In addition to the close connections to the community that Wally’s Party Factory has created over the years, Erwin says the company’s size as one of the largest party supply chains in the nation is another strong competitive advantage. Despite the competition from virtually all sides of the retail environment, Erwin says Wally’s Party Factory has the pieces in place to help it continue to grow well into the future.
Erwin says the strong ties Wally’s Party Factory has with the communities it serves stem from the autonomy the company gives each of its stores. Although some party supply chains dictate how each store should look and what kind of product mix they should offer across the board, Wally’s Party Factory gives its stores the ability to tailor the shopping experience for each community. “Our stores and store managers have significant leeway from a marketing standpoint and a merchandizing standpoint to customize their stores to their communities,” Erwin says.
Wally’s Party Factories managers by and large are residents of the communities their stores serve, so they understand the needs of the communities better than anyone. Wally’s Party Factory is a member of the local Chamber of Commerce in each market they serve with the store manager acting as the company representative for each. This allows Wally’s Party Factory to form relationships with local businesses, civic leaders and schools. Stores participate in sponsoring local events and supporting local charities such as food drives for local food banks. Based on feedback that comes from these activities in each market, individual store assortments, displays and marketing can be tailored to better serve the customer than another chain with a uniform look and product mix no matter where it is. Beyond the layout and makeup of the individual stores, Wally’s Party Factory managers also get involved in local events, participating as sponsors and building displays in their stores with all the appropriate merchandise for those events. “We’re primarily in mid-sized to smaller markets, so it’s a natural fit for this type of operation and it results in stores that cater to their customers more effectively,” Erwin says.
Erwin adds that although Wally’s Party Factory is the second-largest party supply store chain in the nation, it remains a relatively small operation, giving it the ability to be nimble enough to cater to each community’s particular needs while also giving it economies of scale. “One thing about our size that helps is that we’re big enough to buy from suppliers at the best prices so we can pass that competitive pricing to our customers,” Erwin says.
Economies of Scale
One of the biggest challenges to Wally’s Party Factory is the competition the company faces from dollar stores and big-box retailers who can undercut the company’s prices with cheaper goods. Erwin says these retailers import large amounts of low-price goods from China, which can make it easier for them to keep their prices low. Wally’s Party Factory also imports goods from Asia and is significantly growing this part of their assortments, but that’s not the only way in which the company is working to compete with its larger competitors.
Erwin says Wally’s Party Factory benefits a great deal from its membership in the Party Club of America, a buying club comprised of independent stores from across the country. Erwin’s father started Party Club of America in 2002 as a means of helping the independent party supply store compete with larger competitors, and today the organization has nearly 400 members. “It just gives us more scale,” Erwin says.
Another major challenge for Wally’s Party Factory is the competition the company faces from online retailers. Although many customers choose to order their party supplies from online retailers because they believe it is more convenient, Erwin says Wally’s Party Factory offers shoppers some distinct advantages. For example, many customers prefer to see the goods they are purchasing in front of them to determine their quality, rather than order them based on a single picture on a website. And store associates act as party planners that offer customers creative ideas to make their parties unique.
Certain items like helium balloons are difficult to order through an online retailer because the balloons need to be inflated in the store. Wally’s Party Factory stores have balloon artists that create custom balloon art for parties as well as an extensive “take and go” menu of balloon centerpieces. Nevertheless, Erwin says Wally’s Party Factory sees the value in having an ecommerce presence, and the company is in the process of re-launching its website to give a superior online shopping experience.
Erwin says Wally’s Party Factory is on track for growth in the near future, and the company hopes its streamlined and upgraded online presence will help guide it to find new opportunities. If the company finds new markets through its Internet sales that fit well with the company’s profile, Erwin says, Wally’s Party Factory will do what it can to expand to those communities.
“If we start seeing traction from outside of our market areas, we may invest more dollars in that,” he says.