We Fixed It, You're Welcome - Rethinking Retail: Party City's Demise

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Starting point is 00:00:22 Saving those children is how we all go home. From binge all episodes exclusively on Paramount Plus. All right, here's how this works. In each episode, we pick a company we all know that has something going on right now. Then we put ourselves in charge and see if we can fix it. You'll be hearing from Melissa in Operations, Peter on finance, Chino on people in culture, and me on marketing. My name's Aaron. As always, a quick disclaimer, we are going into this somewhat cold and nothing we say should be construed as legal advice, financial advice, or anything that would get us in trouble. These are our views and opinions. We're here to ask the kinds of questions everyone's thinking,

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Starting point is 00:01:44 downloads and we're getting guest inquiries, all the good things you want to hear about. So if you want to suggest the topic or reach out to our team, we're at we fixeditpod.com. I want to mention we are without Peter today, who's our financial expert, but fear not, you have the fearless trio of Chino, Melissa, and myself. In this episode, we're going to look at the unexpected bankruptcy enclosure of Party City and the bigger challenges that are facing malls and retail centers. In this day and age, does it make sense for specialty companies like Party to still have a large retail footprint.

Starting point is 00:02:16 And if so, what does it take to survive? When a company like Party City goes under, is it just another isolated incident or a wake-up call? And more importantly, what are we going to do about it? And what are we going to do with all that empty retail space? As always, it's up to us to fix it. So let's get into it. Let's talk about Party City.

Starting point is 00:02:34 Any memories or recollections about Party City? Well, I think of an interesting, more current Party City story. It has to do with my members. middle daughter who went viral on TikTok for a ghost. She believes in ghosts. So, anyway, Chad the frat ghost. And Party City reached out to her last Halloween, not this last year, but two years ago, and asked to do a collaboration with her. And they paid her to do shoot two videos. And they also gave her a thousand dollars worth of credit in a party city store or online, which if you know and have been to Party City, I think that's about everything in the store.

Starting point is 00:03:14 So that was a lot. She did two really fun videos. She, you know, neither one of them went hugely viral compared to some of the, like, the other videos that she's had, like, six million hits or something like that. But I thought it was interesting because I think we'll get into this topic of seasonality and how Party City was very focused on the seasons because that's when parties happened. So like Halloween being one of their biggest seasons, but maybe not keeping in, mind the competition, which is so important.

Starting point is 00:03:48 Because one of the things my daughter did was have the ghost choose which costume he liked best. And so she went and got some costumes from Party City. And her comment to me after the fact was that she felt the costumes from the Halloween Spirit store pop-ups were much more relatable to what, you know, people. want today. So I thought that was an interesting thing because I think we're going to be talking about what got Party City to where to this bankruptcy stage. And I think this focus on on the seasonality, but also maybe not keeping your eye on the ball and why your competitors are doing so much

Starting point is 00:04:33 better than you are. Yeah. Well, good good point about seasonality and about relevance. Party City was up until recently a pretty big powerhouse. If we go into the history, it was founded in 1986 in Woodcliff Lake, New Jersey, became the go-to retailer, you know, the name brand, right, for party supplies and costumes, decorations, over 800 locations at its peak. And like you mentioned, Spirit stores became part of the national conversation every Halloween because of the costumes and the decor and the what have you. But even in off-peak seasons, you would go in for a mix of party supplies or balloons or birthday favors or candy and novelties, that kind of thing. And then even up to pre-pandemic was performing well financially, reached revenue about $2.35 billion in 2019. But since then, it's been facing debt pandemic-era supply chain issues that maybe didn't recover from. And we'll get into it, but changing consumer behaviors and we'll talk about all that stuff.

Starting point is 00:05:34 So filed for bankruptcy January, 2023, came out of it. September went from 850 stores to around 700, bankrupt again by the end of 2024. And now it's a daily news topic, but all stores are expected to close by February with current plans to auction off the remaining 695 stores in the U.S., including 26 in New Jersey where it all started. So kind of a sad end for what you call a retail mainstay. Well, let's talk about it. What, you know, what, what happened? And we can talk about, you know, what are we here to fix? What kind of situations? Can we turn Party City around or is it, you know, endemic for other retailers and that type of thing? Should we all be paying attention to this? I think we should. I think we should. And what's really interesting with Party City and kind of my background and experience with that would be I go to Party City every single time. I'm hosting some type of event and having a dinner party. I don't want to wash dishes.

