Retail chains across all industries have faced mounting economic challenges in recent years, with slower consumer spending leading to mass store closures and even bankruptcies.
To avoid the same fate, Michaels is reshaping its business strategy and seizing new growth opportunities.
With leading sewing and crafts retailer Joann and once-popular party supplier Party City both filing for bankruptcy, significant gaps have opened in the market. Now, Michaels is stepping in to fill those voids by expanding its in-store experiences and product assortment.
Michaels’ new store-in-store concepts
Michaels has debuted two new concepts, The Knit & Sew Shop and The Party Shop, inside select locations.
These additions build on the company’s signature arts-and-crafts offerings, giving customers access to an expanded selection of fabric, yarn, sewing, party supplies, and balloons, alongside upgraded in-store services.
“The launch of The Knit & Sew Shop and The Party Shop at Michaels is a transformative step forward on our mission to become the go-to destination for fueling creativity and celebration,” said Michaels CEO David Boone in a press release.
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“We are proud to offer an unmatched experience for creating and celebrating through our expansive product assortments, enhanced services, lower price points, and seamless in-store and online shopping options.”
The Knit & Sew Shop is now available in over 840 Michaels stores, increasing its assortment of fabric, sewing, and yarn by around 25%. The retailer plans to expand the concept to 250 more stores, and by mid-October, over 650 locations will feature new services such as fabric-cutting tables.
As for The Party Shop, it now offers 700 additional new products and a dedicated balloon bar in stores. Online, Michaels has expanded its party inventory to 79,000 items and lowered prices by 25-70% on over 200 party products.
However, this isn’t Michaels’ first step into party services. Last year, it introduced in-store parties and arts-and-crafts classes at select locations, allowing customers to host birthday celebrations and create on-site.
Image source: Bloomberg/Getty Images
Joann and Party City file for Chapter 11 bankruptcy
Michaels’ expansion comes at a very strategic time.
- Joann first filed for bankruptcy in March 2024, briefly emerging after going private, but filed for a second time 10 months later. By May 2025, the chain had closed around 500 stores. In June, Michaels acquired Joann’s intellectual property and private label brands, but this deal didn’t include physical stores.
- Party City faced a similar fate, filing for Chapter 11 bankruptcy a second time in December 2024 and closing most of its stores. In February, Michaels attempted to acquire the chain during its bankruptcy auction but was outbid by New Amscan, an Ad Populum affiliate that took over Party City’s intellectual property and wholesale operations.
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Michaels taps the one-stop-shop strategy
By enhancing its product assortment and services, Michaels is tapping into the rising one-stop-shop trend, which allows customers to fulfill multiple needs in a single trip. This approach drives convenience and reduces the risk of losing shoppers to more specialized competitors.
As the pioneer of the one-stop-shop strategy, Walmart (WMT) has long been a major player in the retail industry. The retail giant partners with food chains and suppliers so customers can shop and affordably dine all in one place.
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This strategy has made Walmart the biggest company in the world, and its growth has only skyrocketed. In the second quarter of fiscal 2025, revenue rose nearly 5% year-over-year to $177.4 billion.
With consumer demand evolving and two giants in the party and crafts categories no longer a threat, this strategic expansion makes Michaels a top competitor.
While this approach has many advantages, there are also plenty of downsides.
“Businesses benefit from increased consumer loyalty and revenue streams by providing convenience, though they must maintain quality and not spread their offerings too thin, as this can erode their core competencies,” said Investopedia business expert Troy Segal.
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