A couple of weeks ago Progressive Party magazine announced the opening of a retail store by Party Delights. As it is only a half hour drive for me , I thought it worth a look at what could be a significant event for our industry.

There will be some out there, thinking what is significant about a new party shop …they come and go all the time…yes they do, but this is a little different.

Party Delights is the U.K’s largest online party retailer. It is also owned by the worlds largest party product supplier. Either one would be significant on its own, together it is highly significant, not only for the UK but possibly for Europe. But I will come back to that.

The store, itself, is located in a very busy shopping area in Romford, Essex. It is not for me to write a review of the shop. However, what it does emphasise is that even as the worlds largest supplier of a particular product range it is very difficult to create a successful retail format. Unless, you are Apple, a parfumerie or a specialist chocolatier it is very tough creating a retail store formula that can capture the imagination of the consumer. Nike, Sony et al try and succeed to a lesser degree. No matter how big your range is it is unlikely to offer the consumer everything they are looking for when browsing for ideas. Consumers go to Nike because they want the Nike brand. When they go into a party shop they are looking for ideas. 

A regular customer of the Party Delights web site, will be somewhat surprised if they were to visit this store as the offering is very different. A retail store cannot offer the same depth of product as a web site. But whereas the web site, in this case, offers the best product of a number of brands. The store offers only the best of one brand.

The significance of this event, is that Party Delights (and Amscan) feel that there is a need to be on the High Street. I cannot see it being the only store, if for no other reason than a single store will not make them enough money. Consequently, there are likely to be more, and I suspect not just in the UK. 
For the party retailers out there, at the moment, these are two good signs.

1. The largest party web shop feels the need to have a bricks and mortar store

2. In its current format, this store will not be a threat to the independent party retailer.

There is a ‘however’. It is further evidence that the future is not through a single channel. If you are web based, some form of store connection is needed. If you are store based you need a web presence. Alibaba (China’s Amazon) has just announced a tie up with a Chinese electronics retailer which has 1600 outlets. More will follow.

It is quite extraordinary if you chance upon certain counterfeit items, the extraordinary lengths the counterfeiter will go to, in order to replicate the original detail. It is believed that many counterfeit products come from the original factories. The channels of distribution are varied. In the past we, in the UK, would generally come across counterfeits on street markets, boot sales, pubs, or the backs of vans. Today, the volume comes through the internet.
Some within the party market, would say fortunately it is not something they come across. If only that were true. There is a huge amount of counterfeit product arriving on our door step and mainly through the internet. What is particularly odd, is that it appears very open and obvious.

As far as we are concerned there are a number of types of counterfeits that affect our market.

• Branded licensed product

• Generic designs but counterfeit EU labelling (costumes and party items)

• Counterfeit copyright design graphics. This is more copyright infringement rather than actual counterfeit product. There is a legal difference but the effect is the same.

Branded licensed product

This takes various forms. An example is say a Frozen costume. It is not difficult to find this particular item. You only have to log into EBay, type in the description and it won’t be long before some examples appear. At the time of writing, the first 6 entries were based in China or Hong Kong. As to whether they are counterfeit, the reader would not be qualified to know but the price and image would suggest that they probably are. Within Amazon it is not so obvious. However, if you dig deeper, it would not be long before you find offending articles and from UK sellers. To quote a review from a happy customer on one resellers shop ‘….it is not Disney product, but it was not a Disney price…..’

Generic Designs

This refers to a design such as a Pirate costume that does not infringe anyone design or copyright but generally comes directly out the Far East and where relevant, has never seen the inside of a testing lab yet carries a CE mark plus text to say it conforms to the relevant EN procedure. This does not involve just costumes but also party products eg latex balloons, plastic party items , in particular loot bag toys, blowouts, party poppers, and numerous other ‘accessory products’.

Counterfeit copyright design graphics

Licensed party product and decoration, where the design is infringed.

A further form of counterfeiting which is rather more furtive. There are online sellers who will use the bar codes, descriptions of well-respected brands to make the sale but then substitute it with cheaper and inferior product.

It is a big problem and will only get bigger, especially when players like Alibaba & Aliexpress become more focused on the European markets. It would appear on the surface that the big players seem to be doing little about it. There is an argument, mainly promoted by the likes of Amazon and EBay that the problem is so big that it is too big to police. There is, undoubtedly, some truth to this. However, speaking to UK resellers many would say that they are very quick to pounce on them with dubious and often fallacious claims of selling counterfeits. One reseller said they were upbraided by Google+ for using a genuine logo with a genuine product .

