The Economics of Seasonal Pop-Up Stores

Retail bottom-feeders, or real estate saviours?

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Halloween decorations have come down. The candy’s gone. Long gone. And same goes for the Halloween pop-ups, which turned back into empty storefronts at the stroke of midnight on November 1st, just like Cinderella’s pumpkin. (Except for the few that swap the skeletons out for Santas and, boom!, Christmas store.)

The vast majority of these spooky seasonal stores only open from September to November 1st. So, what about the other 10 months of the year?

Are seasonal stores good for annual business?

From single pop-up to Halloween empire

Legend has it, in 1983, Joe Marver realized he could make more in one month selling Halloween costumes than he made selling dresses all year-round. Goodbye Spirit Women’s Discount Apparel, hello Spirit Halloween. (Yup, the “spooky” name’s just a coincidence.) Spencer Gifts acquired the company in ‘99, growing 60 pop-ups into 1,450 locations across the US and Canada. Boo ya.

It’s not just Spirit though. Party City has Halloween City (which turns 1/5th of its seasonal pop-ups into Toy City, come Christmastime). There’s Halloween Express, and Halloween Adventure on the East Coast. All riff on the same business model: take over a vacant storefront, move millions in Halloween gear, do it all again the following year.

How much money can you make in two months?

Plenty. Seasonal stores captured an estimated 35% of Halloween sales in 2018. This year, Americans spent a record $7 billion on Halloween costumes and decorations. You do the math. (Or we can.) That’s $2.45B!

According to the New York Times, traditional party stores do about 30% of their annual sales between Labor Day and Halloween. For pop-ups like Spirit, it’s closer to 90%, with 70% of that rolling in in the final two weeks before Halloween. (The remaining 10% is from online shopping, available 24/7/365.)

How do they do it?

Spirit’s workforce is overwhelmingly seasonal. This, short-term leases and the ability to carry unsold merchandise over each year (something Calendar Club can’t do) allow the company to turn a profit despite making over half its revenue during a two-week window. 

Don’t get it twisted though: Spirit HQ remains open year-round, pouring over last year’s sales numbers and trying to predict next year’s costume trends. Meanwhile, the real estate team starts location-scouting Nov. 1, and calling commercial landlords in February.

Bottom-feeders, or real estate saviors?

Halloween pop-ups aren’t just recession-proof, they’re recession-thriving. More hurting retailers = more vacant stores = more potential locations. In 2009, Spirit took over 83 vacant Circuit City locations. In 2020, they set up shop in the original Barney’s after the iconic department store gave up the ghost. Not even their competitors were safe!

And while Party City dropped from 275 seasonal stores to 25 during COVID, Spirit actually opened more locations in 2020 – with social-distancing, obvs, plus restrictions on testing out the masks.

Turns out, Halloween stores make excellent tenants. They pay above-market rent and offer a “kick-out clause” allowing landlords to rip up the lease if they find a permanent tenant by June, making them a lifeline for commercial real estate. The market for 50,000-square-foot big-box stores isn’t exactly booming, and three months’ rent > zero rent.

Spirit’s motto? “Why let that space sit empty?” With another recession looming, don’t be surprised if Halloween stores outnumber year-round retailers next fall.