Party City was once the dominant force in the party supplies industry, but in recent years, it has struggled to maintain its foothold. While several factors contributed to its decline, major retailers like Costco, Walmart, Amazon, Temu, and even seasonal competitor Spirit Halloween played pivotal roles in undercutting its business model. Here’s how each of these companies chipped away at Party City’s dominance.
Costco: The Bulk Discount Threat
Costco’s wholesale model allows customers to buy party supplies in bulk at significantly lower prices than Party City’s retail offerings. Whether it’s balloons, disposable dinnerware, or holiday decorations, Costco’s ability to offer larger quantities at lower per-unit costs made it an attractive option for consumers looking to host big events. This cut into Party City’s market share, especially among customers who preferred stocking up on essentials at a one-stop shop. In 2023, Costco pulled in $245.65 billion in revenue. According to the BrandValuer app, Costco’s brand is worth an estimated $146.2 billion.
Walmart: The Everyday Low Price Challenge
Walmart’s massive footprint and commitment to everyday low prices provided another significant blow to Party City. With a wide variety of party supplies available in-store and online at competitive prices, Walmart became the go-to choice for budget-conscious shoppers. Additionally, Walmart’s aggressive pricing on seasonal goods and decorations further diminished Party City’s ability to maintain a unique selling proposition. In 2023, Walmart brought in $611 billion in revenue. According to the BrandValuer app, Walmart’s brand is worth an estimated $360.5 billion.
Amazon: The Convenience Factor
Amazon changed the game with its fast shipping, vast selection, and customer reviews that helped consumers make informed decisions. Instead of making a trip to a Party City location, customers could order themed decorations, balloons, and party favors from Amazon with the click of a button and receive them in a matter of days — or even hours with Prime delivery. Amazon’s dominance in e-commerce significantly hurt Party City’s in-store traffic and eroded its online presence, as it couldn’t match Amazon’s logistical efficiency and pricing. In 2023 Amazon pulled in $574 billion, an 11% increase from their 2022 revenue. According to the BrandValuer app, Amazon’s brand is worth an estimated $348 billion.
Temu: The Ultra-Discount Disruptor
Temu, the newcomer to the discount retail space, capitalized on direct-from-manufacturer pricing and ultra-low-cost products, including party supplies. Consumers looking for the cheapest possible decorations and favors found that they could get similar items on Temu at a fraction of Party City’s prices. While shipping times could be longer, many were willing to wait to save money. The rise of platforms like Temu further devalued the party supply market, making it difficult for Party City to compete on price. In 2023, Temu was able to grow big, esp in the United States — pulling in an eye-watering $34 billion! Nearly doubling their revenue from 2022. According to the BrandValuer app, Temu’s brand worth is estimated to be $30 billion.
Spirit Halloween: The Seasonal Juggernaut
While Party City had its own seasonal Halloween City pop-up stores, they were no match for Spirit Halloween’s dominance in the costume and decoration sector. Every fall, Spirit Halloween’s temporary stores appeared in prime retail locations, capturing the Halloween market and diverting customers away from Party City’s stores. The brand’s extensive selection and partnerships with pop culture franchises made it the preferred choice for Halloween shoppers, further diminishing Party City’s seasonal revenue, which was a crucial part of its business. In 2023, Spirit Halloween brought in $1.1 billion in revenue. According to the BrandValuer app, Spirit Halloween’s brand is worth $590 million.
A Perfect Storm Leading to Bankruptcy
Faced with competition from all angles, Party City struggled to maintain profitability. The convenience, pricing power, and broad selection offered by these major retailers left Party City with little room to differentiate itself. Rising costs, supply chain disruptions, and shifting consumer habits further exacerbated its challenges, ultimately leading to its bankruptcy filing in early 2024. In 2023 Party City pulled in $2.2 billion in revenue. According to the BrandValuer app, Party City’s brand is worth $1.1 billion.
Conclusion
Party City’s decline wasn’t the result of a single competitor but rather a collective shift in consumer behavior driven by more convenient, cost-effective, and diverse shopping options. Costco, Walmart, Amazon, Temu, and Spirit Halloween each played a unique role in fragmenting Party City’s once-loyal customer base, proving that even dominant brands can fall when they fail to adapt to an evolving retail landscape.
