June 1, 2005
At Party America
Expert confections category merchandising helps this fast-growing retail chain deliver complete party planning solutions to its customers. By Mary Ellen Kuhn
Hearing Party America described as the “nation’s No. 2 party store chain” doesn’t sit all that well with the folks at the company’s Alameda, Calif., headquarters.
Sure, Party America is second in size to the 506-store Party City chain, which has revenues in excess of $1 billion. But the committed, upbeat staffers at Party America don’t think of themselves as second-class citizens in the realm of party goods merchandising.
And rightly so. The chain is a merchandising award winner on the retailing fast track. Thanks to a series of acquisitions made in the past two years, Party America has grown from a regional chain of 36 stores with sales of about $55 million to a national chain with stores in 45 states and sales of more than $225 million.
Candy gets prime location
Candy occupies an exalted position adjacent to the high traffic balloon bar in Party America stores. Inflated balloons are the chain’s stock and trade, so the location is “prime real estate” in the store, reports Dale Cuevas, divisional merchandise manager, everyday merchandise.
The 12-foot candy set includes everything from five-pound bags of Kiddie Mix assorted candy to the popular mini gummi hamburgers, hot dogs, and pizza SKUs priced at 20 cents each.
The sandwich and pizza gummies “sell phenomenally,” reports Cheryl Mitchener, buyer, everyday merchandise. “People buy them 20 or 30 at a time as treat bag stuffers,” she says.
The Party America candy assortment includes top-selling candy bars, kids’ novelty/interactive items, and plenty of peg bags and laydown bags. The everyday candy set numbers between 150 and 200 SKUs. Price points for candy range from the previously mentioned 20 cents up to $9.99. In addition to the candy-aisle offerings, changemaker items such as Ghirardelli Squares and Lindor Truffles are featured at the checkout counters.
Licensed products are an especially important part of the candy set, just as they are for the themed party goods the chain stocks, and staying abreast of what’s hot in the licensing arena is critical.
“We carry a great deal of licensed product,” says Mitchener. “When moms are shopping for their kids, the kids want a certain license. This summer, it’s going to be Star Wars, and its great to have a candy to go with that. So we carry...all of the big licenses that kids want.”
“We find that when there’s value, the moms don’t mind spending a little bit of extra money for the license,” says Cuevas.
License to experiment
“We are trying some different things,” Cuevas continues. For example, the merchandisers just worked Disney Princess Gummi Bracelets from Imagination Confections into a new princess party goods set.
“We have a new princess merchandising section that is just going out,” says Cuevas. “We are going to incorporate those bracelets there and see how that performs.”
Cuevas and Mitchener see additional examples of candy cross merchandising in the party chain’s future, particularly with licensed products. “We may do that with the NASCAR line,” Cuevas continues. “Or maybe something with Sponge Bob. You always have to try something different.”
Positioning licensed candy within the various themed party goods sets allows the chain to deliver on one of its primary retailing objectives of simplifying the consumer’s shopping experience.
“When you run in to plan your kid’s party, a lot of times it is at the last minute or done on a lunch hour,” says Cuevas. “We want to make that experience as complete and easy and as fun as possible. So candy could be a vehicle for accomplishing that...I don’t know that mom always has time to get the plates, cups, napkins and party hats and then remembers to go to the candy aisle to see if we have candy [to go with it]. But if it’s sitting in that set, she’s much more apt to grab it as an incremental sale. So we’re trying it.”
More secondary placements
Candy also is merchandised in Party America’s wedding section. Along with gift wrap, favors, invitations and the like, wedding goods shoppers will find bags of Pillow Mints from Sconza as well as Wilton Mint Drops in peg bags and 32-ounce tubs of Richardson After Dinner Mints.
One of Party America’s biggest confectionery success stories has come in the colorfully whimsical form of Twinkle Candy lollipops. “They retail for just 35 cents,” says Mitchener, “but we sell hundreds of them at a time. People will come in and buy 50 or 100 and make bouquets or centerpieces out of them...or use them as a decoration on top of their package. That’s really something that has crossed over...even though it’s in the candy department, it works in gift wrap to go with your bow or as a centerpiece. So those have been really great for us.”
Twinkle Candy pops currently are merchandised in the store in an innovative display rack that resembles a floral merchandising fixture, with the pops positioned in rows of vase-like containers. In addition to the individual pops, a Twinkle Candy lollipop bouquet sells for $4.59.
The baby-themed pops (in shapes such as teddy bears and tiny feet) have been a big hit, so Mitchener and Cuevas have added them into the plan-o-gram for baby shower party goods. The pops will be showcased in customized fixtures attached at both ends of the baby set.
