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The Spooky Economics of Halloween Costume Pop-Up Shops

Here by Labor Day, gone by November. How do they work?

Like pumpkin spice lattes, those Halloween costume pop-up shops seem to appear out of nowhere every year, yet totally predictably. What was once a former Babies R Us is, for a couple months, a seemingly endless scroll of costumes and masks strewn about, scary-sounding electronic noises, and only a vinyl banner as a sign. And just like Daylight Savings Time, one morning it’ll suddenly be gone. So how do these halloween costume pop-up stores actually work?

Alongside Melissa Gonzalez, CEO of The Lion’esque Group and author of The Pop-Up Paradigm: How Brands Build Human Connections in a Digital Age, we’re popping up some answers. 

How do these halloween costume pop-up stores suddenly appear?

These temporary costume shops — an industry that tends to be dominated by Spirit (more than 1,300 pop-up stores in recent years) or Halloween City nationwide, or in New York City by Ricky’s — often appear in different places from year to year, and always right around the corner from Halloween. But the reality is that their locations and most other details are anything but spontaneous. They were often planned a year ago, and sometimes as late as a few months before they open (usually in September). 

As soon as Halloween is over, Spirit’s real estate team is already planning for next year, they’ve said. On November 1st, they’re scouring the country for space for the following Halloween for their thousand-plus stores, making their site selections as early as January and as late as August.

What kind of empty storefront are they looking for?

The process is pretty detailed: They scout all over the country, looking for high-visibility spots that have a car count of at least 25,000 per day. When it comes to size, most anything will do! From 3,000 to 50,000 square feet, they’ll make it work. That’s why you’ll see them in all sorts of spaces. But former big-box stores and strip malls are pretty common. They’ll generally put “as much merchandise as they can fit on the floor,” Gonzalez says.

What’s with the empty space that they take over?

There’s an interesting relationship between recessions and pop-up stores. When recessions hit and retail stores close, it’s a great time for pop-up stores to proliferate. Indeed, there have been fewer Halloween stores in the past few years than there were during the recession (partly owing to online shopping as well, but still). And large vacant spaces are harder to come by in a good economy than in a bad one. 

Also, seasonal pop-up spaces have a symbiotic relationship with landlords. “Landlords aren’t going to want to lock up a space when they know they have an opportunity for a long-term lease,” Gonzalez says. Landlords love long-term leases for the stability, but a short-term rent is better than nothing, so there can be a bit of a chess match that goes on throughout the year between landlords and pop-ups. Once it’s likely that a storefront won’t be occupied in the fall, a deal is pretty much on. And the term is so short that landlords generally aren’t missing out on a prospective tenant.

The benefits of a costume shop, and all the people it attracts, are often not lost on landlords, though. “A mall operator will realize that a pop-up costume shop is going to drive a lot of traffic to the property, so there’s value to that,” Gonzalez says.

Who runs this stuff?

There are still mom-and-pop costume shops around the country that are open year-round, though the pop-ups have forced many former ones to close. Spirit operates many of its own stores, though it relies on franchises in places they don’t already have operators. 

How does that work?

It’s up to the franchisee to work out the lease. After that, the company supplies all the merchandise, including cash registers, and pays for all the freight. The company takes a cut of the sales (they won’t say how much), and at the end, the franchisee pays for only what’s sold — Spirit takes back all the unsold merch. 

What about… you know, the internet?

Sure, Amazon sells tons of costumes. One of the largest costume makers, Rubie’s (it’s very likely you’ve bought one of their costumes in the past for you or for your kid), gets swamped by Amazon every year

But Gonzalez points out that Spirit and other places sometimes aim to make their shops more experiential, which is a big advantage that stores have over the internet. And being able to touch, try on and interact with a costume counts for a lot. The biggest advantage, weirdly, is the procrastination factor: Ever been in a costume shop the day before — or of — Halloween? It’s almost literally a madhouse. Finding a costume very last-minute is something the internet just can’t deliver.  

What about the employees?

They’re seasonal hires over the summer. All district managers for Spirit, though, fly to New Jersey for a week of training ahead of the season

What do they do with the costumes during the other 10 months of the year?

Well, that’s the good thing about costumes: Unlike, say, technology, most don’t become obsolete after six months, so you can put them in a warehouse and bring them back next year. In the meantime, you can sell them online for random costume parties throughout the year. With the exception of trendy costumes (hellooooo, Karen) many of them stay evergreen year after year.

So is Halloween going to suck this year?

There’s a good chance of it, with large gatherings not allowed in many places. But strange things happen during strange times: More Easter bunny costumes were sold this year than in previous years, since everybody was forced to stay home. Maybe the same thing will happen for Halloween, where many families might choose to do a big blowout at home instead of heading to large parties. 

Keep in mind, though, Halloween is nearly a $9 billion industry, $2.5 billion of which is spent on costumes alone. The average person celebrating in Halloween festivities spends more than $86! Twice as many adults dress up nowadays than they did 30 years ago. Even if Halloween 2020 is a relative bust, it’s still a huge holiday.

One thing is for certain, though: By this time next year, many of those vacant storefronts that COVID has claimed in your town will be the temporary home of a costume shop — at least for a couple months.

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