Starting point is 00:06:38 You know, you can go to the dollar store. I can order it on Amazon. But if you're like me, who's someone who does things very last minute, I'm always running to the store, you know, two hours before an event to kind of get those remaining stores. And there's a lot of us that are there. And so it's sad, especially being in Canada, where we have a few party city locations that are huge in size, right? We don't have as many or as high a number as you would in the States,

Starting point is 00:07:11 but the ones that are in Canada, specifically in Toronto, the three mainstays that I'm thinking of, are mega stores. And so it is really helpful when it is those peak times like Halloween, Christmas, any other times that there's a birthday, which is essentially every other day, it looks to be quite packed. But the challenge, that I'm finding is, you know, the dollest or obviously Spirit Halloween during Halloween and Amazon, frankly, if you can literally plan like a day or two ahead, it's often cheaper to go on Amazon. And so it begs the question, do you need these mega, you know, retail locations to hold

Starting point is 00:07:56 products, as you said, Melissa, that maybe aren't the most up to date and sure there's some novelty things, but it's not what consumers are necessarily looking for. So it's interesting. I do think it's going to be a challenge, not just for specialty stores like Party City, but looking at retail in general. Yeah. One of the things that I was thinking about when we talked about this was, what are the operational opportunities for adapting some of these empty retail spaces, as well as What have other big retail box stores like, you know, like the party city's done to overcome this? And I was doing some research on this and it was funny because I was actually just at my local Barnes & Noble. And Barnes & Noble has actually been a great story that they have transformed kind of that big bookstore thing.

Starting point is 00:08:52 So, you know, borders went under. There was this whole plot that, you know, Barnes & Noble was going to as well because it. Amazon books, you know, Amazon was killing it. You don't have to go anywhere to get a book, right? You can just go online. And so it's interesting to hear what the new CEO talks about and the way he addresses the business. And the way he addresses it is he looks at it as an experience and he looks at it as a creative space that should be owned by the local management of that store. So he said they know best the customers who are actually walking through that door. And it was interesting because they were talking to a manager at a New York store, for example.

Starting point is 00:09:38 And she was saying that pre this gentleman, he came from a British book chain. So I think it was called daunt, dauntless or something like that. And he said that they said they would be told what books to put on what tables, where the tables were to be located, and to what degree an angle the tables needed to be shifted towards. I mean, it was all laid out for them, architected for them. And then when you look at the book, the Barnes and Nobles, for example, in New York City now, the neighborhoods might make it look and feel like almost like a local neighborhood bookstore.

Starting point is 00:10:20 They'll cram it with a bunch of books that they think are, going to be very interesting to the locals, including what might be around that, you know, that locality. So if it's a hot restaurant, I'm making this up. But if it's a hot restaurant area, you know, maybe they're going to have a bunch of different types of cookbooks and they're going to have pop-ups with authors, et cetera, et cetera. So I think that that is one way of addressing the competition and what we were talking about with Party City is they've had a great model that Chino, You and I, you know, when you have kids, Party City is a place to go to get the little party favors. I do want to say, whichever mom created the party favor bag, I want to kill her because not the point of crazy.

Starting point is 00:11:06 But, okay. But Party City did a great job with that. Like, you could go into an aisle and just pick willy-nilly and have everything ready to go. But my, you know, my thought to them now it's too late, obviously, but would have been to transform that party. experience and maybe have it be like a creative space on how to throw a amazing dinner party, right, and have a table set up and actually have the party city employees be party planners. And you could go to one that's like, I do, I'm a specialty party planner for birthdays 10 and under. So I'll tell you what's the hot thing.

Starting point is 00:11:49 Everybody wants, you know, Captain America or whatever, you know, and then you would have it all ready to go. Or you could learn because I really feel like Etsy, Pinterest, all of these things. If you look on TikTok now, everybody's doing it yourself, DIY. And so maybe it needs to be something like that where they have these DIY like wedding shower, you know, all the different types of parties. and you could have events where you're actually showing people or actually posting these online and showing them exactly what the items were that you were using. Yeah. I'm with you, Melissa.

