Deep in the heart of every city in America, there lie the desiccated remains of malls from a bygone era. Beached upon parking lots like shipwrecks, these boarded-up buildings remind us of the halcyon days of brick-and-mortar commerce. And yet every October, some transient force haunts these old crypts, bringing back some semblance of glories otherwise long-since vanished. Draped in banners like funeral shrouds, these hollowed malls now read in block capitals: Spirit Halloween.
Florid prose aside, if you’re an American, you probably know what I’m talking about. Sometime around late August, Spirit Halloween moves into your old neighborhood Sears, J.C. Penney’s, or Macy’s for a little while. They slap some banners up on the windows, put out an inflatable or two, and fill the old store up with spooky Halloween decorations and costumes.
The interior is cordoned off with vinyl banners mounted on PVC pipes and merchandise sitting on freestanding slatwall panels. The lighting is often, but not always, dim and there are inevitably a lot of teenagers perusing the store. Like IKEA or Costco, Spirit Halloween is one of those businesses that gives you a distinct feeling when you walk in.
Every time I walk in, I can’t help but feel like Spirit Halloween is just a brilliant business. The data proves my instinct on this too, and some estimate that the company made more about $1 billion in revenue in 2016 alone.
In this article, I’m going to talk about how Spirit Halloween is doing well, and most importantly, what you can learn from them and apply in your own business!
Every October, Spirit Halloween haunts the ghost of bygone malls
Spirit Halloween is one of the most popular forms of what we now call “pop-up Halloween stores.” The concept is pretty straightforward. Every year, usually around late August, pop-up Halloween stores temporarily move into old retail buildings. Usually, this means occupying the space that used to be taken up by a Sears, a regional conventional hall, or even an old grocery store.
Say what you will about eCommerce – there are tons of benefits to shopping online – there’s something about going to an actual, physical store that you just can’t replicate online. It gives you a whole different kind of customer experience. You get to see all your options, right there in front you in a physical space. When you’re not sure what to wear for Halloween, being in-store will give you ideas in a way the internet just can’t.
The market demand for retail stores still exists, just not as much as it used to. However, there are fewer stores that can keep up with the stresses of maintaining a massive retail presence, making it really hard for companies to provide product-market fit for a cost that even remotely approaches reasonable. Real shame.
Spirit Halloween provides an in-person retail experience but for way less money
Spirit Halloween just avoids many of the issues of running a retail chain entirely. The stores only operate for about two months per year, dramatically cutting down on labor costs which are almost entirely temporary. While Spirit Halloween does secure leases, the terms are likely much more favorable than just outright leasing the retail space full-time. All the decorations are easy to put together at the beginning of the season and pack up at the end. It’s like a high school stage play on grand scale, with the slatwalls and vinyl banners. Items hang on hooks that were probably purchased in massive bulk from ULINE.
They also don’t try to fill up the whole retail space, instead making a closed-off box within the larger old building that they’re temporarily inhabiting. This is good because it both requires less decoration but it also means a Spirit Halloween in a 15,000-square-foot Food Lion in Tennessee and a 60,000-square-foot Sears in Colorado can be occupied by the exact same items. Standardization!
In short, Spirit Halloween stores are masters of minimization. They show up, put together a store, and leave without a trace in early November. This costs so much less than running a full-on, year-round retail operation.
Spirit Halloween captures about 10% of Halloween spending in the US
The only thing less killable than a vampire is consumer capitalism in the US. We love spending money on just about everything you can imagine, and the holidays are no exception. Among the holidays, Halloween accounted for about $10.1 billion in US spending in 2021.
It’s said that 82% of US households with kids celebrate Halloween and that the average shopper will spend a bit over $100 on Halloween items. When you break that figure down a bit, you find that about a third of that is spent on costumes and another third is spent on decorations. Spirit Halloween serves these product categories really well – they’re serving demand that’s already there and has been for a long time.
When you realize Spirit Halloween captures about 10% of Halloween spending, you might think, “oh, that’s cool, Spirit Halloween is capturing about 10% of the money going to Halloween stores.” But bear in mind, most of that money does not actually go to niche Halloween stores.
About 30% of US Halloween consumer spending goes to candy. Another $660 million goes to greeting cards. Most people buy these things in grocery stores and major retailers like Walmart. Another half a billion goes to haunted houses and other attractions, which isn’t even retail!
Indeed, only about 35% of US Halloween spending goes to specialty Halloween stores. That means Spirit Halloween is getting about 30% of the money that goes to Halloween stores in the US.
The big, spooky competitor is…Party City?
Yes, seriously. Spirit Halloween’s biggest competitor is Party City. If you look at Party City’s stock price, you’ll see an ongoing horror story. Even once you take out the world’s worst party-crasher, COVID-19, out of the picture, you still see a steady downward trend.
Party City is one of those older retail chains that a lot of people are surprised is still kicking. You’ll see it in many of the business developments of America, alongside a Walmart or similar big chain store. Anywhere you can imagine a Great Clips and a GameStop being within walking distance, Party City would be right at home.