This would be appear on the surface to somewhat bonkers, as surely, one way to identify brands is by using genuine logos. Having been shown sites that clearly do not have genuine products, and do not pretend to use logos purely words Frozen and Winnie the Pooh for example. Surely it is not beyond the wit and ken of these behemoths to write software that high light such anomalies.

Perhaps the more honest conclusion is that the legal complexities between nation states makes this a complete nightmare. A leading law firm ‘… said there has been a sharp rise in European litigation and soaring costs for businesses trying to stop the theft of their trademarks, products and content…’ makers of the Rubik’s cube have said it has sued the European Court of Justices over delays in trying to trademark its shape. The case began in 2006.

Local primary suppliers in the UK are trying their best but ultimately it is a bit ‘King Canute like’. One method they are trying to use is encouraging their customers not to cut prices. This is not a convincing argument , as increased margins only increase the motivation to counterfeit.

This problem is not going to go away. It is very difficult to see how it will get any better. Licensors (the Brand owners) not the licensees need to work closely with the online masters of the universe. A further simpler but less likely step would be to convince the consumer that they are getting a fair deal and value for money as opposed to looking elsewhere because of the perception of a ‘Disney Price’.

If we can sit on our sofa, make a few taps on our screen, have a video conversation with a friend 12,000 miles away or make a purchase that arrives the following morning, surely the technology giants can stop a load of hooky gear being sold. Stopping deals in dodgy played in out of the way pubs, or gear being flogged on the street corner, back of the van , all very nefarious and tough to police. But when counterfeit product is blatantly flouted in the virtual shop windows of the worlds biggest on line retailers, it is hard to swallow .

This a shortened version on article I have written for Party Party, which should be published in the next edition. However, as it consistently rears its ugly head, I felt that any thought or discussion would not benefit from waiting a couple of months.

AO one of our largest online retailers for home appliances has just announced whilst there are no immediate plans to open High street shops, it is an option they would consider.

This is nothing new . Or rather let me clarify, before a reader claims they once went into a shop, it is not new for an online operator to open or consider retail outlets. Both Google and EBay have had pop up shops and Argos, whilst not solely an online operator are probably the nearest, you currently get to a web site with shops.

A financial journalist recently said in five years time entrepreneurs will start opening things called shops. It was not said with tongue in cheek. Retailers, both on and off line are beginning to understand the importance of some representation on the high street. Richard Perks , retail director of Mintel, says about the future of retailing that ….setting them against each other is a red herring…it’s more about bringing them together.

The point I am trying to make is that online accounts for just under 12% of retail sales. Conversely, 88% of purchases, are made in shops. That 12% will continue to grow but for some time the vast majority of purchases will be made in retail outlets. The primary motivation for any business has to be profit, or else it does not survive. This is why it is so important that …retailers look at bringing them together…

If you look through photography magazines, you will invariably see  a story on ….Jonny Snapshot has been running his local camera shop for over 350 years, but has decided to close because ‘them, there Internet people….’it is a crying shame’, said a local..’we have had a camera shop in this town since the 16th century ‘…The point being that there is a relationship between camera party shops. Both rely on customer service. In my own experience, having an interest in photography, Customer service is not always as evident in some independents, as it should be.

If you were new to photography, you would find it very difficult to buy the right gear by just going online. If all camera shops disappeared, they would have to be re-invented. I believe the same is true of party shops. If this were not true, why would Party Delights, the U.K’s largest party web site, be involved in a new retail outlet. 

Online operators, of all varieties, are increasingly finding it difficult to operate successfully. There are issues with operating costs, maintaining customer loyalty, brand awareness and increased competition. Couriers are finding it increasingly difficult to make the delivery at first attempt. Second and third attempts increase dissatisfaction and increase costs.

Retail outlets without an online presence, will be severely hampered to maintain their business. Web sites without a high street presence are just as exposed. Retail analysts talk about consumers making store visits as a leisure as opposed to a purchasing activity.  As a consequence, major retailers are looking at ways they can incorporate all three, online, in shop and leisure all in one location. The theory is the longer time spent in a retailer, the more likely loyalty will grow. 

With some ‘out of the box’, ‘blue sky’  thinking, and some hard commercialism, the party shop should be the ideal retail outlet to incorporate these three fundamentals, in shop, online and leisure.

As a footnote, with Amazon dramatic share price increase, the company value exceeded Walmart, the worlds largest retailer. I find this, especially, interesting, as an Amazon buyer tried to convince me at the NEC, that they were not as big as TESCO. 