Starting point is 00:12:28 You're talking about 10,000, 12,000, 15,000 feet of retail space. That's a lot of space for napkins and party hats, right? I was kind of thinking along the same lines as, you know, I was there in November. I was less than a party city. And it was bleak, right? it's cold and, and, you know, you could be anywhere. You could be at a hardware store. And when you have a brand, you own all the elements of the brand,

Starting point is 00:12:55 including the name and including everything that could represent. And I always wondered with something like Blockbuster, if they were about the, you know, too late to save them, but unless they make a comeback, but they were about the theatrical experience and the love of movie going. And I always wondered, could they have become little like pop-up theaters inside of a mall, you know, and run these little, you know, odd time, have to be there to enjoy it type of theatrical experiences in the middle of a store would not be kind of cool. So rethinking if they're, they're all

Starting point is 00:13:27 about movies, but party cities all about parties, why don't you feel like you're at a party when you walk in the room? You know, they own that or they could. Right. And from a customer experience perspective, like I said, Chino and I are great examples of this. You know, we want it to be easy. We know in our head what we want, but like, I can't think of everything, right? And so wouldn't it be great that if you could walk into it and say, okay, this is for a baby shower. And I know they're way better baby shower ideas and favors and games and, you know, paper plates or whatever. And if they have that already set up for you to see and then you could pick what you wanted and it would be really easy and it'd be all packaged. I mean, I would love that because it's the ease of that.

Starting point is 00:14:14 And you think about all the things that are happening today with like, you know, gender reveals and everything like that is like have they moved away enough? They hadn't moved away enough from like, you know, the birthday parties for kids and the helium balloons. And then there was the helium shortage, which was crazy. But yeah, there's that. So there's just a lot of business things to think of. Chino, I wanted to ask you, though, a people question because one of the things about this has been the way they announced it, especially to their own employees, was just, we're shutting down.

Starting point is 00:14:52 Yeah. And it was right before the holidays. So could you imagine where your whole brand is party and celebration. And right before, arguably the biggest celebration, everybody's waiting for that holiday to shut down. It's devastating in any way to be let go before a holiday. But especially in a company where your brand is holding on to, you know, being a part of a party. And so, you know, it is very hard. I understand as business leaders, um, to make those calls. Like you are impacting thousands of people's lives and like the trickle effect from that. But as we mentioned, as you mentioned earlier, Aaron, they've already filed for bankruptcy earlier. Earlier was the last year in 23. And so

Starting point is 00:15:45 they knew this was coming. This is not, oh, this just happened one day and we didn't know the numbers and whoopsie. This was a very planned, very strategic move and to move into the new year saying we're done.

Starting point is 00:16:00 It's a challenge. And I think that sure, you can take the approach of being kind of removed from the situation. And I just think it's the cowardice way to go. I'm going to say it. I'm sorry to every. I know there's lots of layoffs happening, but you don't need to be like everyone else. And I feel like we've become so desensitized to layoffs that

Starting point is 00:16:24 when you hear an announcement like this, it's like, it's a part of all of the many other layoffs. And I just think, again, the world is small. People will move on and they will find other opportunities. but as those managers, as those people who were responsible for those people, there is some form of responsibility you need to take. And if you can at least go the high road with that, and I hope that they had a hefty severance package, because again, you knew this was coming. I hope you weren't doing hiring ahead of time,

Starting point is 00:17:00 which again, a lot of companies do where sometimes their job posts are still up. And so it's really important to think about the human, of this obvious time of year is really important. I think it wasn't the best move to do that. If they had announced that come, you know, end of November after their peak season being Halloween, that would have been a better time to do that so that people can at least have a bit of approach going into the holiday season versus hearing this. I think it was two days before Christmas, which is heartbreaking. And at that point, no one's hiring. No one's doing anything. Everybody's logged off. So you've put people in a,

Starting point is 00:17:38 very weird position where come January 6th, when everyone's kind of back from vacation, they have to kind of, you know, fingers crossed and hold their breath until that time is there to actually make any type of moves to look for new opportunities. So again, I just think there's a more human way and approach to do this. And I just would love to see more companies going that way versus taking the coward's route and just cutting people like they're just numbers. Well, and I would imagine that with their store employees, most of those store employees are hourly. So I would think that even in a best case scenario, their severance packages would be fairly minimal. My understanding was that there was not any of that, but I don't know.

