by Kate McMahon
They are the annual harbingers of fall: the onslaught of pumpkin spice products, football prognostications and Halloween pop-up shops.
This year, however, Party City is moving beyond its traditional Halloween City pop-up extensions on two fronts – by selling costumes on Amazon and creating companion Toy City shops which will stay open after the last Wonder Woman outfit is scooped up on October 31st.
I think that both are smart moves this season, particularly since the demise of Toys R Us.
Spending on Halloween costumes, candy and pumpkins rocketed to a record $9.1 billion in 2017, according to an annual survey by the National Retail Federation. Halloween is Party City’s biggest selling season, with costumes representing about 5% of its annual revenue.
In addition to its 900 stores and its website, Party City typically opens about 250 Halloween City pop-ups. So why launch a pilot program on Amazon’s marketplace platform and pay a commission?
Simple. With the e-commerce Goliath dominating the space and some 50% of all searches, it’s impossible to beat them. More and more retailers, such as Nike, Chico’s and Best Buy, have opted to join them. Or, as Party City CEO James Harrison told Bloomberg: “It’s the world’s largest mall. It gives us an opportunity to reach out to a large segment of the population.”
It makes particular sense for Party City, which merged with wholesaler Amscan in 2005 and morphed from mere retailer to manufacturer as well. In fact, Party City Holdco now produces about 80 percent of the merchandise offered through its retail operations, and its wholesale brands such as Costumes USA are sold to other stores as private label goods.
In a statement, Harrison said the 50 Toy City shops opening next to select Halloween City stores allowed them to leverage existing pop-up capabilities in “optimal” markets and “capitalize on the category whitespace that has recently been created.” That is a very genteel way of describing the deep, dark retail void since Toys R Us shuttered its 735 stores across the country due to bankruptcy.
From a practical standpoint, it makes economic sense to lease space (and there’s plenty of that in malls these days) and hire workers for a four-month season instead of two, and it gives Party City an entrée into the toy business. It is also an opportunity to sell more holiday season party goods and accessories once the ghouls and goblins are packed up November 1st.
In fact, in New Jersey, four of the six Halloween City/Toy City pop-ups are in retail spaces occupied formerly occupied by Toys R Us and/or Babies R Us, according to NJ.com.
Ironically, CNBC noted that Party City's moves are reminiscent of those of Toys R Us in 2010, after KB Toys went bankrupt and shut down its stores. Toys R Us opened hundreds of pop-up shops, and some were kept open permanently.
I think this holiday season will see Amazon, Walmart and Target pull out all of the stops to capture the Toys R Us “kids” and parents market, with other brick-and-mortar stores scrambling to compete on price and delivery.
It’s apparent that Party City is looking at the longer play, and engaging more millennials to shop online and post party photos on social media. Or as Harrison said in an interview: “We’re looking to broaden our reach to a constituency that really isn’t our core consumer at this time. Our brand awareness really resides with mom and grandma.”
I’d call that pretty prescient thinking. As a mom (not grandma) who has spent countless hours shopping in the local strip mall Party City, I can’t recall seeing many 20- or 30-somethings in the store. And my big birthday party/costume shopping years have both regrettably and thankfully come to a close. But I still may need to order a scarecrow or Santa online.
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