October 7, 2025 • 21 mins
In 1983, Spirit Halloween stores began popping up with a very unique business model — rent out a large, vacant store front; fill it with Halloween costumes and temporary employees for about eight to 10 weeks; and then as of Nov. 1 — poof! They vanish like a ghost.
CSU College of Business Associate Professor Zac Rogers researches the financial impact of supply chain sustainability, emerging logistics technologies, as well as purchasing and logistics issues. In this encore episode, Rogers talks about how the Spirit store model has influenced how we do business and whether its latest endeavor to enter the Christmas market will be a success.
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Episode Transcript
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Speaker 1 (00:02):
Welcome to Colorado State University's podcast, The
Audit, where host Stacy Nicktalks with CSU faculty about
topics ranging from their latestresearch to current events.
Speaker 2 (00:13):
In 1983, Spirit Halloween stores began popping
up with a very unique businessmodel. Rent out a large vacant
storefront, fill it withHalloween costumes and temporary
employees for about eight to tenweeks, and then as of November
1, poof, they vanish like aghost into the mist. Today I'm
talking with Colorado StateUniversity College of Business
Associate Professor Zach Rogers.Rogers researches the financial
(00:36):
impact of supply chainsustainability, emerging
logistics technologies, as wellas purchasing and logistics
issues. We're gonna talk abouthow the spirit store model has
impacted the supply chain andhow it's influenced how we do
business.
Hi Zach, thanks for being here.
Speaker 3 (00:51):
Hi, thanks for having me.
Speaker 2 (00:52):
Let's start by talking about how spirit
Halloween stores kind ofoperate. I think everybody knows
that they they seem to kind ofpop up overnight, they stay open
for a short amount of time. Ithink the Fort Collins one I saw
opened about late August thisyear.
Speaker 3 (01:07):
Right.
Speaker 2 (01:07):
And then as of you know the next day after
Halloween they are like done.They just close-up and
disappear. Now clearly this is abusiness model that has worked
for them. I mean last yearAmericans spent more than
12,000,000,000 on Halloween and1,100,000,000.0 of that was
spent at spirit stores. Why doesthis model seem to work so well
for them?
Speaker 3 (01:27):
The reason the model works is because it's incredibly
targeted. You have somecompanies that try to do too
many things, be all things toall people. Spirit is not that.
Spirit is not Cheesecake Factorywhere you walk in and they give
you an encyclopedia. They're inand out.
Look, we got three things, youknow what they are. They're
gonna be good. If you don't wantit, don't come here. And that's
(01:48):
sort of in the spirit Halloweenethos. And because they do that,
they can be incredibly focusedand really build economies of
scale on their supply chain.
The only permanent building theyhave is in Charlotte, North
Carolina. They have a bigdistribution center, hold all
their costumes there all year,and then everything else moves
out and they're veryopportunistic about the places
(02:09):
where they put in retail stores.And they work on those stores
twelve months out of the year,you just said they're going to
pull out in November. A weeklater, they'll have people on
the ground saying, Okay, whereare things going to close? What
is like the old mall wherethings are failing?
And fortunately for them, wehave been going through a period
(02:30):
where there's a lot of options,which has really opened up the
places they can be. You know, itused to be okay, Spirit
Halloween, that might be in anold Kmart somewhere. Now they're
everywhere. They're in stripmalls, they're in actual malls,
and it's part of the ongoingretail apocalypse is the term
that's been used for it, that'sbeen going on for the last seven
years, where we've had literallytens of thousands of retail
(02:53):
stores closed. A lot of that isdue to folks moving to e
commerce.
Pre pandemic e commerce wasabout 7% of all retail. Today,
it's about 16%. So if you thinkabout that, okay, well, percent
of retail, we don't really needanymore. And so that creates a
lot of openings for a companylike Spirit who can come in, do
(03:13):
something very targeted, andachieve great economies of scale
because they're not trying to dotoo many things. The other piece
you mentioned I think isinteresting is how early they
started this year.
They were here in August. Seemsearly for Halloween.
Speaker 2 (03:25):
Yeah, it's a little earlier than usual, it felt
like.
Speaker 3 (03:27):
And there's a couple reasons for that. One is,
inventories came in early thisyear. So there's a few things
that were happening in 2024. Themain thing people were trying to
avoid was the port strike on theEast Coast. And even if Spirit
doesn't use the East Coast muchbecause a lot of their stuff is
gonna come in from Asia, so it'sgonna come in to the West Coast,
They were trying to avoid apotential traffic jam at the
(03:49):
West Coast because everyone elsemoved over to the West Coast.
If you look at the West Coastports, I believe for the
October, because this right nowwe're in the height of bringing
stuff in for the holiday season,October, it's up 70% year over
year from last year and 75% fornext week. Now, part of that was
an unforeseen surge we couldn'thave seen due to hurricanes and
(04:09):
things like that. Butessentially, Spirit got
everything in early, like allthis stuff was here early on
this summer. And so at somepoint, it becomes more
efficient. Well, maybe we'llmove it out.
It will get out of the centralwarehousing and if these stores
are ready for us, we can go inthere. The other piece of it is
during the pandemic, we reallyhad supply chain traffic jams
(04:30):
everywhere. And so because ofthat retailers stopped thinking
that the holiday season startson Black Friday. They don't
think that anymore. You know,Amazon has two Prime Days now,
because they're trying to spreadthings out.
Speaker 2 (04:41):
It feels like more than that.
