September 30, 2010

Seasonal Stores

I recently read an article in the Gazette on seasonal stores in Colorado Springs. With Halloween coming up large seasonal themed stores like Spirit Halloween, Halloween USA, and Halloween City are opening up hundreds of locations across the country. These Halloween themed seasonal stores pop up at around labor day and liquidate immediately after Halloween before popping up again next year. The author of the article suggested that the influx in seasonal stores right now has to do with the sluggish economy and these stores also help other areas of the economy.

An economist would reason that seasonal themed stores pop up right before holidays like Halloween because of the high demand for items related to the holiday. Consumer preferences will increase for products related to the holiday but almost completely drop after the holiday is over. These seasonal stores would compete with large traditional retailers like Wal-Mart, Target, and Party City but try to increase the consumer preferences to their seasonal store by offering an all-around experience. For example these stores would offer large selections of masks and costumes, in-store horror movie screenings, and interactive activities while large retailers would just have large selections of Halloween stuff.

The author suggested that the influx in seasonal stores could have to do with the sluggish economy because of all the large retailers that went out of business and left behind storefronts. The author thinks these spots are perfect for temporary pop-up locations for seasonal stores. These allow for landowners and property owners to make some extra income after the current vacancies. According to the article a decade ago shopping center vacancies were at 7% in Colorado Springs but in the second quarter of this year it was up to 11.5%. The large amount of vacancies allows the seasonal stores to have their pick of locations at good lease rates but just because there are a lot of good locations doesn’t mean that they necessarily should. The author of the article made it sound like if there is a spot available the seasonal store should rent it, but in my opinion they should only rent the spots that according to a market analysis there will be lots of demand.

Seasonal stores can help the economy in other ways as well. For example demand for the items sold by the seasonal stores can pull more consumers to stimulate traffic to other stores around it. Seasonal stores also provide jobs for people that are currently unemployed for a short period of time so it can provide a short “burst” to the local economy. Recently company’s like Borders announced how they would open “pop-up” shops that will only last through the holiday season.

Source: The Gazette 9/28/10 “Sign of Scary Times”

1 comment:

Larry Eubanks said...

Of course the short answer to why these stores "pop up" is that the owners of these stores believe they will profit by "popping up."

I would look for more specific answers on both sides of the profit calculation, and you have done that, i.e., higher demand in season and lower lease costs on the cost side. I would suspect both are relevant, and perhaps there are more considerations on one side or the other as well.

Still, stores that are in business all year long can also choose to supply seasonal demands. If these pop ups are something quite new, then perhaps the bottom line answer should be expected on the cost side, i.e., perhaps cheaper to lease new space for inventory and seasonal display than to using existing inventory and display space. And, perhaps your note about Borders points in this direction.