Record-Breaking Halloween: Sales To Reach $6 Billion

Despite economic gloom casting a spell on consumer confidence this year, America’s darkest holiday is looking bright for retailers.  According to industry research firm IBISWorld, Halloween sales are expected to reach a record-breaking $6 billion in 2009, up 4.2 percent from the $5.77 billion generated last year. That’s contrary to the National Retail Federation’s prediction, which forecasts sales will decline to $4.75 billion.

“Economic recovery appears to be around the corner and consumers are enthusiastically looking to escape their recessionary woes,” said Toon van Beeck, senior analyst with IBISWorld.  “Even last year, when the outlook was much worse, the Halloween spirit remained unhindered as we saw total sales actually jump 5.1 percent from 2007.”

Halloween retail sales are comprised of a wide range of consumer goods, aimed at adults, children, and even pets.  These goods include costumes, scary make-up, wigs, Halloween decorations for inside and outside, and of course, pumpkins and candy, among other things.

In projecting this year’s total sales, analysts at the Los Angeles-based firm aggregated the retail-dollar performance of the following four traditional Halloween categories:

Category	2008 Revenue (Billions)	2009 Revenue(Billions)	% Change
Candy	$1.77	$1.89	6.8%
Decorations	$ 1.58	$1.65	4.4%
Costumes	$2.07	$2.12	2.4%
Greeting Cards	$0.35	$0.35	0.0%

It appears an increasing number of people are buying treats this year, making candy the fastest growing holiday category. The average person is estimated to spend about $22.50 on Halloween treats in 2009.

It appears an increasing number of people are buying treats this year, making candy the fastest growing holiday category. The average person is estimated to spend about $22.50 on Halloween treats in 2009.

Also fuelling this year’s record-breaking sales is the demand for holiday decorations.  With Halloween falling on a Saturday this year, more adults are expected to join the fun.  In fact, 32 percent of people celebrating the holiday will either host or attend a party. For this reason, IBISWorld expects decorations to reach its highest level yet at $1.64 billion.

“Halloween-related festivities are a growing trend and this is driving sales of decorations and candy,” adds van Beeck.  “Dollar and variety stores stand to benefit from the 4.4 percent increase in decoration sales, as consumers look to purchase cheap and disposable thrills to make a memorable evening.”

Call it escapism or just good, old-fashioned fun, Americans of all ages show the desire to go all out when it comes to dressing-up.  Costumes are expected to generate the greatest amount of revenue this Halloween, but growth is slight (2.4 percent) as consumers will apply more frugal but creative approaches when shopping.

”Despite more people participating in festivities, money is still tight and consumers will look to cut corners when it comes costume purchases,” said van Beeck.  “Instead of buying a packaged costume, which can cost up to $60 on average, people will get more eclectic and opt for cheaper individual items.”
But given the lack of growth for the card category, not all cheaper items will fare well this year. While cards did well last year, as consumers chose to cut back on pricier categories, 2009 expenditures will revert back to traditional shopping habits.

“Although unemployment is still very high, the overall outlook is far rosier today than it was this time last year,” adds van Beeck.  “For this reason, IBISWorld expects the upward trend in Halloween expenditures to continue its course for 2009, which despite economic conditions will prove to be the best year yet.”

The 2009 Verdict

America’s largest retailer of party goods, today announced its retail sales results for the five-week Halloween season ended November 7, 2009. Amscan’s retail sales include sales under its four retail banners, Party City, Halloween USA, Party America, and Factory Card & Party Outlet.

Retail sales for the five-week period ended November 7, 2009 totaled $257.4 million and were $11.6 million or 4.7% higher than the retail sales for the five-week period ended November 1, 2008, principally due to the growth and performance of the Company’s network of temporary Halloween USA stores.

During the five-week period ended November 7, 2009, the Company operated 247 temporary Halloween USA stores, as compared to 149 in 2008. In addition to its network of temporary stores, the Company operated 387 Party City and Party America “Big Box” retail stores (stores generally greater than 8,000 square feet), 59 smaller outlet stores and 161 FCPO stores during the 2009 Halloween season, as compared to 391 Big Box, 86 outlet and 171 FCPO stores during the 2008 season.

During the five-week Halloween season of 2009, the average sales for temporary Halloween USA stores increased by 7.5%, while the same-store net sales for the Company’s Big Box stores decreased 1.5%. Same store net sales at FCPO stores decreased 1.2%.

Commenting on these results, Gerry Rittenberg, Amscan’s Chief Executive Officer, stated: “In light of the current economy, the dire pre-Halloween predictions of the National Retail Federation and aggressive competition from other temporary Halloween stores, we are extremely pleased with these key holiday results.”

Additional links 
Candy Production: http://www.ibisworld.com/industry/retail.aspx?indid=234&chid=1
Gift Shops & Card Stores: http://www.ibisworld.com/industry/retail.aspx?indid=1099&chid=1
Greeting Cards & Other Publishing: http://www.ibisworld.com/industry/retail.aspx?indid=1235&chid=1
Formal Wear & Costume Rental: http://www.ibisworld.com/industry/retail.aspx?indid=1369&chid=1

Deloitte Consumer Spending Index Up For The Fourth Consecutive Month

The Deloitte Consumer Spending Index rose again in September, hitting its highest level in two years. The Index attempts to track consumer cash flow as an indicator of future consumer spending.

