Party City Becomes Latest Retailer to Turn to Amazon for Growth
Party City (PRTY) has joined the hit parade of retailers deciding to be pragmatic about Amazon.com (AMZN).
The company said on Thursday it would begin selling Halloween costumes on Amazon’s mammoth marketplace, the first time it will sell Party City items outside of its fleet of 900 stores and its own website. And if that works out, Party City said in a statement, Amazon will later sell its Christmas and New Year’s merchandise. Party City also manufactures much of what it sells.
“The program also creates an additional channel of distribution,” Party City CEO James Harrison said in a statement. Party City joins a growing list of retailers that have decided Amazon is a fact of life in doing business today and ultimately an important partner to build online sales. By some estimates, Amazon, via its marketplaces and what it sells directly, is behind 50% of U.S. e-commerce, meaning the threat of having Amazon steal sales from stores has to now be measured against the threat of missing out on its online growth. Amazon Prime has 100 million members globally, the bulk of whom are Americans, so the company’s hold on online shopping won’t recede anytime soon.
The move comes as Halloween, Party City’s biggest occasion, nears and the company faces increasingly aggressive play for its market of late by Walmart and Target. Spending on Halloween items like costumes, candy and pumpkins reached a record $9.1 billion in 2017, according to an annual survey by the National Retail Federation.
The list of retailers teaming up with Amazon includes Best Buy (BBY), which sells Amazon’s smart home products among others in its stores, Kohl’s (KSS) which sells some Amazon items and at some stores is testing out handling returns for Amazon, Nike, Sears, and Chico’s.
Some retailers are working with other online giants for similar reason. HBC’s (HBC) Lord & Taylor now sells its products on a portal on Walmart.com, a move aimed at improving its modest online business.
Separately, Party City reported quarterly results including only a slight 0.1% increase in comparable sales, highlighting the need to find new sources of growth.