Starting A Party Store And Growing Into A Chain
Hello! Who are you and what business did you start?
I'm Dean Salakas Chief Party Dude at The Party People. Our goal is to help people have the parties of their dreams. We are Australia’s largest party store selling balloons, decorations, costumes, novelties, confectionary, theme partyware, and anything else you could possibly want for a party.
The Party People has 2 bricks and mortar party stores of which one is the largest in Australia in Drummoyne NSW. The business also has an online business which is the market leader for party supplies.
The business has over 30 staff and a multimillion-dollar turnover.
What's your backstory and how did you come up with the idea?
30 years ago, my mum was “Patches The Clown” catering for kids parties. Her passion for parties led her to open a small party store with my grandfather. From the age of 4, I was put to work filling small bags with sand for 5 cents each which would be used to weigh down helium balloons on tables.
We love change. Every time something changes, there is an opportunity for us to be early and capitalize while everyone else drags their feet.
My responsibilities in the business expanded as I grew from filling shelves to serving customer which I did after school, on weekends and in my school holidays. In 1998 when I was in year 10 of high school, my mum decided to launch Australia’s first online party store. As a tech savvy teenager, I was put on the project and in 1999 I launched the website and managed it.
In 2003 I graduated from University of Western Sydney with a Bachelor of Business and Commerce Majoring in Marketing and Operations Management. I achieve a distinction average and was ranked in the top 5% of graduates nationally. It was in my final year that I did a website improvement project as my thesis. That project recommended significant changes including cheaper shipping, affiliate marketing and launching on Google AdWords. The project would later make me a celebrity at Google head office when I became their media ambassador due to being their first Australian Customer as a result of that university project.
After University I contacted Woolworths for a job and they created a graduate program for me as they didn’t have one. Within a month I was put on a small project while Bernie Brooks (a judge of these awards) was at the company to introduce provide some logistic cost information to buyers. After Bernie moved on from the company, the project scope expanded to introduce activity-based costing to Woolworths called Net Profit Dashboard. As the lead analyst at just 21 years of age (the youngest in Program Office), I became its subject matter expert less than a year out of university.
On completion of the project, I went to work in the new role in “Planning and Optimisation” within the Woolworths Logistics division. Fortunately for me, the activity-based costing project gave me some very unique skills that no one in the company had which was a detailed understanding of the end to end supply chain, its costs, the drivers of those costs, and how those drivers effected upstream and downstream processes. This put me in extremely high demand for consulting on other projects occurring in the company.
In my new role, I suggested that we change the way the company orders inventory. I was told my theories were correct but the politics of the situation and the lack of an effective solution meant that many before me had tried and failed so this was not a project I was to waste my time on.
That night I went home, built an excel model of the solution I was proposing and returned the next day with it. That model showed a net $4m saving per year into perpetuity, was implemented in 3 months and I went on to win the Woolworths Innovation Award for that project called “Economic Order Quantity”.
The project did not operate under typical Woolworth's governance as it was overseen by the Chief Logistics and Information Officer (CLIO) Steve Bradley. I would go on to execute multiple projects in a similar manner which was highly unorthodox for a typically bureaucratic and highly governance focused company. I was given the flexibility to execute projects fast with minimal governance but instead reporting directly to the CLIO.
In 2007 my brother and I took over the family business The Party People so my mum and grandfather could retire. We saw a gap in the market that could be explored more aggressively given our parents didn’t have the technical understanding to grow effectively. At that time The Party People Shop had 2 employees in the shop.
Today the business has over 40 employees, are the market leader for party supplies online in Australia and has two bricks and mortar stores of which one of them is the largest bricks and mortar party store in Australia. Under my leadership, we pioneered online retail in many areas. We offered click and collect in 1999, we were Microsoft Bings first Australian advertiser, we were a pilot company for Facebooks accelerator program and many more firsts.
The business appeared on Shark Tank Australia season 1 where we received a $400,000 offer from Janine Allis which we turned down and today are preparing to create a chain of party stores in Australia so that every Australian can create their dream party. For the last 2 years, Dean has been named in the Internet Retailing Top 50 People in Ecommerce and by the Australian Retail Association as “Retail Leader of the Year”.
Can you give us some history on the business?
The Party People was originally a clown hire business. My mum started helping people with the catering and clean up so became a full-service party planner and entertainer. Back in the 80’s, everyone had parties at home and there were no hardly any kids party venues so she had an idea to start one up.
She opened a small venue where she had planned to host kids parties but at the same time McDonald’s launched its party rooms and so the party room didn't go so well. The venue did, however, sell a small range of party items and balloons which was going really well so my mum pivoted the business to focus on retail and the party shop was borne.
In 1998, It was at a time of dial-up internet and my mum had a vision that people could have great parties all over Australia even in remote areas and people who work long hours also had a way to shop with us. As her son, she gave the website responsibilities to me and I set it up. Back then website software didn't exist so we built our site from scratch using two university students who had studied IT.
In 1999 we went on to launch Australia's First Party Store. The store had “pick up in store” which is now called click and collect.
The business launched in 1985 and then went online in 1999. The business was doing 1 order a week and that was exciting at the time. It grew and now we do hundreds of orders a day. At the time the Internet was very new so this growth was organic.
In 2007 Dean and Peter Salakas took over The Party People from their mum Mala Salakas and Grand Father Peter Nikolas. With a focus on digital growth, the business quickly jumped to 300% growth.