Party City carries a steady stock of varying party supplies like greeting cards, disposable cutlery, balloons, and the like. But to keep things fresh, they also celebrate every holiday by refreshing a very high percentage of the items in their store. It’s all hearts and arrows for Valentine’s, bunnies and eggs for Easter, and costumes and candy for Halloween.
Focusing on seasonal demand and then disappearing keep costs low
Both companies are serving seasonal demand, but Spirit Halloween is performing much better as a business. Why? To me, there are two reasons.
The first is that Spirit Halloween’s brand is all about Halloween. Nobody walks into a Spirit Halloween thinking, “I wonder if I can buy a sheet cake here?”
The second reason is that Party City is just getting eaten alive by retail expenses. Those buildings are expensive to lease. Year-round labor costs money. Constant power and water bills cost money. Rotating out your inventory multiple times a year and praying that people take your Valentine’s candy off the clearance rack on February 17 costs money.
Spirit Halloween sets up shop quickly, serves a specific niche demand, and disappears before the first week of November begins. Boom, gone – like a werewolf after daybreak!
This means it almost entirely avoids these expenses. Labor is temporary, leases are short-term, and leftover inventory may very well be sellable at full-price next year. It’s a business model for a new age. Spirit Halloween’s annual disappearance isn’t a bug – it’s a feature.
How your business can dress up like Spirit Halloween and succeed as a result
Spirit Halloween has been monstrously successful in its niche, and it’s not hard to see why. But you might be wondering, “well, what does this have to do with me as a content creator, consultant, or small business owner?”
Surprisingly, the answer is a lot! There are many lessons that we can all draw from Spirit Halloween. Here are the first five that came to mind for me.
1. Serve existing demand.
It’s really difficult to create demand for a product or service. Most find it much easier to succeed by selling something that people are already buying with just a little twist. Spirit Halloween is an excellent example of this principle at work.
Retail stores have been selling seasonal Halloween items forever. Moreover, specialty Halloween stores have been around for decades. Yet Spirit Halloween decided to take this concept and go as far as humanly possible with it. They noticed that no one was shopping in Halloween stores in April, so they decided to make a Halloween store that can be assembled only when the demand exists, then boxed up and stowed away for the rest of the year.
2. Laser focus on your niche.
Some stores and companies seem to do a little of everything. Think about Walmart or Procter & Gamble. Although these companies make for great MBA case studies, they’re just not that helpful for entrepreneurs. That’s because when you’re small, being known for one specific thing is critical!
Spirit Halloween, despite being a pretty big business, is extremely niche. They don’t sell other seasonal items like Party City. Instead, they sell Halloween items and Halloween items alone. If you want something else, you go to a different store!
If you’re used to thinking this way, it might seem crazy to not serve all customers, but it makes sense. Focus on what you can do best and become really great at it. This dramatically improves the odds that people remember who you are and what you do. If you want to expand later, you’ll be able to expand from a position of strength and with the resources necessary to make it happen.
3. Don’t muddy your brand.
Just like you need to focus on a specific niche for a specific target audience, you also need to make sure your brand clearly communicates that. With Spirit Halloween, the purpose of the store is in the name. Everything from the fonts to the colors to the layout of the store reinforces the core brand message of “this is the place to go for all your Halloween items.”
Once you figure out what your specific niche is, you need to make sure every part of your brand reinforces it. Your logo, your name, your colors, the way you lay out your store – online or offline, the way you speak with people. Every single touchpoint a customer might have with your brand needs to leave a consistent impression.
4. Think in terms of “minimum viable product.”
Consistency is key, but don’t mistake consistency for perfection! If you want to run a small business, start as small as you possibly can. Whatever you think people will think of your business will be wrong, at least in some way. It’s important to prioritize the most important details first to your product or service, and take care of the others later. You might even find some of the “important” details are not actually that important later on.
You may wonder how this relates to Spirit Halloween, but here’s an example. Upon walking in, you’ll notice pretty quickly that everything is temporary. You know you’re in some long-dead Sears surrounded by stand-up walls and posters and flat-pack furniture. But the atmosphere and commitment to theme makes up for it, and ultimately, all those “flaws” end up not mattering. In fact, they end up weirdly adding to the charm!
5. Cut all unnecessary expenses.
If you run a small business, you’re going to be David taking on Goliath. Alongside adopting the “minimum viable product” mindset, you’ll also need to be a slasher when it comes to price. Spending cash on things you don’t need to spend cash on will lead to your untimely demise!
The flip side is that people tend to give small businesses a little leniency, meaning you don’t have to be perfectly polished – just consistent. Spirit Halloween is like that. You know that they will show up at a certain time of the year, every year. You know what kind of items will be in the store. Like I mentioned a moment ago, the jankiness adds to the charm.
You’d be surprised what kind of costs you can cut. In the modern age, you can work from home instead of an office, run a team across the globe, and use AI-powered software for like $15/month. If you don’t see value in something super expensive, then see what happens if you go without!
If Spirit Halloween can pop up in your old town mall for two months and disappear without a trace while making hundreds of millions of dollars, then you can run your small business. Take a note from this clever business and perhaps running your own won’t be so spooky!