Halloween Popup, Temporary Retailers Slake The Thirst For Costumes And Other Spooky Paraphernalia

They're as routine these days as fall colors and mums. Temporary Halloween retail stores bloom across the U.S. in malls and storefronts in October, sprouting orange and black blossoms for a month or so. By the first week of November, they're gone.

Companies like Halloween Express, Halloween Adventure, Halloween Warehouse, Spirit Halloween and Halloween City put up these transient sites – also known as popup stores – in every nook and cranny imaginable, hoping to reap a portion of the billions of dollars Americans pony up every year for activities related to trick-or-treating and other Halloween festivities.

“We get about 500 to 1,000 people through here every day during the week; more on the weekend,” said Charles, an employee of Halloween City, as he unloaded boxes of costumes, props and other paraphernalia for the company’s temporary space in the historic J.P. Morgan building across the street from the New York Stock Exchange, a tourist heavy area in an increasingly residential neighborhood. “We get more people after school and we’re selling out of a lot of costumes throughout the day.”

And he added, holding up a cardboard box of children's costumes, “I’ll be back later with more of this stuff.”

The National Retail Federation (NRF) estimates that Americans will spend $8 billion this year on Halloween gear when 71 percent of the country will celebrate the holiday compared to only 52 percent seven years ago. Some $370 million will be used to buy costumes for pets, according to an annual survey by BIGinsight, which tracks consumer behavior.

With these numbers, it’s no surprise that the number of Spirit Halloween outlets in the U.S. (except Hawaii) and Canada has grown to 996 this year, from 548 in 2007. Indeed, market research firm IBISworld estimates that there were 1,622 temporary Halloween outlets in the U.S. last year, up from 1,304 in 2009.

Serving this fleeting but lucrative business is a year-round effort. Companies spend most of the year trying to guess which products customers are going to want the most – a difficult assignment as tastes in Halloween costumes change capriciously as personalities enter and depart the pop culture orbit – just a few years ago, Kate Gosselin (remember her?) was a favorite of young girls – and negotiating to get these items at the lowest prices possible.

These firms are also busy setting up and breaking down outlets – many of them run temporary retail sites as well for Christmas, Easter, Valentine’s Day and other seasonal landmarks; hiring thousands of short-term workers to operate them; and scouting for ideal commercial locations, preferably in the busiest part of a city’s commercial hubs.

“We operate 365 days of the year,” said Crystal Baxter, marketing and licensing manager for Spirit Halloween, based in Egg Harbor Township, N.J. “We have an entire department dedicated to our real estate opportunities. They find the locations and negotiate terms. We also develop our marketing and e-commerce operations and meet with sellers.”

One of the reasons why Halloween spending has risen the last few years is that the cost-to-fun ratio is ideal for thrifty families coping with uncertain economic times. Costumes are relatively cheap and Halloween parties and trick-or-treating are inexpensive activities. And the sluggish economy has also benefited temporary Halloween retailers who have enjoyed sharply discounted rental space for the many vacant storefronts across the country.

“(Popup retailers) are filling a lot of the big empty boxes that have gone out of business, like Borders,” said Christina Norsig, CEO and founder of PopUpInsider, an online exchange for temporary retail sites and the author of PopUp Retail; How You Can Master This Global Marketing Phenomenon. “It’s hard to find tenants for these.”

With more and more low-priced vacancies to choose from, the popup retail phenomenon became increasingly aggressive. It has taken a whole new twist with more retail and fashion houses, "particularly in large urban centers like New York and D.C., using this concept for three-day blowout sales or to introduce new lines or whatever,” said George Raitu, commercial real estate researcher for the National Association of Realtors.

But the generous short-term leases that made setting up temporary outlets so desirable may be coming to an end. As consumers have slowly begun to open their pocketbooks again, traditional retailers are feeling expansive again. In September, U.S. retail sales grew at annualized rate of 14.82%, compared to an average annualized growth rate of only 4.5 percent in the past five years. And with these and other positive signs, including gains in wages and employment, retail vacancies have declined to an estimated 11 percent in 2012 from 14 percent two years ago, according to Raitu.

“For 2012 it was a little harder to find temporary commercial rentals because there are more permanent residents,” said Baxter of Spirit Halloween.

Which means that the costs of running Halloween popup stores (and any temporary retail sites) are likely to be on the rise in the next few years. Profits will no doubt take a hit. (All of the popup outlet companies are private and declined to discuss revenue or earnings.)

But the enthusiasm for the 400-year-old holiday is not going to change anytime soon. And as long as people are attracted to the ghosts and goblins that appear on the last night of October, there will be no shortage of money to be made opening a store for a month or two that caters to this curiosity for ancient druid revelry.

Or, put more prosaically, the popup retailers are not going to be spooked by something as benign as a few dollars more in rent.