Starting point is 00:18:25 And to your point, I wonder if they did this also to even that small amount of severance, let's just say it's not, you know, their debt was over a billion dollars. So let's just say it's, you know, $100 million or whatever. That they were hoping that people would just come back and quit. Because, you know, if you're working retail at Party City, I mean, I'm going to try to go get another job somewhere else. I'll go to Whole Foods. I'm going to go to, you know, Hobby Lobby. I'm going to go to Dick's sporting goods. I'm going to go somewhere else.

Starting point is 00:18:59 So to me, I think you hit it on the head, though, is that the human aspect of it, is somewhat ignored in these kind of very abrupt announcements as if it's not the holidays, as if everybody doesn't have a life that's going on right then. So I mean, I appreciate that, you know, because I think calling out the cowardness in it is really important because that's not just party city. It's everybody. There have been so many layoffs this year and there have been so many things that point in a different direction where, you know, the CEO is, is bonus millions and millions of dollars or stock options and, you know, and yet, you know, entire teams are being decimated. And that's really, it's really a frustrating sign. And just so

Starting point is 00:19:49 someone's stock can go up or whatever, you know, that's just, it's just frustrating. It is. Yeah, go ahead. It is. And what was interesting, too, I believe they let go of a lot of their executives ahead of time as well. So the executives actually got let go, not the executives, with leadership, people in kind of the office versus retail stores were let go prior to the retail store workers because they still needed people, you know, on the job. And it kind of brings up the point of how do you keep that momentum, right, from a cultural perspective? Like I think we brought up some incredible ideas of how we could have reinvented Party City and make it a place and really experiential focused, you know, really catering to a do-it-yourself.

Starting point is 00:20:35 crowd, but, you know, with the people like me who are still very last minute, I need to run and maybe don't have the time to build a Pinterest board. And so I think there are so many opportunities and I would love to, you know, I know it's a very hard decision. It's, we're kind of past, the ship has passed in a way. But I would love to talk about how other specialty stores can maybe learn from Party City and how they can, you know, stop the ship hopefully in its tracks and kind of to a different direction. Yeah, well, I think it goes back to owning, you know, the core aspects of your brand and not being afraid.

Starting point is 00:21:11 You, when you're in buried and in survival mode, you know, you try to turn out as many blue forks as you can, I guess. But when you have a moment to sit above it and say, look, if we sell another gross of blue forks, is that going to turn us around? Or do we have to rethink our model? Put the brakes on for a second. And I do wonder, Melissa, I don't know, operationally if this, we could, whatever, fly, but, you know, we're throwing out ideas. Could Party City have become a party venue after

Starting point is 00:21:40 hours and use 10,000 feet of space and, you know, you rent it out? And there's all of a sudden a new revenue stream and then the stores are tailored accordingly. Like, could they have rethought what they stand for and, you know, what's at the core of their business model? Could that potentially fly as, you know, another way of staying viable? I think that's a great example of thinking outside of the box and thinking about how your customer experience has transferred or transformed over time, as well as the need for operationally for you to have very discipline and rigor. I mean, I know those are kind of corporatey jargony words, but it's really true. So they, when they came out of the bankruptcy the first time a year ago, their debt was still

Starting point is 00:22:31 at a billion dollars. I mean, a fork, a gross of forks, that's not going to cut it, right? So you really needed strategists to come in to transform the entire operations. And I think you kind of hit it, Aaron, like what are the kinds of things that people are paying for today? And like I said, what kind of partnerships are they having? I mean, them partnering with my daughter was a great idea, but they really could have maybe partnered with bigger venues, right? Like, if you think about it, like, I, Chino, I don't know how old your kids are,

Starting point is 00:23:05 but like, I remember when laser tag parties were a big thing. Oh, yeah. And I always used to laugh, you know, Martha Stewart living. I, I was like, my, my Melissa Eaton would be buying because I just, I don't have time to build, do all that stuff.

