analyst at Sageworks. “With more construction, there’s been more need for supplies,” she pointed out. “And retail providers, even niche ones like TreeHouse, are stepping into a positive market that is growing substantially.”

TreeHouse’s story bears this out: its sales grew 21%, year over year, from its first to its second year in business. In its third year, that growth rate increased to 75%. “We’re not just growing, but we’re growing on an accelerating curve,” Ballard says.

As for the company’s ultimate goal, Ballard sees its potential as lying far beyond basic expansion. He wants TreeHouse to, effectively, transform home improvement.

With that in mind, the store deliberately downplays its sustainable bona fides. “The words ‘green building’ and ‘sustainable building’ aren’t on any of our signs in the store,” Ballard explained. “That’s because we hope that this approach will be the standard in 20-30 years.”

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