At that point, sales were not hard to come by, controlling the volume was the biggest hurdle. We continually ran out of capacity in every area from staff, to space, to computers, to eventually hours in the day when splitting day and night shifts were still not enough.
At one point we were so busy and out of capacity that we had to turn the website off for 2 months over November and December. We lost hundreds of thousands of dollars in orders however we did get existing customers orders out the door and that was more important than profit at that stage particularly because it could have killed the business.
Eventually, we moved the internet operation to our Drummoyne store which now has significant growth capacity.
Since launch, what has worked to attract and retain customers?
Excellent customer service has always been the key to our customer retention. We don’t cut corners on customer service regardless of the cost.
We do a significant amount of marketing however the strategy since launch has changed over time. Initially, as the only online party store, it was simply good enough to be somewhere whether it be on search engines, on affiliates, or on google ads.
When it comes to marketing we follow a formula. We don’t have advertising budgets, we try to spend as much as possible as long as it meets our formula. This formula is simple, we understand our the value of a sale and we understand the cost for us to service that sale (all the direct costs not fixed costs) and so one minus the other is our variable profit per sale which is also the amount we can afford to spend on marketing since any less would result in us spending too much.
Google ads have become very expensive lately and so has other costs per click channels so we have focused more recently on SEO. Most of our customers are acquired through organic means. They either drive past our stores or find us on google. It sounds simple but there is a lot of complexity to ranking well on Google and so we do a lot of SEO management.
As with my first comment, what has stayed constant in attracting and retaining customers is great customer experience. We provide this by making sure we help customers as much as possible and in particular, if we have an issue such as being out of stock, service is at its most important.
We might provide those customers a more expensive item at no charge or upgrade their shipping for example. When customers shop with us, they tell their friends, they write reviews, and they return which results in a continuous cycle of growth that continues to work for us.
We ask all our customers to review us via Feefo. We have a score of 4.7/5.
How are you doing today and what does the future look like?
We doing really well. Sales continue to grow and we keep getting more efficient so our profit margin is growing.
We are now focusing on building a solid foundation to open more stores. We are working on our systems, processes, and procedures to ensure we have a platform that grows with as little hassle as possible. That means making sure we have procedure manuals for roles and that roles can perform adequately without the need for the owners to be in the business.
We are in the process of adding new technologies and we are one of the few companies in the world to trial scan and go technology called Tilly. We are also looking to upgrade our existing website.
We are also reviewing our business model constantly to see how we can help our customers better which has resulted in a shift in our model from just selling party products to more broadly helping people have parties.
At present we are a party store selling party products and we do it well. However, customers want help with their whole party not just with finding the right party supplies. So we are currently trialing a system where we help customers with their whole party.
Through starting the business, have you learned anything particularly helpful or advantageous?
A million things. We have learned to plan, budget, manage cash flow and more. We have also had to hack our way through some things and we have learned how to get government grants easily, how to scale our marketing without spending a cent, and how to take advantage of disruption.
Starting a business is harder than most think. I tell most people to imagine how hard it is, and then double it.
With government grants, we employ a company on a success fee. We never have time to do them so we never get to it if we do it ourselves. The company we get takes all the risk and if they don’t get us a grant, it costs us nothing for trying.
With our marketing, we focus on doing conversion marketing where the cost per conversion is lower than our profit per sale. This way, every bit of marketing we do pays us straight away and there is no investment cost. By applying a formula for this we can scale our marketing significantly.
Finally, we tackle disruption with passion. We love change. Every time something changes, there is an opportunity for us to be early and capitalize while everyone else drags their feet. We were google adwords australia and bings first customer in Australia and we were the first customer to trial scan and go technology with Tilly.
What platform/tools do you use for your business?
We use Magento for our website and Microsoft Dynamics RMS for our POS. We use MYOB for accounting.
Our inventory system is something I built myself in Microsoft Access and many of our repetitive processes are automated through Microsoft Excel spreadsheets.
What have been the most influential books, podcasts, or other resources?
The One Minute Manager is my favorite on managing people. It’s a book that explains how you need to manage different people differently.
Platform by Michael Hyatt is another favourite about standing out. It outlines how to build yourself and your business up to be seen as a thought leader in your chosen field.
I also regularly subscribe and read enews from Power Retail, Internet Retailing, Inside Retail.
I attend lots of conferences such as Retail Global, Online Retailer, Online Retail Summit, New Retail and more. Going to conferences and reading ensures I am up with the absolute latest in my industry and the broader market.
Advice for other entrepreneurs who want to get started or are just starting out?
Don’t do it. If they ignore my advice, they might actually have what it takes to survive.
Starting a business is harder than most think. I tell most people to imagine how hard it is, and then double it. It's not the parts you love about going into business that are hard, it’s the parts you didn’t sign up for.
Thinks like taking the bins out, doing the bookkeeping, hiring and firing staff, and dealing with staff personal issues. You have to be so determined that you need to find the boring and mundane. I love doing those things because I know doing them helps me achieve my goal.
Are you looking to hire for certain positions right now?
We’re always looking to hire. We have a senior team of 6 people and all 6 have been with us 6 years or more. Were growing so always looking for people to join our team.
People who work for us generally work with us a long time which I think says something about our company.
Where can we go to learn more?
- Facebook The Party People Company
- Facebook The Party People Sans Souci
- Facebook The Party People Drummoyne
- Google+ The Party People Company
- Google+ The Party People Sans Souci
- Google+ The Party People Drummoyne
The Party People has provided an update on their business!
Over 1 year ago, we followed up with The Party People to see how they've been doing since we published this article.
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