Thursday
Oct292009
Halloween Logistics
Thursday, October 29, 2009 at 4:26AM
Halloween and Logistics? Why of course. Halloween is a season and retailers plan for the peak. Think of Walgreen’s and CVS. They have their seasonal aisle, usually in the middle of the store. The space was dedicated to Back-to-School. As soon as that was over in mid to late September, the aisles were converted to Halloween and loaded with all things black and orange, from candy and costumes to every kind of decoration and accessory our friends in marketing might dream up.
How many SKUs? When to order? How much to order? When to ship to the stores? All these questions must be answered, planned, and then executed. Oh yes, Halloween, like Thanksgiving and Christmas to follow require good solid inventory and supply chain planning and execution.
I was watching the History Channel. Yes, it is what older folks do. Being Halloween week, prime time was full of shows on the lore and legend of vampires, ghosts, the history of Halloween, and one Modern Marvels show was dedicated to the business of Halloween: the $6 Billion business of Halloween.
A segment in this show was dedicated to a very interesting company, Spirit Halloween. Spirit Halloween is one of the companies that operates pop-up stores. These are the stores dedicated to Halloween and open up, fully stocked and spooky, in late September and disappear like a wisp of fog around November first. Spirit Halloween has been in business for over 25 years. In 1999, they had 63 pop-up retail locations. In 2008, that number had skyrocketed to over 600! They began as an independent and were bought by Spencer Gifts in 1999. Annual sales for this company are $7.5 M. www.spirithalloween.com. Spirit Halloween is not alone. They have a big brother competitor: Halloween USA. Halloween USA has annual sales of $16.1 M and have been in business for over 30 years. www.halloweenusa.com
The Halloween USA website informed me that Halloween is now the third largest party occasion after New Year’s Eve and the Super Bowl.
It is hard to find information on these companies as they are privately held. But 70-80% of their sales occur in September and October with the bulk of that happening in the last ten days of October. So, we have two companies that operate retail stores for 1-2 months where they earn the majority of their revenue. I am guessing the remaining revenue comes from web sales the remainder of the year. For 10-11 months, they are marketing, purchasing, planning, ordering, and staging for the military like operation of opening, operating, and then closing a large number of stores. Everything is geared to a one time event. It is most impressive.
It is a dynamic market in these stores. In 2008, I went to what I now know is a Halloween USA pop-up location. I went on October 28. The inventory was dwindling and I bought a wig, fake breasts, and a few other things as my wife talked me into going as a ballerina (it was a big hit). As these pop-up stores do want to close without any inventory, I purchased these goods at 90% discount.
I heard a report on NPR a few weeks ago that name brand retailers like Toys R Us will be using the pop-up model for Christmas this year. It makes sense. Christmas is their biggest season, they have cut back on locations, and with the glut of empty retail space they can increase their locations for their peak season economically. Will this trend continue or is it opportunistic given the available retail space?
I would love to benchmark the planning, logistics, and execution of one of these operations. Happy Halloween!
How many SKUs? When to order? How much to order? When to ship to the stores? All these questions must be answered, planned, and then executed. Oh yes, Halloween, like Thanksgiving and Christmas to follow require good solid inventory and supply chain planning and execution.
I was watching the History Channel. Yes, it is what older folks do. Being Halloween week, prime time was full of shows on the lore and legend of vampires, ghosts, the history of Halloween, and one Modern Marvels show was dedicated to the business of Halloween: the $6 Billion business of Halloween.
A segment in this show was dedicated to a very interesting company, Spirit Halloween. Spirit Halloween is one of the companies that operates pop-up stores. These are the stores dedicated to Halloween and open up, fully stocked and spooky, in late September and disappear like a wisp of fog around November first. Spirit Halloween has been in business for over 25 years. In 1999, they had 63 pop-up retail locations. In 2008, that number had skyrocketed to over 600! They began as an independent and were bought by Spencer Gifts in 1999. Annual sales for this company are $7.5 M. www.spirithalloween.com. Spirit Halloween is not alone. They have a big brother competitor: Halloween USA. Halloween USA has annual sales of $16.1 M and have been in business for over 30 years. www.halloweenusa.com
The Halloween USA website informed me that Halloween is now the third largest party occasion after New Year’s Eve and the Super Bowl.
It is hard to find information on these companies as they are privately held. But 70-80% of their sales occur in September and October with the bulk of that happening in the last ten days of October. So, we have two companies that operate retail stores for 1-2 months where they earn the majority of their revenue. I am guessing the remaining revenue comes from web sales the remainder of the year. For 10-11 months, they are marketing, purchasing, planning, ordering, and staging for the military like operation of opening, operating, and then closing a large number of stores. Everything is geared to a one time event. It is most impressive.
It is a dynamic market in these stores. In 2008, I went to what I now know is a Halloween USA pop-up location. I went on October 28. The inventory was dwindling and I bought a wig, fake breasts, and a few other things as my wife talked me into going as a ballerina (it was a big hit). As these pop-up stores do want to close without any inventory, I purchased these goods at 90% discount.
I heard a report on NPR a few weeks ago that name brand retailers like Toys R Us will be using the pop-up model for Christmas this year. It makes sense. Christmas is their biggest season, they have cut back on locations, and with the glut of empty retail space they can increase their locations for their peak season economically. Will this trend continue or is it opportunistic given the available retail space?
I would love to benchmark the planning, logistics, and execution of one of these operations. Happy Halloween!
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