Paper Warehouse parties on with continued strategic success. Every day is a cause for celebration for Minneapolis, Minn.-based party and paper goods supplier Paper Warehouse. Specializing in everything from invitations, banners and giftware to tissue, bows and party snacks, this retailer aims to provide customers with the tools to commemorate every occasion.

The first Paper Warehouse store opened in Minneapolis in 1983. Today, the chain boasts 98 company-owned stores - 30 of which are concept stores - in Denver, Des Moines, Kansas City, Minneapolis/St. Paul, Oklahoma City, Omaha, Seattle, Tucson and Tulsa, as well as 48 franchises across the country. Paper Warehouse CFO Cheryl Newell anticipates future company-owned stores will be concept stores. Meanwhile, the company plans to selectively remodel certain existing stores wherever the revenue potential justifies the investment.

In response to international interest, Paper Warehouse signed a franchise agreement with a developer last year to open several franchises in Canada; the first of which will open shortly in Calgary. Approximately 105 stores will be under the Paper Warehouse or Party Universe name within the next year, with four new stores online for 2001.

When choosing store sites, Paper Warehouse favors locations in or near visible high-traffic strip malls close to prominent shopping malls, mass merchandisers, discount or grocery store anchors. "We choose these locations because of convenience. People are out doing errands anyway, and it is easy for them to stop at our stores," explains Newell.

Demographics such as parking availability, storefront visibility and presence, local competition, traffic counts, lease rates, income and age are also considered when choosing a site. "Our typical customer tends to be a woman between the ages of 25 and 49 with young or school-aged children," says Newell.

The Paper Warehouse introduced its current 8,500-sq.-ft. prototype store in 1994. In 1998 the company introduced its concept store, adding more colorful ceilings than previous stores, lower shelves in the store's front, confetti-tiled floors and new, vibrant signage. "The front of these stores is low, and shelves get higher toward the back so that customers can easily see across the entire store and quickly find what they need," explains Newell.

Although Paper Warehouse competes with other specialty party-supply retailers and card shops, it has distinguished itself from the competition in several ways. "We differentiate through size - others tend to have larger facilities, although they carry fewer SKUs - and we cluster our stores in major metro areas while others take a more shotgun approach to where they locate stores," says Newell.

By carrying more items in smaller-sized stores, Paper Warehouse increases cost efficiency and passes savings to the customer. It has also leveraged its advertising and administrative expenses by clustering 10 stores in one large metro area, for example, rather than in 10 separate areas.

Paper Warehouse also sets itself apart by positioning itself as the "party expert" by implementing the Party Smart program in 1999. The Party Smart concept provides a customer with all the information and resources necessary to throw a party. The company also created the "party planning resource center" which offers entertainment and catering ideas and suggestions.