PARTY CITY TO OPEN 50 POP-UP TOY STORES ALONGSIDE HALLOWEEN CITY AFTER DEATH OF TOYS R US

PARTY CITY TO OPEN 50 POP-UP TOY STORES ALONGSIDE HALLOWEEN CITY AFTER DEATH OF TOYS R US

(Photo: Party City)

Take a trip back to your younger days with one of the nation’s best-known retail chains. USA TODAY

Another prominent retailer is seeing opportunity when it comes to filling the void being left by the liquidation of the Toys R Us chain.

This time it’s Party City, which said Monday it plans to open about 50 temporary toy shops for the holiday season.

The Elmsford, New York-based party goods retailer plans to locate temporary Toy City stores alongside its seasonal Halloween City stores. The stores will open in early September and stay open through the end of the traditional holiday shopping period.

The pop-up shop strategy aims to capitalize on the period during which toy sales are most lucrative – and not be stuck with largely vacant stores the rest of the year. The company said the list of locations hasn’t been finalized.

With Halloween City and Toy City under one roof, the stores will average 12,000 square feet of floor space, Chief Financial Officer Dan Sullivan said in an interview.

About two-thirds of the floor space will be devoted to Halloween City until the spooky holiday is over. After Halloween, most of the space will gradually transition to Toy City for the rest of the holiday season. Workers will staff the entire shop.

“We’re going to have a very robust assortment – toys, action figures, dolls, crafts, games, puzzles,” Sullivan said.

He said it’s unlikely the store will sell video games or software, and they won’t sell outdoor equipment such as bikes.

Party City isn’t alone in trying to capitalize on the collapse of Toys R Us.

Department-store chains J.C. Penney and Kohl’s have both announced plans to “enhance toy offerings” for the 2018 holiday shopping season, Jefferies analyst Stephanie Wissink wrote in a recent note to clients. Kohl’s, for example, plans to begin offering Lego and FAO Schwarz branded items.

But the biggest winner after the liquidation of Toys R Us might be online seller Amazon, as toy spending shifts to more electronic items. Amazon is expected to keep prices low, which “could minimize sales and profit potential,” Wissink said.

Nonetheless, Party City says it’s identified an opportunity.  Its strategy, which includes online sales, reflects a new strategic venture for Party City, which makes about 25 percent of the party goods it sells. Altogether, the company either manufactures or directly procures about 80 percent of its products.

But to attract customers who previously shopped at Toys R Us, the company will have to carry products made by the major toymakers. Suppliers will include Hasbro and Mattel, Sullivan said.

The announcement comes as Toys R Us is wrapping up its liquidation. The big-box chain filed for bankruptcy in September and decided to close all of its U.S. stores after failing to reach a deal with creditors to keep some locations open.

Party City described the strategy as a pilot project, which suggests it could be expanded further if the plan bears fruit. The company has about 900 stores, including 150 franchised locations and temporary shops.

The retailer plans to open about 250 to 270 Halloween City locations this year, Sullivan said.

The company is hoping that its ability to offer six months of rent to landlords will help the combined Halloween City-Toy City shops secure higher-grade real estate locations, Sullivan said.

“We think it’s a really neat opportunity for us to test a concept, and obviously market dynamics have helped,” he said.

 

 

Source:  USA TODAY, June 2018