Actually it should be the Bank of Amazon, but I didn’t think it would be as eye catching. But then when I started writing, it might behave been a better title. Just over two weeks ago Amazon announced a lending programme to invited resellers in the UK.

Yes, that is what I said they are offering loans to resellers. Or initially to resellers of their choice. My first reactions were that this was a very smart move by Amazon. The details are sketchy, as the announcement was a bit under the  radar, but they would select certain retailers and offer them funds to develop and they would take the repayments from commissions.

As a business initiative, it is pretty clever stuff. Amazon would have a company’s complete history on revenue flows, in much more detail than any bank or financial institution. It would also have a pretty good idea on the margins enjoyed by resellers. In terms of security, it would be a fairly sound proposition. If  Amazon saw a reseller experiencing falling revenues it could assist in increasing its revenues, until the repayments had been made. Clever stuff, but a double edge sword for the reseller.

However, on reflection, and a lot of reflection wasn’t needed for this, there are some nasty bits. Two come to mind.

Firstly, Amazon are building a huge data base, which will quite soon reach a level , unmatched by any other institution, of any description, in the world. They are accruing sales data at an alarming rate, now they will be garnering related financial data. 

Secondly, should they decide to extend this offer to other resellers, it raises the spectre of  the Amazon market place favouring resellers with loans against self funded sites. 

At the moment, this is all slightly hypothetical, as there are no details. I don’t know how the loans would be structured, apr’s, payment terms, plus how national governments would view or define these loans on a local level. In the USA, where they have already started the programme, the loans can be anything from $1000 to $600,000 and the repayments are generally over months as opposed to years. Moreover, it is not a totally new idea as a similar scheme has been run by PayPal. 

Whilst currently owned by eBay, PayPal is due to be siphoned off as a seperate company in 2015. Hence with the operating differences between eBay and Amazon, plus PayPal becoming a seperate company. There are few similarities.

As to whether it is a good or bad thing is too early to tell. My initial reaction is of concern with the long term attitude of Amazon towards their resellers who they are assisting with finance against those who are being self financed or funded by third parties. Commercial logic would suggest favouring those who owe them money.

I suggest it will not be long before we begin to see what are the intended consequences of this financial munificence. 

Last week the UK Goverment published a bill to outlaw legal highs. One of those ‘legal highs’ is Nitrous Oxide, better known as laughing gas, whippits or Hippie crack. I can hear the cry ‘…..oh yeah, jolly interesting, but what’s that got to do with the party industry…?’ . Well, I will get to the point soon,there is more to come. Apparently, after Cannabis, in the UK, it is the drug of choice. That is to say it is the 2nd most widely used drug. It is estimated that there are over 500,000 (mainly teenagers , early 20’s) users.

So here comes the really interesting bit, the main way of experiencing laughing gas is using latex balloons . Now there a number of implications, but we will come back to them. Once again,bear with me .First of all, we can take a look why latex balloons are used. The main risk is unconsciousness or death through lack of oxygen, this occurs when oxygen used for breathing is pushed out by the nitrous oxide. Balloons limit that risk as they do not cover the nose and mouth.

I am not going to be judgemental, as it serves no purpose, there are risks, although they are considered low, using balloons, but they like any drug or intoxicant do exist. Moreover, the new bill aside , it is already an offence to sell nitrous oxide to minors , if it is thought it is going to be used for personal consumption. The other level of risk comes from where the majority of this ‘ legal high’ is purchased, the net. As a consequence , the users cannot be certain it is nitrous oxide and have no idea whether it has contaminated and if so with what?,

Ok, we can come back to the implications for the party industry. 500,000 people equals 500,000 balloons. That assumes that they only do it once a year. I will leave the maths to the reader. Needless to say we are not talking about a insignificant Your worst nightmare, is if someone buys balloons from you and has a natural latex allergy. Anaphylactic attack, and substances that withdraw oxygen from your system are not good mixes. If you suspect anyone is buying balloons for this purpose, I, personally, would reinforce the natural latex and allergy warning. 

I don’t know if many of you have heard of head shops. They are shops that sell legal highs and associated paraphernalia. In many such shops, there are party sections, and they can be quite substantial. ‘Why?’ You may ask. I suspect it is because the clientele of such establishments are party types , or they are going to parties hence the connection . However, you won’t see many in the party hall at the NEC. Not strictly true, you may stumble across a few.
Where I am going with this and do I have any advice. Nowhere and none, are the answer to both. But the reason for this blog is to flag it up and should any of the media think there is an angle here and approach you, I would propose the ‘…. I know nothing….I am just a party shop that sells balloons like every other party shop, that has been doing so since the nineteenth century…..’ approach.
For those what who want to know the day job of nitrous oxide, it whips cream. Not in a ‘fifty shades of grey’ whipping, but in a jelly or ice cream sundae whipped cream way. So completing the circle. You can have jelly and whipped cream , then round off the party with a short legal high. I said I would not be judgemental.