Starting point is 00:23:21 And I loved that the laser tag place started to evolve so you could buy the entire package. Like, they asked you, like, what kind of, what kind of room do you want to have? Is it a girl? Is it a boy? Do you want, you know, balloons? Do you want a cake? You know, do you want us to do pizza? We will do all of it. And like, I loved it. I was like, I'm sign me up. Here's my credit card. But like if they could do something like that, they could have, you know,

Starting point is 00:23:48 partnered with some of these venues and they could get some branding acknowledgement and marketing acknowledgement and they could, you know, sell and they'd have this constant flow to these, to these places. I mean, I think the partnerships that they probably weren't thinking, they needed other places to go to partner when they actually probably really did. And I do love that idea of creating event spaces because right now, events, you know, now that we're out of COVID, event spaces are a big thing. And I recently went to event space. And that's all it is, is an event space. and you go and it feels a little warehousey, but like depending upon what the thing is, you bring in, you know, sports memorabilia, or you bring in, you know, a quartet or whatever

Starting point is 00:24:37 you want and you make it what you want. And I think that they miss that opportunity to kind of look at the broader picture and also not just focus on what was the blue fork. It was the Halloween costume when, you know, if you think about the spirit, stores, they're not paying rent except for two months. Right. They're paying for September and October. Like you see them, like, it's always interesting to me where they pop up.

Starting point is 00:25:05 Like, you're like, oh, wasn't that like a little gym over there? What happened? It's like this Halloween store, right? And they don't even need hardly any, they put one billboard on the freeway and then everybody's there. Yeah. So I think that like when I look at, you know, in. look at the way that their inventory was laid out too they had stuff they had to have every color

Starting point is 00:25:32 of fork right and do you really right you know like that's the kind of thing that probably they got caught up in and then they just didn't really think about that later i think that the owners of the space one of the trends that commercial realtors are talking about is those there's a lot of retail space that is being freed up. And they're focusing on what they're calling the four Fs, which is kind of funny, which is food, fitness, fun, which is experiential things like we were talking about pop-ups, things like that. And then physicians, which is not really F, it's pH, but medical, like med spas, medical,

Starting point is 00:26:17 urgent care centers. There's some talk about furniture and furnishings. but that seems a little weird to me because I don't know, do people, I guess people still go to furniture stores, right? Yeah. What's interesting, what's interesting to me is I want to talk about the competitors, right?

Starting point is 00:26:35 So you have Spirit Halloween who have brilliantly found a way to not pay the retail, you know, cost and kind of override that, which is brilliant. And then you also have Amazon where you online shop, right? and it comes to you two or three days later again, you need to be a little more proactive. So for the last minute shoppers like me, it's not great. And I think we're any specialty store that has a big event. The reason people come in, same thing with the furniture shop, right?

Starting point is 00:27:09 I'm doing all my research online. I have laid out what mattress I want. But you know what you can't do online is feel that mattress. What I need to do is if you're, If I'm, you know, planning a wedding or a baby shower and I don't have the time to put together this beautiful, you know, balloon thing or, you know, what's the latest and greatest decoration and decor or what did the seven-year-old boys love for their birthday parties? That's what people come into a store for.

Starting point is 00:27:45 And I think it's going to be very important for any store to remember that. nobody is shopping online not knowing what they want right we're browsing online we know that's what the consumer is doing the people who are walking into a retail store are looking for the experience they're looking for the feel and touch they're looking for that experience as a brand you need to have that in mind people can order it online how many times have you got into a store where they might not have the stock so maybe you know you had three different types of pink forks and I needed maybe a rose gold. I can order that online.

Starting point is 00:28:24 And if I need it, maybe you have some in the back. That's not what I'm there for. I'm there to either pick it up quickly or to experience something. And I think any store, especially a specialty store like Party City, where they have huge amounts of space, need to reimagine how they can bring that experiential to life. I love that because that's actually one of the things that Barnes & Noble talked about. They said Amazon is always going to have, I think they have like 58% of the book market.

Starting point is 00:28:55 Okay. But the CEO said they don't have that experience. So when you walk in and you can feel a book, you can smell the books, you can see them, right? You can see all the books that are like this murder mystery that you love, right? You know what I mean? And you can like, it's just an experience. And I think about like the last time I went to Barnes & Noble, I was looking at, for a very specific book.

Starting point is 00:29:20 And I went in, and of course, they didn't have it, which they were like, oh, we can order it for you, blah, blah, blah. And I was like, well, I don't know if I want to order it, you know, because I was like, I'll just go order it on it. And then the woman helping me said, if you like that kind of book, this is my absolute favorite book of the year. And I was like, really? And so I bought it. And you know what?

