Retailers Spooked by Halloween Sales Drop
Until Recently, Halloween Spending Was Booming -- What Does the Future Hold?
By MARTHA C WHITE
Oct. 31, 2009 —
For most Americans growing up as Gen Xers or Boomers, Halloween was just a minor thrill in the slog between the start of school and the arrival of Christmas. Kids created costumes from cut-up cereal boxes and ran around their streets in a sugar-fueled mania. Holiday décor consisted of a jack-o'-lantern on the front steps and a paper cutout on the front door.
But as the Great Home Equity Cashout hit its stride, our preferred flavor of spooky turned commercial. We had the money to blow and we believed marketers who told us we needed inflatable lawn mummies. Last year, we spent $5.77 billion, compared with $2.5 billion in 1995. Much was made of this continued increase, since the holiday came on the heels of an economic catastrophe. And last year was a turning point -- because this year we've spent 15 percent less. So the big X factor for retailers is what Halloween will look like in the future, as the crucial millennials have slashed their expenditure.
Historically, Halloween has been a lagging indicator of our mood. In 2002, we were fresh off the tech bust and 9/11 but still spent $6.9 billion on the holiday, an all-time high. (That figure took a nosedive the following year.) This year's stats suggest the recession is changing our consumption patterns, and that the downturn has had a disproportionate impact on wealthier households. According to National Retail Federation (NRF) data, 88 percent of survey respondents said they are spending less on Halloween because of it. American Express (AXP) research underscores this. According to that firm's monthly spending poll, a higher percentage of affluent respondents said they plan to spend less on costumes and décor this year, and will recycle costumes.
That's not going to stop stores from trying, though. With shopping-center and mall vacancy rates at 18- and nine-year highs, retailers will be taking advantage of the abysmal commercial real estate market to hawk orange-and-black ephemera to the masses. Pop-up stores are growing in popularity, with landlords desperate enough to welcome even short-term tenants.
Even among adults, the craze for dressing up hasn't been abandoned entirely. When it comes to the one-third of NRF respondents (two-thirds of the 18- to 24-year-old group) who plan to dress up this year, the stats show that grown-ups haven't returned the holiday to the kiddies. The fifth-most popular costume on the NRF's survey was a character collectively dubbed "wench/tart/vixen." This probably isn't what mom is wearing if she's chaperoning the afterschool candy grab. Likewise, the ill-advised "illegal alien" costume isn't family-friendly attire.
What people will be donning this year is a blend of the traditional and current pop culture motifs. Witches are still the most widely worn costumes for adults, but the craze for Twilight and True Blood has vampires nipping at their heels. Anecdotal reports indicate that the King of Pop will enjoy a posthumous revival. Sales of Jackson masks, single white gloves, and Thriller-era red jackets are on the rise. Politicians have been popular picks in past years, but revelers seem to want to put the real world out of their minds for a night. Politicians and nurses -- number five last year -- fell out of the top 10.
In addition to dressing up, many people are decking out the old homestead, although they have probably shown restraint. Décor spending dropped significantly, from $26.91 per person in 2008 to $23.56 this year. This is puzzling, since sales of home-related goods have held up through the slump because of our urge to nest when times get tough. What's likely is that people will still decorate their homes, but they'll be using last year's props. Alternately, some analysts suggest that consumers went out last November and scooped up Halloween decor for discounts, as retailers struggled to manage overloaded inventory levels.
Another casualty: haunted houses and seasonal amusement-park entertainment. This fare had grown in popularity in recent years, but the trend seems to be one of the hardest-hit. NRF data show that roughly one-third of young adults -- a major audience for these attractions -- said they'll cut down on these activities as a result of the economy. The fact that these purchases are often cash transactions may hurt them further, says Pam Goodfellow, senior analyst at BIGresearch, the firm that conducted the study for the NRF.
This scaling-back of the more commercial festivities surrounding Halloween is a good indication that the holiday will return to its roots as a low-key kids' day -- at least for the near future. For instance, trick-or-treating is almost exclusively a kiddie activity, and candy sales are holding up relatively well this year (94 percent of NRF respondents plan to buy candy). According to NRF data, the largest drop in spending occurred among young adults. This 18-to-24-year-old age group shrunk the most: from an average $86.59 in 2008 to $68.56 this year.
This age group was the first demographic to grow up without a DIY Halloween tradition -- a distinction that could affect the holiday's long-term prospects as a retail hook, according to Tim Denison, a retail psychologist with the research firm Synovate. Since young adults never grew up making their own costumes or decorations, these practices are less likely to be re-embraced. Rather, he says, they'll just cut back, and that austerity could continue into their childrearing years. If this is the case, we're likely to experience a repeat of what Boomers and Gen Xers grew up with: Halloween as kids' territory.
David Bell, a professor of marketing at the University of Pennsylvania's Wharton School of Business, points out that shifting views of sustainability may also reshape the holiday. After all, a plastic costume shipped to the United States for one wear runs counter to the values adopted by a growing percentage of Americans, particularly millennials. Likewise, with many schools embracing zero-tolerance policies on junk food, the emphasis on candy may fall out of favor.
To retailers, this prospect is scarier than Saw VI. Stores and their respective marketing teams had created a very successful argument that Oct. 31 -- rather than Thanksgiving -- should mark the start of the annual buying binge. If the recession creates a more sedate status quo, retailers will have lost a month of profitable ground. They might try to drum up interest in Halloween again once the economy rebounds, but that's dicey, since even shopping habits born of necessity tend to stick over time. Stores won't want a redux of 2008's inventory-slashing bloodbath. Maybe they'll retrench and focus on a new holiday. (If you start seeing Super Bowl party hype before your New Year's hangover is gone, you'll know why.)
Whether or not millennials' shifting mores will be the stake through the holiday's heart remains to be seen. Spending has slumped before; in 2003, total Halloween expenditures dropped to a shade under $3 billion, only to come howling back. It's possible that after a dismal year or two, the coffin will creak back open, and we'll be doing the Monster Mash with abandon once again.