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September 28th, 2011 - Kelley Chambers

No tricks, just treats


Halloween store operators predict rising revenues this season


 

With Halloween each year comes a sea of witches, ghosts, sexy nurses and famous characters. To meet the demand for costumes, accessories and themed party supplies, seasonal Halloween stores from local and national operators begin popping up around the metro in early September.

The outlets usually are set up in vacant big-box stores or strip centers, and can prove profitable for store owners and landlords.

Marty Dillon, owner of Party Galaxy, began opening seasonal Halloween stores five years ago. In addition to his eight in the Oklahoma City metro area and one in Stillwater, the venues are packed with all the latest costumes and accessories. At the regular Party Galaxy stores, Dillon says about 25% of the inventory is dedicated to Halloween. At his superstores, it’s nothing but Halloween.

“We could get a bigger selection and get more people through the door with a 100% Halloween store,” he says.

Numbers from last year by the National Retail Federation showed that after consumers slowed on Halloween spending in 2009, activity picked up in 2010. The 2010 Halloween Consumer Intentions and Actions Survey showed Americans planned to spend an average of $66.28 on costumes, candy and decorations in 2010, up from $56.31 in 2009. Numbers for the 2008 survey showed the average Halloween spending was $66.54 per person. The NRF estimated total spending for Halloween in 2010 at $5.8 billion.

As of press time, 2011 projections were not available.

And Dillon has noticed that increase.

He says the highest-volume items at his stores are costumes, and Halloween accounts for about 20% of his total yearly business.

But still there are some unknowns.

Dillon has to look in his crystal ball to determine what will be hot nine to 10 months down the road.

“We buy this stuff in January,” he says. “You hope when you’re buying Captain America or Green Lantern costumes that the movie isn’t going to bomb.”

“Generally, temporary tenants are not particularly attractive to landlords. Although … Halloween operators have that formula down. They have a short-term lease agreement that is landlord-friendly.” —Stuart Graham

An example of a stumble from recent years were costumes and merchandise associated with the film “Indiana Jones and the Kingdom of the Crystal Skull.” While the globe-trotting archeologist had proven a popular costume in the past, Dillon found a lackluster response to Jones’ signature fedora, leather jacket and bullwhip.

This year, he expects to have a positive response from children and adults wanting Captain America costumes based on this summer’s blockbuster film.

Other season-specialty retailers set up shop around the metro, including the Egg Harbor Township, N.J.-based Spirit Halloween superstores, which opened four local stores this year.

However, the national chains can take a bite out of local retailers’ holiday profits.

“It gets frustrating,” Dillon says. “That’s why we’ve added more temporary stores.”

Stuart Graham, a retail broker with CB Richard Ellis|Oklahoma, says temporary tenants can be good or bad for a landlord. With many empty big boxes around town, the retailers can provide a revenue stream for an owner, but only for a limited time. He says Halloween stores have proven to be an exception.

“Generally, temporary tenants are not particularly attractive to landlords,” he says. “Although ... Halloween operators have that formula down. They have a short-term lease agreement that is landlord-friendly.”

He says landlords and owners also like the stores because they are flexible on space and often will take what is available. Dillon says his superstores range anywhere from 7,000 to 30,000 square feet.

Graham says while the Halloween stores do not get gouged by landlords, it is not unusual for them to pay a bit more than the going rate, which can help a landlord’s bottom line, even if just temporarily.

Dillon expects another successful Halloween at his stores this year, and boasts that he has items from inexpensive trinkets all the way up to expensive coffins and faux, yet realistic, electric chairs that can run thousands of dollars.

“We have real coffins,” he says with a laugh. “The kind you can bury people in.”

 
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