Starting point is 00:29:45 I've now bought three other books by that same author because I absolutely love that book. And I would have never known about it if I hadn't met this young woman who was working at Barnes & Noble that day. And she's just trying to help me. So I agree with you, Chino. I think that there's something about that personal connection that can't be, you know, you can't substitute. But Aaron, I have a question for you. And I know that Peter's not here, but do you think there's a possibility that part of city would come back in a different format like Toys R Us did, where they went, they closed all

Starting point is 00:30:22 their stores and then Toys R Us is slowly like somehow coming back, which is interesting to me. Good. I, you know, I really, I don't think they could come back as a commodity without the curation, right, like we were talking about. So if I'm going to walk into what feels like a warehouse and I'm going to go walk to the wall and pick out what I need and maybe someone will begrudgingly help me. That's not a business model. If we're going to go more into the party planning expertise and maybe you know, you do a minimum spend and you have a built-in party planner and you leave it to us and we're going to create the party for you.

Starting point is 00:30:58 And there's something to it, right? Who else is doing that in a retail mall environment? Maybe there's something there. Maybe there's something to the after hours venue or that you would go in for, you'd spend $40 on a Halloween costume, but would you spend $150 on a Halloween experience in real time. you know, in person. Not to say these are a waste of space. There could be, you know, something viable there. But even, you know, companies like T.J. Max are talking about experience and the thrill of

Starting point is 00:31:28 the hunt and in this day of age have little to no ecom, right? You have to be there. So I think that's what party city would need is something where you have to physically be there to, you know, take part in what they're all about. Agreed. And Aaron, I think you bring up. up a really good point too. You don't need a sales associate that's begrudgingly there. And I think, Melissa, to your point, you know, when you were talking about going to Barnes and Nobles and the sales

Starting point is 00:31:59 associate had a great recommendation, we need to move away from, you know, we're just doing sales. Like, it's important, right? We need to sell, it's a business. We get that. The best sales associates will be the connoisseurs. They will be the people who are creating that experience. You need folks who love, live, and breathe your brand. You know, if you look at like a Lulu Lemon, for example, they have so many different people of all different shapes and sizes and backgrounds who will say, you know what, I'm really into hot yoga, you know, try these pairs of pants or if you're into running or if you're a pair, you know,

Starting point is 00:32:38 you're doing hoop basketball, whatever the sport is that you're doing, they have people there that someone has done it or understands that sport that can actually point you to the proper things that you need and you actually usually walk away with a lot more than what you intended to. Because again, if I'm walking into a store, I can buy it online. I have the app. I get a discount for using the app. I'm there because I want to see if there's a sale and I want to see, I want to learn about the product and feel the product that I'm going to be. buy, which Amazon can never do. Not going not yet.

Starting point is 00:33:16 That will truly be the death of retail space if Amazon figures that out. But what everyone else has a leg up on is building that experience and having, you know, curated connoisseurs as their sales associates. Well, you know, what happens to, you know, across the country? I think Canada might be immune from this, what's happening now. But across the country, we want retailers like this, specialty retailers to thrive and survive. because when, you know, strip malls or malls lose their cornerstone store, I mean, there's a, there's a fly, a fries electronics, not too far from me, huge city block, you know, vacant for four years. And finally, they're going to knock it down to make apartments. But what's happening? What happens, Chino, what happens to communities when, you know, across the nation, when stores like this, maybe they'll get a buyer, maybe they won't, but they could sit vacant for a long time. Yeah. And, you know, it's happening in Canada, too. Like, I grew up.

Starting point is 00:34:12 up, shout out to Scarborough Town Center, STC. I worked at a mall all through university and parts of high school. I was a mall kid. And so there's always a special place of going in and experiencing things. I feel like I'm a really good shopper having done the whole customer experience piece there too. But it's sad because what happens is, okay, the cornerstone, you know, store closes. A, all the kids that would work there don't have jobs, they don't have those transferable skills.

Starting point is 00:34:45 It's a lot harder to find things. Usually your first job is at a mall. For most people, if you have a mall nearby, second, okay, so that store is gone. Well, there's less foot traffic. The conversions for other stores don't work, and you can see it how, like kind of the death of the malls, right? Slowly but surely, those, that main driver,

Starting point is 00:35:07 that one store that was driving people to come, now they're not kind of popping by these other stores. And so those other stores then lose business, they lose traction. And, you know, slowly and surely, I've watched it in my own mall, certain stores are slowly shutting down like months after each other. And then you have whole mall blocks that are empty. Where people come to shine is in the specialty time. So the holidays, Halloween, you'll find those pop-up stores, which is great.