BBC Watchdog returned, as promised, to the horrendous accident of Claudia Winkleman’s daughter.

They stated that they had contacted every Chief fire officer in the UK showing them the flame tests carried out on a number of fancy dress items . Then they were asked for their opinion. Apparently, the overwhelming conclusion was that the current regulations were insufficient.

They had also approached a number of high St national retailers asking for their approach for Halloween 2015. A few said they would not now  sell such items, others said they were reviewing their policies. Having said that, from seeing the list, I don’t think a number of them actually sell costumes. There were a number of significant players ie discounters, who I suggest were not approached and were probably bigger players when it comes to kids costumes.The further announcement made was that the Department for Business, Innovation and Skills, was now looking into the efficacy of the current norms.

Should you want to find out what retailers were involved, I suggest you watch BBC Watchdog on iplayer (may 21st).

Nobody can argue with any of this. Yet, I find it quite extraordinary that it overlooks the cause of this accident – the flame. I suspect the chief fire officer’s remarks were and would have been included as part of his conclusions, but were edited. The reality is, that had there been no naked flame, this would not have happened. Whereas, the poor child could have been wearing any manner of clothing and still have been burnt.

The action of the multiples may create another dilemma for our industry. Over the last four years many independent retailers and online operators have kept away from inexpensive kids costumes and left them to the multiples. However, if they are going to offer them for sale or dramatically reduce their offering, there maybe a pent up demand. As to whether you fulfil that demand is, of course, up to the individual operator. If you do decide to do so then may I suggest that either via your web shop, or your store staff, you highlight the dangers of the naked flame. To repeat my last blog , naked flames and small children , in clothing of any type,  are a dangerous concoction .

During Halloween 2014, there was the very sad  and distressing case of the injuries endured by the daughter of Claudia Winkelman(TV Presenter).

For those who are unaware, her daughter was wearing a  witch’s costume that touched a candle and as a consequence she suffered horrendous burns.

Quite rightly Claudia has now brought it into the public arena as she does want anyone else to have to go through this terrible  experience.

The vast majority of the Party market supply base is very aware and conscientious about product safety. This is not purely altruistic but also commercial. Much of the supply base big and small are family businesses and they are very aware that they design and supply a great deal of product that is deemed to be used by children. Within the EU we are , in this case fortunately, policed by a variety of EU regulations designed to protect children. The majority of which come under EN71 toy regulations for flammability.

Certain sectors of the press and media have taken this to task saying it is not strict enough. They are using the regulations for night wear . Yet no clothing is inflammable. The tests involved measure the rate of burn. The test for nightwear is tougher than that of the toy regulations. So the initial reaction is that maybe they have  a point. What is being overlooked is that, as far I am aware, no other form of everyday clothing have any regulations whatsoever and this includes school clothing. They are not subject to any flammability tests nor any other test for that matter.

What caused this horrendous accident was the naked flame. Dark winter nights, small children and naked flames are not a good mix and are repeated once again on Guy Fawkes night the following week.

Apparently, the surgeon taking care of Mathilda (Claudia’s daughter) felt that there was a mini epidemic of this type of accident. Accident statistics showed in 2014 there were 94 incidents involving injuries from burning or melting clothes , 21 were children under 18. Fortunately, it is not quite  of epidemic proportions and we  need to keep them as low as possible,but it will never be possible to eliminate them .

On Thursday, May 14th, the BBC Watchdog programme conducted an emotional but balanced interview with Claudia. Her reason for agreeing to the interview was to try and ensure that no other parent or child should have to go through the same experience . Watchdog then carried out a rather lopsided investigation. On Thursday, May 21st, they are inviting the fancy address industry representatives to respond.

If comprehensive research by the EU found that there is  cause to relook at children’s fancy dress regulations, then I am sure that no established supplier in Europe would baulk at meeting the relevant norms. But the reality is that any form of clothing if exposed to a naked flame is dangerous. One way eliminate this hazard, without waiting for the EU to conduct meaningful research, is to ensure there are no naked flames anywhere near children. Hence, if you are in any doubt during Halloween 2015, make your customers aware of the dangers of the naked flame.

