Commercial Real Estate and Retailers and Specialty stores and Retail and Real Estate & Retail

Bankruptcies, store closings help Halloween shops scare up space

October 23, 2009

Like zombies coming to life in a low-budget horror flick, the Halloween specialty shops that invade empty store fronts this time of year are groaning with activity.

That's especially true this season, as a spate of retail bankruptcies and store closings have been particularly kind to the seasonal sellers taking advantage of the additional empty space.

“It is easy to open up a temporary space, not only for Halloween, but we’ll be seeing temporary stores for Christmas and Easter,” predicted Purdue University retailing professor Richard Feinberg.

Halloween has become a billion-dollar industry in which adults now are just as likely as children to dress up in costume to celebrate the festivities. Despite the recession, market research firm IBISWorld Inc. expects 2009 sales for costumes and décor to rise 3 percent, to $3.8 billion, this year compared with a year ago.

Marty Cohen, the local franchisee of Owenton, Ky.-based Halloween Express, operates two stores--one in Carmel once occupied by bankrupt Today’s Bedroom One  and the other in a former Shoe Carnival store in Castleton.

“It all comes down to real estate,” Cohen said. “The biggest mistake we’ve made is not knowing when to walk away from a [bad] deal.”

Cohen, who became a franchisee of Halloween Express four years ago, hopes to expand to three or four locations next year. Finding the ideal space, though, can be one of the most difficult tasks of operating a store.

Although retail space is more abundant, some landlords still are hesitant to lease on a temporary basis, he said.

Halloween Express is among the national costume outlets that have multiple locations throughout the metropolitan area. Most stores are at least 15,000 square feet and can contain about 12,000 items each.

Larger competitors include Halloween USA, a subsidiary of Naperville, Ill.-based Factory Card & Party Outlet, and Spirit Halloween, a division of New Jersey-based Spencer Gifts LLC. Locally, Halloween USA has three shops and Spirit Halloween four.

Neither company returned phone calls from IBJ seeking comment on their operations.

But Tony Detzi, Spirit Halloween vice president of operations, told Associated Press that it is occupying 83 former Circuit City stores nationwide, as part of the 100 stores it added to the 625 it had last year.

“The bigger the storefront, the bigger impression you have on the consumer,” he said, “and that’s the big plus.”

Feinberg said the strategy amounts to simple economics.

“If you build something where people are,” he said, “they’re more likely to spend money there.”

Cohen at Halloween Express expects to post solid sales this season but declined to divulge specifics.
 
What he freely admits, however, is that there’s much more work involved than just ringing up sales for two months. On top of his full-time job at an inventory-management company, he attends several Halloween trade shows to see firsthand what products his franchisor will purchase for the stores.

The Halloween buying season traditionally begins in December, when most consumers are thinking more about buying gifts for the holidays. This year, the International Halloween Show, one of the industry’s top shows, kicks off the season in New York City.

Cohen begins his search for employees in April and could have as many as 40 between the two stores by the time Halloween rolls around. He initially interviewed roughly 100 candidates vying for the part-time, temporary jobs.

This year, because of the high number of unemployed, he could be even more selective than usual.

“There’s the perception that as long as they can fog a mirror we'll take them,” Cohen said, “and that’s not the case.”

Most employees are 20-somethings who are drawn to the festive atmosphere, which grows in intensity as Halloween draws closer.

“It’s like the day before Christmas,” Cohen said, “times 20.”

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