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Why Halloween Is Recession-Proof for Some Retailers
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Special to CNBC.com
Halloween spending is expected to fall by roughly $1 billion this season, but sales at some stores may not be as dismal as originally thought.
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AP With an increasing number of Halloween specialty stores opening, sales may not fall by as much as you might expect. |
Seventeen-year high commercial vacancy rates have allowed specialty retailers to increase their presence, scooping up high-traffic locations that landlords previously wouldn't dole out to temporary stores.
"The problem, historically, is that retailers or landlords who have space available don't like to tie up the space for a few months because you take it off the market," said Michael Burden, a principal with industry adviser Excess Space Retail Services. "Clients that used to not give any consideration for those type of users are not only giving consideration but are consummating transactions."
Spirit Halloween, for example, added nearly 100 more stores in 2009, taking its total to 723. Among these locations, 125 stand where bankrupted Circuit City and Linens 'N Things big boxes used to be.
Specialty retailers are also gobbling up surplus real estate from national pharmaceutical and office goods chains, which are the perfect size for the stores' abundant inventory, Burden said.
Ricky's NYC opened 28 Halloween-exclusive pop-up stores in the New York City area, up from the 10 it opens in a typical season. Though CEO Todd Kenig is still spending between $5,000 and $50,000 in rent at each location, he's getting a lot more for his money, he said.
Because of its more visible locations, Ricky's has maintained per-store sales figures comparable to this point in years past, Kenig said. Though it's been harder than usual to get customers to stop window-shopping and start opening their wallets, he predicts that with more locations open, sales will rise 20 percent on the year, he said.
"It's still a little early, but we haven't seen any decrease," Kenig said.
To prod customers along, his store is offering 30 percent discounts on more than 200 costumes, and it's replaced $100 costumes with price-point frocks, Kenig said. It's also offering a full line of costumes, masks and accessories.
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While that diverse inventory is what gives Halloween stores an edge over retailers such as Target [TGT
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] or Wal-Mart [WMT
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], experts say it's also what makes them vulnerable.
It's counterintuitive for retailers to boost inventory levels during an economic environment that has forced so many to drastically cut back their supply. It's especially risky for specialty shops, given the increasing number of shoppers who are flocking to discount stores, said Abigail Marks, retail economist at CB Richard Ellis.
Data is a real-time snapshot *Data is delayed at least 15 minutes
