After a difficult few years for the party industry, Sydney-based The Party People has made its first acquisition – buying up Mega Party Warehouse, and creating a wider umbrella company to run its operations, Fun Industries. Opened in 2018, Mega Party Warehouse sits in southwest Sydney and boasts a 2,400sqm footprint, making it the largest party store in Australia. It holds approximately 40,000 products. The Party People’s chief executive Dean Salakas said the previous owners of the bus
he business did a fantastic job running it through the pandemic, and now he will look to broaden the operations and range of both businesses.
“We’ve always wanted to grow [The Party People], but Covid was not the right time,” Salakas told Inside Retail.
“Things were pretty tough for a while, but we’re in good financial shape now. We’re on the lookout for more acquisitions, and maybe opening some more stores, over the next year or so.”
With the acquisition of Mega Party Warehouse, Salakas said The Party People will have a broader range and stronger online presence. He plans to rebrand Mega Party Warehouse as The Party People eventually, but said the team will spend some time running it and understanding how it operates first.
Just prior to making the acquisition The Party People created a parent company, Fun Industries, which will manage the two businesses as well as any future acquisitions.
“[Fun Industries] manages our different locations as separate entities, as well as our online and marketplace businesses,” Salakas explained.
Looking forward, Salakas is certain that more acquisitions are on the cards, despite the changes in consumer spending and confidence.
Serving the spectrum
In fact, Salakas isn’t overly concerned about the impact the rising cost of living could have on The Party People, because he sees the business as sitting in the middle of the market.
“If you think of parties as on a spectrum, there’s people who go small [who] tend to just go to Woolworths and pick up some plates and whatnot, and people who go all out – rent out a venue or a nightclub or something,” Salakas explained.
“And then there’s people in the middle, who will have a party at home, but will go to a party store to dress it up in a theme. As some of those people drop out due to increasing costs, we’re expecting more of the people that go all-out to start hosting stuff at home again – and we’ll pick them up.”
After surviving the global financial crisis in 2008 and the Covid-19 pandemic, Salakas is confident that the business will do just fine, despite operating in a bear market.
Party pivot
The fact that the business is healthy enough to make acquisitions is a small miracle after in-person gatherings were made illegal during the pandemic, and The Party People’s revenue from physical stores dropped almost entirely.
Even online sales fell dramatically, Salakas said, though “around 8 per cent” of its customers continued buying despite the lockdowns.
“We wanted to know who these people were that were still buying from us, and why they were still buying. There weren’t that many of them, so we just asked them.” Salakas said.
“Turns out they were buying a bunch of stuff: dress ups to entertain the kids stuck inside, arts and crafts, toys and games, and then our Coronavirus navigation items – stuff like masks and hand sanitiser.
“We redesigned our webpage to focus on those four categories, and with those front-and-centre that carried us through the worst of it. When lockdowns happened again and again, we just went back to that playbook and rolled it out.”
That strategy kept the business afloat, Salakas said, with total sales at one point exceeding pre-pandemic revenue.
“We’ve been beaten up a lot over the past three years, but we’ve come out of it relatively strong,” Salakas said.
“If we didn’t do anything, we were going to go bankrupt. We literally just spoke to our customers, and focused on what they wanted and needed. It sounds so fundamental, right?”