“The fundamentals of consumer spending continue to improve, giving households increased purchasing power,” said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP, and author of the monthly Index. “The housing market is beginning to show signs of stabilizing while initial unemployment claims have fallen significantly. Household net worth is rising and real wages are climbing at their fastest pace in 40 years. Signs of recovery got a boost from the cash for clunkers program in August, plus a gain in real spending has materialized across the board in recent months.”

The Index, comprising four components — tax burden, initial unemployment claims, real wages and real home prices — rose to 3.44 percent, from an upwardly revised gain of 3.08 percent a month ago.

“The Index suggests that many households increasingly have the means to spend, and with the worst of the downturn seemingly behind us, the retail environment may soon see signs of life,” said Stacy Janiak, vice chairman and Deloitte’s U.S. Retail leader. “Retailers have tackled cost cutting and cash conservation and the next few months will likely be all about enticing the consumer to spend. Offering personalized marketing, enhancing in-store customer conversion tactics and encouraging online product reviews are just a few of the ways that retailers may be able to gain an edge this holiday season.”

Highlights of the Index include:

Tax Burden: The tax burden continues to fall with the weakening of the economy. The tax burden is at a level only seen on a few occasions over the past 50 years during brief periods following tax rebates. Continued decline is expected.

Initial Unemployment Claims: Initial unemployment claims have come down sharply over the past three months which historically has been a reliable signal of economic recovery. Claims are down more than 100,000 from their recession peak.

Real Wages: Real wage growth continues to post solid gains due in large part to falling prices. Real wages are up 4.8 percent from a year ago as falling prices have given a big boost to consumer purchasing power.

Real Home Prices: The pace of decline in home prices has slowed significantly on a year over year basis. Continued efforts to forestall foreclosures coupled with a tax credit for first-time home buyers have brought some stability to the housing market. The decline in home prices has made home buying much more affordable.

Retailers Having Back To School Blues

With 55.8 million kids enrolled in public and private schools this fall, retailers can anticipate their usual brief stint of shoppers. But given lackluster consumer spending and a 9.4 percent unemployment rate, it is no surprise analysts at industry research firm IBISWorld expect back-to-school spending to decline by 3.4 percent – from the $20.42 billion generated in 2008.

In probing their back-to-school cost breakdown, the Los Angeles-based firm divided the following four categories into what it considered to be typical school-related expenses: electronics, traditional supplies, footwear and clothing.

“Parents will inevitably put more thought and less dollars into their back-to-school shopping strategies,” said George Van Horn, senior analyst at IBISWorld. “In particular, dollar-variety stores can expect to see a greater wave of traffic since parents are doing everything they can to save an extra buck”.  In fact, IBISWorld approximates 21.3 percent of sales from the $47 billion discount-retailer industry to come from school and office supplies alone.

The fastest growing category, electronic school supplies, will see a slight decline of 1.8 percent, down to $5.12 billion. Parents on average will spend $91.69 per child on electronic equipment this year, a fairly significant leap from the $43.36 average observed in 2005. Items such as calculators and personal laptops are must-haves in today’s learning environment, and IBISWorld predicts that by 2016, this sector will become the number one back-to-school spending category – overtaking the core area of clothing, as the learning environment becomes more technologically focused.

The biggest decline this year comes from the clothes category, expected to plunge 5.4 percent. For each child enrolled in school this year, sporting the latest trends in clothes and accessories will cost parents $136.60 on average.

And for the 1.23 million kids that will be home-schooled this year, IBISWorld found that while parents may be saving on certain expenses like clothes and shoes, educating a child at home escalates costs in other areas. In particular, parents incur the hefty price of purchasing the latest teaching tools, textbooks, and learning equipment – typically covered by public and private schools.

“Back-to-school spending is a necessary and justifiable expenditure,’” said Van Horn. “Retailers have driven down overall prices in order to entice consumers, so price-conscious parents won’t need to significantly cutback, because they will get a lot more out of their dollar this year.”

About IBISWorld, Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every U.S. industry.  With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions.  Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide.  For more information visit www.ibisworld.com or call 1-800-330-3772.

Ethical brand/products rising in demand

 Corporation Institute (ECI) has found the current economic climate is having little effect on consumer desires towards making ‘ethical’ purchases. Demand for produce certified by organisations like the Rainforest Alliance and Fairtrade is soaring in 2009. We can expect further growth in the market for industry standards and certification.

Rob Cameron, head of the Fairtrade Labelling Organisation, told the Annual Responsible Business Summit in London last month that consumption of products under the Fairtrade label is continuing to rise. Retail sales volume is expected to increase from €2.4 billion in 2007 to €3 billion when the 2008 figures are released. This rise will have been aided by partnerships with the likes of Starbucks and Cadburys.

Last month the Rainforest Alliance reported that the amount of forest and farmland certified by Rainforest Alliance will continue to soar along with demand for products that meet standards for social and environmental sustainability.

“The drive is coming from all along the value chain and especially companies. We’ve never seen more interest from companies, from consumers and from producers,” said Chris Wille, Rainforest Alliance chief of Sustainable Agriculture.

It’s clear retailers seeking to cut costs in the economic downturn, need to continue investing in environmental sustainability to retain customers.

Sharon Greene, Managing Director of RISK International told ECI that their recent studies show 72% of European consumers prefer ethical brands.

‘In order to keep customers and other stakeholders engaged with their brand, companies need to stay abreast of the recent developments in this sector’ says Pam Muckosy, Head of Research at the ECI.’