Party City Is On Top: Lessons Your Company Can Learn From This Industry Leader

If you’ve ever visited a Party City store, you’ll see a tightly run business model with an immaculate store appearance reminiscent of Loblaw’s store model. The aisles have a crisp, clean look and all store shelves consist of products that are fronted and stocked well enough to produce an impressive display.

Party City is North America’s top party retailer with more than 750 stores within the $10 billion retail party goods industry. It sells party items including paper and plastic tableware, metallic balloons, accessories, novelties, gifts, stationary and Halloween costumes. All retailers can learn things from the Party City corporate model and adapt and apply aspects of this model to their own stores.

Party City is a fun store in every sense of the word. Upon entering, it is hard not to get caught up in the fun and exciting store environment.

Some of the party supply items available for sale are glittery and eye-catching and there are large sections of products that are tied into different themes.

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Some of the different store sections include Hawaiian, Halloween, birthdays, and retirement. The juvenile birthday aisles contain licensed party supplies that are similar in theme to the birthday themes that many other retailers sell.

Halloween is the biggest moneymaking holiday at Party City. Last year, one quarter of entire annual revenue from Party City came from Halloween.

Birthday party sales were the next big moneymaker for the company. This includes things like tableware and balloons.

The girl-themed birthday aisle has licensed products like Cinderella, Lia Sophia, and Strawberry Shortcake.

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Some licensed product companies Party City is in partnership with include, Disney, Nickelodeon, Sesame Workshop and Hasbro. The company also licenses a wide variety of sports-themed products from the NHL, NFL, NBA, MLB, and NCAA.

Party City operates a vertically integrated business model and is able to manufacture, wholesale and sell goods through its retail stores. The company sells its manufactured products through a variety of third-party channels outside its own retail stores.

During the first quarter of 2015, the company saw a healthy increase in comparable store sales and the wholesale business was driven by a strong demand for licensed juvenile birthday products, metallic balloons and higher international sales.

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The center of the store is called Candy City and this is where customers can find a wide assortment of bulk candy items. A huge life-size gumball machine is in the middle of this section and features separate bulk candy bins around the outside priced at 15 for $1.

The bulk candy section is an eye-catching, brightly colored display that invites customers to purchase.

Within the Candy City aisles, there are a wide variety of candy items, dessert and candy bowls and dishes and birthday treat bag items.

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Party City does a great job turning boring products like napkins, plates, glasses or mints into an eye catching, rainbow-coloured display.

This type of use of the colour spectrum in grocery / CPG displays is underused and is very effective in drawing attention in a cluttered environment.

Paper crafts have recently become popular in the Canadian crafting industry and Party City sells a variety of these products. For example, customers can purchase paper ice cream cones within the dessert-themed party section and can hang them from the ceiling as party decorations.

After opening this type of product, customers ‘fluff’ open the paper ice cream and attach the cardboard cone provided.

So what can other retailers learn from the Party City business model?

Other retailers should feel free to experiment with eye-catching displays. Bulk bin sections can be dressed up to entice customers. For example, Loblaw’s bulk bins at Superstore can be merchandised differently and can have their own, unique stand-alone section.

Many retailers including Walmart, Loblaw, dollar stores and other retailers sell birthday party items. Most of these retailers are offering these products based on price and not differentiation. However, they have the customer base in their stores to sell these popular items and if sales are profitable, they could consider additional store space.

Retailers can also start to continue to beef up their merchandise for Halloween. This holiday appears to produce lucrative results and retailers should produce eye-catching, visible Halloween displays that are in the front of the store.

Lastly, retailers can start to explore vertically integrated business models and determine if these models or hybrids of these models would be profitable for business. For example, Loblaw currently manufactures its own President’s Choice (PC) brand and after purchasing Shopper’s Drug Mart, the PC brand has started arriving in Shoppers stores.

But what if Loblaw shopped around its PC brand to other retailers to sell?

Retailers are in a position to study each other for ideas relating to business and Party City is one company model that can be studied for these purposes.

Party City plans to increase its store count by approximately 30 stores per year until it reaches approximately 1,200 stores by 2025.

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