As a safety footnote, not just flammability issues, all major suppliers within the costume and party sector have departments within their organisations ensuring that where relevant all product meets or exceeds the relevant regulations. However, I am very aware that there is counterfeit product coming    from the Far East via some very grey importers on the edge of the industry. This is also true of some traders on eBay and Amazon.  A plea to all online retailers and  bricks and mortar retailers that if you are offered any product from  a source you don’t know and the deal looks too to be true. It probably is. Don’t hesitate to ask for genuine certication and make sure it is upto date. Most of the product within our industry comes under EU norm EN71. The major exception to this rule is cosmetics which come under the norms for cosmetics. However, I will come back the problem of counterfeiting in a later post.

In the coming edition of The Progressive Party magazine, there will be a section on summer festivals.

A couple of years ago in the very same magazine, my wife (Julia Brett) wrote an article highlighting the tradition of carnivals in the UK. That tradition often goes further back than many European countries yet it is very underplayed.

That said there are still hundreds of carnivals and festivals throughout the UK especially in the summer months. It is one of the areas where local party retailers can outwit the Internet. Local retailers should have the ‘local’ knowledge that no online operator can hope to provide. This would be especially true in parts of the south west where there is a huge tradition of local festivals. Many of which  were originally started by purveyors of historical oddities like ‘cure all’ elixirs. They created the festivals in order to bring potential customers from outlying rural areas.

There used to be numerous street festivals in London only dating back to the fifties and sixties. Yet many of these have diminished over recent years. The suggestion would be that the local party store could be a fulcrum for re-establishing these events. The timing is right. Many of these areas are very multicultural and as few of these events have any religious implications, they would be great ways  of developing community cohesion. Notting Hill carnival  was created out of a community wanting to establish it’s identity. Now it is one of the worlds largest.

Many of us in the supply side, who have any knowledge of the European market are envious of the  carnival season. In this months Progressive Party , the editorial recognises this opportunity, even though there is an odd comment about whether our weather is suitable. Not quite sure,to what this refers, as most of this happens in Northern Europe, in February and outside, where it can  be  a flipping sight  colder than it is here (sorry Jacqui!). Where we do currently fall down is the quality of our dress up. Particularly in Germany hundreds of Euros can be spent on buying very well made product. Part of the reason is that the wearer is going to be celebrating outside in early February!

Whilst there is no tradition of this form of carnival in the UK, there is no reason what so ever that we could not try and introduce it. After all we introduced Halloween, we are starting to embrace Oktoberfest , we have taken on Diwali and Eid , and now we are enjoying ‘day of the dead'(see banner image) Bring on pre lent carnival, it may have catholic and pagan origins , but so do we!

The competition for ‘etailers ‘ delivery contracts is intense and very aggressive.

I am very aware, that there are some big online players, within our market, who have some extraordinary deals on parcel rates. The question is how long will this continue?

December 2014 saw the demise of City Link. Yodel despite increasing volumes is still unable to make a profit( or make their customers happy!)Amazon has just doubled the order value that a customer has to buy to get free delivery. This , of course, is one way to move customers to Prime, but there is evidence in the U.S. that Prime is yet to make any money.Ocado took ten years to make an operating profit. The company’s entire ‘raison d’être ‘ is logistics. 

The consumer is beginning to expect ‘free’ delivery. Within every market, when a critical mass is achieved , aggressive players enter the market to achieve market share. Some succeed and of course some fail. As more fail, the remaining players can increase their margins. The question will be , can free delivery be sustained?

Perhaps, more relevant in the party market is will the online players be able to sustain their current delivery options or will they have to consider reduced margins. A third option is looking at the products they sell and eliminating those that do not fit into the costing model. For example , currently there are many party items that have a too lower retail value for them to be sold online as the courier cost, plus market place commissions and VAT make the selling price prohibitive. I believe Amazon now have a minimum charge of £0.40p . If you include operating costs, distribution and VAT this makes any item retailing under £2.50 very difficult to sustain. Should shipping costs increase substantially then this will push up the sustainable retail price point. Some High Street retailers might cheer at this, assuming they can survive on products at this price level.

This may not be a question that has to be considered now, as the current climate attracts aggressive courier pricing. But there will be a point in the not too distant future, where this element of the complex structure of online costing will have to be reconsidered. One possible outcome, is that more players will look at click and Collect options as this would reduce multi point deliveries. However, the other side of this coin would be that the courier market would shrink, leaving less players offering higher costs !

Some consumers would say click and collect is a bit like going to a shop…..something for the independent party retailers to think about…..