In addition to the everyday candy SKUs, Party America stocks a healthy assortment of seasonal candy offerings. In fact, seasonal products account for 26 percent of total candy sales. As is the case with the everyday assortment, the top-selling seasonal SKUs are novelty-interactive items.
One percent better
The Party America team is led by CEO Marty Allen and Executive Vice President/General Merchandise Manager Alice Tang, who came on board eight years ago to turn around the then struggling (and much smaller) chain. Creative merchandising and responsiveness to customers are at the core of Allen’s and Tang’s retailing vision.
The stores are spacious and colorful. The superstore format stores—which boast wide aisles and distinctive overhead lighting fixtures arranged in a zigzag pattern—are built for customer comfort and deliver the “It’s a party!” message loud and clear. Even the restrooms are decorated to reflect the appropriate season. (It was luau time when Confectioner visited.)
Among the chain’s most popular perks is its practice of providing free refills for balloons purchased online at the Party America web site or for those purchased in the stores within the past 30 days. Party America also offers free helium-filled balloons to young store patrons.
“One of our CEO’s big things is that you can’t do anything 100 percent better, so you try to do 100 things 1 percent better,” notes Cuevas.
Despite his CEO status, Allen works to stay in close contact with consumers. “All of the customer service calls that come in go directly to our CEO,” Cuevas reports. “He addresses them—to make sure that if there are any kinds of issues, that they are resolved. Luckily those are few and far between, but he feels that he needs to be involved.”
Working with vendors
Assembling an all-star candy assortment—complete with all the latest and greatest licensed candy SKUs—is challenging job for Mitchener because she purchases not only candy, but about a dozen other product categories as well. She and Cuevas both try to manage their vendor relationships efficiently.
“We love to entertain vendors because you learn a lot,” says Cuevas. However, he continues: “We run a very lean organization, so our policy on appointments is this. We try to accommodate vendors, but we also don’t want them to fly out here and do big presentations if we can’t react to what they’re showing. So once the candy assortment is set and done, we would want to touch base with them just to get an update of what’s new, what’s fresh, what’s available. That doesn’t always require an on-site visit.”
“I like to see catalogs and samples before we ever sit down for a meeting,” says Mitchener, “because we don’t want to waste their time if it’s not going to be something appropriate for us.”
Trade shows are another great opportunity for checking out new products, of course. Mitchener is a big fan of the All Candy Expo.
“I’ve been to a lot of candy shows,” she says, “and I think All Candy Expo is the most appropriate for our industry. The All Candy Expo is full of the kinds of products we need to see.”
Cuevas and Mitchener see candy as a growth opportunity.
“We have the potential to grow exponentially as a category in the party industry, I think,” says Cuevas. “It has a lot of do with keeping the assortment fresh and keeping up with the newest licenses.” The same can be said of Party America’s positioning in the marketplace. “I think one of the keys is to have something new, something different, something fresh—and to offer depth and breadth of assortment,” summarizes Cuevas. n
Party America’s Fast-Track Growth
Party America’s recent dramatic growth has come via two major acquisitions.
In October 2004, Party America purchased Wisconsin-based Party Concepts, which added 160 stores. They operate under the names Great Party, Paper Factory and Paper Outlet.
Just about a year prior to that, the company had purchased Minneapolis-based Paper Warehouse, which added about 100 stores. With that acquisition, the chain got into franchising. Party America currently has more than 60 franchises and is making them available throughout the United Sates and internationally.
Title: Divisional Merchandise Manager, Everyday Merchandise
Academic Credentials: B.S. in Business Administration, University of Southern Mississippi
Career Track: Cuevas started as a buyer for Dole Foods and worked his way up through the procurement and logistics organization of that corporation. Was named to the “International Who’s Who of Professional Managers.” After realizing that life was moving too quickly, he decided to take some personal time to relax, experience something new and enjoy himself. He moved to Alameda, Calif., and found an opportunity at Party America. He started as a buyer, and in the wake of Party America’s recent acquisitions, was promoted to his current post.
Words to Live By: A sense of humor is part of the art of leadership, getting along with people and getting things done.
Best Thing About Working for a Party Chain: It’s a PARTY chain!
Favorite Party Theme: Hollywood/Oscars
Title: Buyer, Everyday Merchandise
Academic Credentials: Bachelor’s degree in International Business, California State University
Career Track: A relative newcomer to Party America, Mitchener has been on the job for just seven months. She has ample experience as a retail buyer, however, having worked in that capacity for Macy’s Department Stores for six years, and also for the Duty Free Shops chain.
Words to Live By: Life is too important to take seriously.
Best Thing About Working for a Party Store Chain: The variety of merchandise
Favorite Party Theme: 70s Disco