Michaels' 60% Party Supplies Expansion: How the U.S. Retail Channel Is Changing

When Party City and Joann Fabrics exited the U.S. physical retail landscape in 2024 and 2025, they left a significant gap in the party supplies market. The category did not disappear. The retail channels serving it changed.

Michaels, the arts-and-crafts retailer with more than 1,300 stores across North America, is making a decisive move into the party supplies category. In May 2026, the company announced it is scaling up its dedicated in-store party assortment by 60% and introducing nearly 600 new products throughout the year. The expansion builds on a party business that already spans more than 4,500 products across over 60 themes.

This is not a cautious experiment. It is a strategic bet on a category that Michaels believes can drive growth beyond its traditional arts-and-crafts market. And for party supplies suppliers, it signals a fundamental shift in how the U.S. retail channel is being rebuilt.

The Retail Landscape Has Changed

The party supplies category has undergone a significant restructuring. Party City filed for Chapter 11 bankruptcy for the second time in two years on December 21, 2024, and began winding down more than 700 store locations. By February 2025, its stores were closed. Joann followed a similar path, filing for bankruptcy in January 2025 for the second time in less than a year and eventually winding down all of its roughly 800 U.S. stores.

The disappearance of these two retailers removed more than 1,500 specialty retail storefronts from the U.S. market and reshaped the retail landscape across celebration, crafts, and adjacent event-planning categories.

Michaels moved quickly to capture the opportunity. In a matter of months, the company built out party supply spaces at its stores, set up a supply chain to source helium, installed balloon-filling equipment, and trained employees. In 2025, Michaels introduced The Party Shop, creating a dedicated in-store destination for party supplies, balloons, themed décor, and celebration essentials.

The 2026 expansion takes this further. Michaels is adding new categories such as piñatas, expanding its licensed kids' party supplies with characters like Bluey, Hello Kitty, and Stitch, and introducing drinkware and utensils for special occasions. The retailer is also cutting prices on hundreds of party essentials and lowering in-store birthday parties to $149, including setup and cleanup.

Why Michaels Is Moving So Quickly

Michaels' ownership structure may also help explain the speed of its expansion. Owned by private equity firm Apollo Global Management, the retailer has more flexibility to pursue store-level investments and category expansion without the same public-market reporting pressures faced by listed retailers.

CEO David Boone has emphasized the company's ability to move quickly, while Michaels' rapid expansion into party supplies has become part of its broader strategy to find growth beyond its traditional arts-and-crafts business.

Experiential Retail and Customization

Beyond expanding its product assortment, Michaels is investing heavily in in-store experiences—an area where physical stores hold advantages over e-commerce competitors.

The retailer is rolling out what it calls "Customization Bars" across its stores. The concepts include a "Favour Bar" for building custom party favors, a "Candy Bar" for personalized dessert tables, and a "DIY Banner Bar" for creating custom banners.

This changes the supplier equation. Retailers are no longer competing only on how many products they carry. They are competing on how much flexibility and personalization they can offer consumers.

What This Means for Party Supplies Suppliers

The Michaels expansion signals a shift in what large retailers expect from suppliers:

SKU breadth. Nearly 600 new products across multiple themes and categories mean suppliers who can support multi-SKU assortments are better positioned.

Themed collections and licensed programs. The expansion includes both coordinated party themes and licensed products featuring characters such as Bluey, Hello Kitty, and Stitch. Retailers increasingly want collections that work together rather than isolated products. For licensed merchandise, suppliers must also meet the relevant intellectual property authorization and retailer-approved licensing requirements.

Customization capability. Customization Bars indicate growing demand for personalized products. Suppliers who support private label, custom packaging, and flexible configurations align with this direction.

Competitive pricing. Michaels is cutting prices on hundreds of items. Suppliers need to deliver quality at price points that allow retailers to compete.

Replenishment capability. Consistent replenishment across a large store footprint is essential. Suppliers who maintain quality and delivery at scale will have an advantage.

Compliance and retail readiness. Large retailers require documented compliance with safety, material, packaging, labeling, and testing standards. Suppliers who can meet these requirements—and provide the necessary documentation—will be better positioned than those who cannot. The expansion is not simply creating more demand. It is raising the requirements for suppliers.

Party City Returns—Differently

Michaels is not the only retailer filling the party supplies gap. In April 2026, Staples announced it would launch Party City shop-in-shops inside more than 700 of its stores nationwide. The partnership brings Party City's balloons, décor, and party supplies together with Staples' same-day print services.

The physical retail model has changed. Party City did not simply disappear. Its retail model changed. Party City's standalone stores are gone, but the brand is reemerging within another retailer's footprint. Meanwhile, Michaels is building its own party supply destination from within its existing stores.

For suppliers, the distribution landscape is being rebuilt around two new models—Michaels as a party destination and Staples as a host for Party City shop-in-shops.

The Reset Is Happening Now

Michaels is expanding its party business by 60%. Party City is returning through Staples. The old retail map has changed. New players, new store formats, and new distribution models are now shaping what comes next.

Suppliers who can deliver variety, licensed themes, customization, reliable replenishment, and retail-ready compliance will capture the demand. Those who wait may find the channel has already been rebuilt around other suppliers.

Kelaisi Candle has manufactured candles and party supplies since 1991, with facilities in Xingtai and Shijiazhuang, Hebei. We support international buyers with social-compliance, product-testing, and quality documentation covering requirements such as BSCI, SEDEX, CE, RoHS, EN71, and ASTM F963, where applicable.