Party City filed for bankruptcy in 2023 due to approximately $1.7 billion of debt. The company re-opened soon after but were forced to declare bankruptcy again because of more accumulated debt.
One of the reasons for these closures is the emergence of many online retailers. Deborah Weinswig, the chief executive of Coresight Research, said, “A lot of the store closures occurring this year are the result of companies like Shein, Temu and Amazon snapping up consumer dollars…”
Online retailers have been affecting physical stores for quite some time. Amazon’s obvious popularity and the steady decline of malls revealed the effect online shopping had on in-person stores.
The reason for Party City’s large debt is that a private equity bought the company and passed its massive debt over in 2012. This was manageable for the first couple of years until fewer and fewer shoppers started coming in.
This closure caused the loss of between 16,000 and 19,000 employees. This is going to cause the unemployment rate to increase due to the sudden loss of thousands of jobs.
Party City lasted as long as it did because people wanted the in-store experience, but now, fewer and fewer people want to go in-store. This could be a bad sign for other physical stores.