Starting point is 00:35:38 but we're looking year-round as a business model to have a mall, you lose that and, you know, food courts empty. People are there. This is literally the death of the mall. You saw this in the 80s. It's slowly happening again with the rise of online shopping and e-commerce. And so it's, you know, a loss of job opportunities for, you know, the younger generation looking to get into the workforce. it's a loss of just a community space, right?

Starting point is 00:36:10 People would hang out in a mall. People would, you know, my mom used to do laps in the mall. And, you know, she had her little mall friends, all the old people. It's a hub. It can be a hub for some people, especially in lower income places where, you know, maybe you don't have access to, you know, like a national park or other things to go to where things are just really expensive. And so sometimes going to the mall and getting a treat and watching

Starting point is 00:36:35 you know, we used to have a little water fountain or something. And I remember my mom, there was this old man that would always sit there and she would always talk to him and have a coffee. And like, you know, he passed a few years ago. But like that's a moment that I remember as a child that, you know, it was dying off with the loss of these retail stores. And, you know, as much as we say, okay, party city is just one place, it's one major driver. And it's a huge space. And so we really, again, need to bring back the experience into retail. I love what you're saying there, Chino, because I think what it lends to is, Aaron, this idea around curation of the mall, right? So the idea of understanding what are the

Starting point is 00:37:22 kinds of things that drive people to malls or people to spaces, community spaces, and it's that feeling of community. It's that feeling of like, I like to go to a certain place here in Denver, Old Town, Arvada, where they have a bunch of small businesses, and it feels great. You know, there's the little plant store, there's the jewelry store, there's all of these kinds of things, and how do you get that feeling in a mall with some of these bigger names? And I think that you can do that, and you see some of the bigger, you know, stores segment their customers that way so that they have like a kid's store and they give it a cute little name, even though it's the gap, right?

Starting point is 00:38:03 You know what I mean? But they're trying to make it feel like, oh, this is like a little mom and pop store. And then to have like the food experiences, like I was saying what commercial realtors were talking about. The food experiences, a fitness place. Like in our mall, there's now a huge yoga studio, which is kind of funny. And there's a bunch of med spas where you can get, you know, your nails done or Botox or whatever. and also massages and things like that, as well as pop-up seasonality,

Starting point is 00:38:37 you know, like the calendar store or whatever is, that just shows up in December so everybody can buy their new calendars. But I think that like the mall near us is kind of going through this resurgence. And what I've seen is that they've kind of, they've tried to intermix the big store,

Starting point is 00:38:57 like the big Nike store. So that's, and then they have literally like this, cowboy store, like with cowboy boots and like cowboy shirts, but it's very, feels very like rodeo, local kind of thing for Colorado. And so it's really kind of a nice experience. And to your point, you see families taking the loop. I mean, I think you walk into a mall and you smell cinnabund and you're immediately hooked, right? And then they've got the little play area for the kids with the little train and things like that. And again, I think there's ways to draw people.

Starting point is 00:39:31 but I do think really the space is going to be an issue. The last thing that people said, which is kind of goes back to the podcast that we just talked about that just dropped was workspace. And I thought that was interesting. And they said it's a way in which to create community in a public like we work type of space. Because you're close to food. You're close to stores. You might be close to a target or whatever. It might all be part of that mall.

Starting point is 00:40:01 And so it makes for an east, there's parking already there. And it's someplace where people know. So if there's a co-working space, it could be something that could be really a positive experience for everybody, depending on what you're doing. I think that there's hope for, you know, maybe not party city, as you mentioned, Aaron, and as a commodity. But the specialty stores, like, I think we don't care so much. Like, you know, Nike's lost a lot last year, a lot of big names, like all the luxury. brands down. Is that part of the market? Is it because a lot of people being laid off and no one has as much disposable income? Yeah, there's a part of that. But I think people are moving away from just the

Starting point is 00:40:42 stock standard. We want that experience. We deprive from that since COVID, right? We were stuck in a house. You had to order everything online. You want that uniqueness. And I think, you know, being able to go to party sort of create a really cool event for your friends to go to, whether it's a gender reveal, a baby shower, a wedding, whatever. I do a wreath night, you know, during the thing and it's a fun get together, and I just made it up. But like people are creating to connect. And if you can find a way to have a specialty store that's doing things different,

