Getting in the 'Spirit'

When October rolls around, everyone wants to have the best Halloween costume at the party. Here’s how pop-up shops capitalize on seasonal demand, year after year.

This year alone, Americans will spend $2.5 billion on Halloween costumes, and more than $8 billion on candy, costumes and Halloween home décor combined. In the 1980s, Joseph Marver founded Spirit Halloween, the original Halloween pop-up shop, to meet this growing demand for festive wares. Since then, Halloween pop-up shops have become wildly successful, providing retailers and commercial landlords a low-maintenance way to turn a seasonal profit.

How Does it Work?

According to IBIS World, the number of Halloween pop-up stores has grown steadily at a rate of 8% per year since 2005. In 2010, the growth rate rose to 15% when a large number of permanent retailers -- such as Circuit City, Linens ’n Things, and CompUSA -- went bankrupt, leaving behind huge, boxy spaces.

For commercial landlords, these types of spaces are quite difficult to fill long-term -- but luckily, these spaces are perfectly well-suited to the needs of pop-up shop owners. Short-term leases afford landlords the opportunity to make money while they search for a long-term renter, and gives seasonal retailers the temporary commercial space they need in typically high-traffic areas. Larger spaces, such as a former CompUSA megastore, allow retailers to elevate the customer experience. Instead of just a “grab-it-and-buy-it” model, the store can morph into a haunted house, creatively selling products in a unique environment that customers are sure to remember.

A Yearly Tradition

Many pop-up shops utilize a business model that allows them to avoid enormous up-front costs. Instead of purchasing all of the inventory they need to get through the season, Spirit Halloween allows pop-up shop owners under its umbrella to put a down payment on inventory, sell what they can, and then return any remaining stock to Spirit Halloween’s warehouses. Luckily for these pop-up shops, Halloween goods typically don’t go out of style, so they are able to carry over most inventory to the next year.

Halloween pop-up shops also work as a seasonal local economy booster, hiring upwards of 200 employees each year; and these stores have endured as a recession-proof business, allowing many employees to return year after year. Additionally, given Halloween’s close proximity to Christmas, pop-up shop owners can easily swap out their inventory and transition to selling for the new holiday.