Starting point is 00:41:19 that is not just what you can order on Amazon, that creates that experience, you will thrive in this environment and market. Yeah. So specialty stores need to curate, create a experience, not just sell commodity, not just stack shells. They need to create warmth and atmosphere, not just a warehouse space, and not be purely functional. And if we can abuse some local community and a sense of where you are geographically,

Starting point is 00:41:51 that helps, right? It gives it that reason for being. So my fix is, let's not let, you know, Party City is going to do what it's going to do. Spirit, Halloween stores. It's a meme, right? They're a hermit crab. They're really great at finding these vacant locations. But why, you know, obviously it's a seasonal business, but why does it have to be?

Starting point is 00:42:15 We came up with so many ancillary revenue streams and ways of utilizing the space. Why does it have to be so seasonal? My fix is Spirit. Come on in. Buy these leases. Drop the Halloween and become the Spirit store and own the spirit, the essence of wherever you are, and infuse that into what you merchandise, the types of events you have, your marketing play. And let's start going to Spirit stores or Spirit experiences, right? Fill those malls back up. Go for it. Haunted houses. Absolutely. Haunted houses, would you go to, you know, winter wonderland? Sure. Would you go to a luau party on a Tuesday if it was inspiring enough?

Starting point is 00:43:01 And would you pay to be there? Probably, right? Have a do-it-yourself class. Like, all me and my girlfriends right now, we're all into making things and doing fun things. And it's like, you know, nobody has the supplies, right? Taylor Swift Airs Tour happens. I'm not as Swifty. So sorry.

Starting point is 00:43:17 But, you know, the little bracelets everyone's making. Really great opportunity when she was. was in town to like, you know, host an event for kids to go in because I think we talked about, you know, yes, we can create and host a space. But guess what? If your spirit or party city, they need to buy the things to fill the space. You have those things. So that's just double. Let's get it on the front end. Let's get it on the back end. And let's make a business successful there. And I think, well, that's a great example. Like she was in every city. Party City should have been hosting friendship bracelet workshops where you could come in and

Starting point is 00:43:55 charge people by the number of bracelets they made and that you would have yeah right. Yeah, but make it correct. I know that's kind of like blue for us, Aaron. You're not going to get out of debt with friendship bracelets probably, but it's the idea of like understanding what your customers are doing right now. And I think that's what your point is with Spirit is Spirit is actually embrace. what is needed at this time, Party City did not, and that was led to their demise. And so the only way for some sort of Party City replacement would be to really kind of capitalize

Starting point is 00:44:31 on partnerships, on experiences, and to really keep their eye on the competition and strategies for the far future, not just, you know, the P&L of today, because that's what I think Party City's downfall was. Well said. I like that. Yeah. And, you know, I don't know if we mixed, if we fixed Party City. But I think we, you know, came up with some great ideas for, for what, what, uh,

Starting point is 00:44:58 specialty retailers can do, how to reinvigorate some of those vacant or dormant malls, right? And, and what it takes to, to bring people in. And yeah, one bracelet of it. Maybe it's not going to turn it around, but you do that, you do that all day long for specialty audiences and you give them reasons for being there. We could reverse some fortunes out there. So I think we did some good today.

Starting point is 00:45:20 Yeah. So too. Just, yeah, remember your audience because where am I going to go? I'm never going to plan an event when I'm ordering online for Amazon two or three days. I'm a last-minute shopper. I kind of like the chaos. And so Party City, Spirit, please hear our cries. And hopefully you heard this episode because I need you.

Starting point is 00:45:39 Thank you, everyone, for listening again. We are starting to get listener requests coming in. And so I'm really excited about those on the topics we have ahead of us. At some point, we may need to do just even a rapid fire around. But keep listening. We'll have more good stuff out there for you. This podcast is produced by Straightforward Media Group, All Rights Reserved. If you'd like to learn more about how a podcast can help your company establish authority and generate leads,

Starting point is 00:46:04 please email us at Eric at StraightforwardMG.com or go to StraightforwardMG.com for more information. Thank you.

We Fixed It, You're Welcome - Rethinking Retail: Party City's Demise

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