Speaker 3 (04:43):
But it is it is only two I know, they come close
together. So you got one in Julyand one in one in October. And
so what happened is all of theseretailers now instead of
focusing on Black Friday, CyberMonday, it's not Black Friday,
it's Black Fall. And so theypush to have folks start buying
holiday stuff in mid October,which has traditionally been
(05:05):
Halloween territory. And so it'slike a reverse nightmare before
Christmas.
Christmas is horning in onHalloween. And I mean, for for
instance, second Prime Day wasthe October. I know that there
was Christmas presents bought atmy house in the October. So how
does Spirit deal with that?Well, we'll move the Halloween
season up and now it's what it'sbutting up right against back to
(05:27):
school.
So their strategies becomealright, back to school is done.
Let's move in now. So we will bethe next sort of Halloween
group. And you know, it's notjust spirit. There was big
werewolves at Costco in Augustand 12 foot skeletons.
Speaker 2 (05:40):
Right.
Speaker 3 (05:41):
And all kinds of stuff. So it's not just Spirit
that's on it. They're theeasiest ones to see because it's
a whole new store. Spirit,Target, Walmart, all of these
people know holiday shopping hasto start in mid October. That
means if we're going to squeezethat $12,000,000,000 out of
people, we need to then moveHalloween shopping up maybe to
August.
Speaker 2 (05:58):
And something you mentioned earlier that I really
I love the retail apocalypse.So, one of the things that I'm
wondering is you know Spirit isknown for pardon the pun but
haunting large vacant formerToys R Us or Bed Bath and
Beyond's. Basically, they'rebenefiting off of the death of
retail. Is this actually helpfulfor the economy? Are they are
(06:20):
they making use of the space andcontributing to the community's
economy or are they takingadvantage of it?
Speaker 3 (06:25):
I would say they're taking advantage in sense of an
opportunity. I don't believethat they're preying on the
economy in any way because thething is, those stores will get
filled in, even if it's notSpirit Halloween. Honestly, the
more attractive open stores,those are Dollar General's now
or Dollar Trees. If you look,General's the fastest growing
(06:45):
store in the country and hasbeen for the last six years. I
think in 2023, they added over athousand stores.
And what that is is, okay, lotof retail is gone. And so now we
can replace it with somethingelse. And partly what those
stores are is it's a lot ofsecondary market things, so
things that maybe were supposedto sell at Target and then
didn't, or Walmart. And now,okay, well, we have two
(07:07):
Palisades lunch boxes extra. Whydon't we put them in a Dollar
General?
And actually, what I think is,in some ways, we've right sized
retail. And here's what I meanby that. We used to have more
square feet of retail per personin The US than anywhere else in
the world of physical stores. Wehad more physical stores really
than we needed and we've movedthings now online. And what that
(07:30):
does is it allows in some waysmore inclusive stores into these
spots.
So if you think about what aDollar General is versus like an
Aeropostale or American Eagle orany of the places I got a shirt
from in high school, it's moreinclusive. It has more types of
products and more people aregonna be able to shop there. And
so there's actually a socialgood in some ways to these
(07:52):
things opening up because you'renot paying much for these
contracts to be in these places.And it's replacing maybe what
was an expensive store withsomething that's a little more
affordable and brings things topeople that they wouldn't have
had otherwise. You know, everykid deserves to be a Ninja
Turtle on Halloween if they wantto and get candy.
And really what I think SpiritHalloween does is they see an
opening in the market and theybring opportunities to people to
(08:16):
have Halloween. I mean, make itcloser to people's house. I'm
gonna go to Spirit Halloween atsome time in the next couple
weeks before Halloween starts.I'll let you know my Halloween
costume now. You know, we'resupposed to be the scariest
thing we can dress up as, so I'mgonna be a polar bear with a
scuba suit.
I'm with consequences of climatechange. That's the kind of humor
you get from professors. Butanyway, I'll probably go into
(08:38):
spirit to see if they got apolar bear. Gosh, it was very
convenient. And so, yes, thereis this idea that, oh, they come
in and they're out, they're kindof like a plague of locusts, but
what would be the alternative?
They're moving into thesebuildings because they can't be
filled. And so the alternativeis we have something that's
boarded up, that we're notgenerating tax revenue, not
creating jobs, kind of aneyesore. I don't know that
(08:59):
that's necessarily a bad thing.Yes, it's cheap and it's
transactional, but that's whattheir quality niche is. I mean,
it's like, okay, what does TacoBell exist?
Because you want something fastand relatively affordable, and
is it good for me? Am I gonnalook like Ryan Reynolds if I
start eating Taco Bell? Probablynot, but you know what?
Sometimes you want a Mexicanpizza. And so, it's the same
(09:20):
way.
In many ways, Spirit Halloweenis the Mexican pizza of retail
where, look, it has a time and aplace, and I don't think that
they're necessarily beingpredatory in any way.
Speaker 2 (09:30):
You know, and not everyone is a fan of this model.
Spirit was recently skewered ina Saturday Night Live skit.
Spirit responded with a meme ofa fake costume for a quote
irrelevant 50 old TV show. Whatdo you think about these
criticisms that you see withthis model? Is it fair?
Then where is Spirit reallydoing things well?
Speaker 3 (09:50):
Yeah, the first thing I would say, I am sure they felt
like they had to respond, but ifthere was somebody I wasn't
gonna get into a fight with, itwould be Saturday Night Live. I
think there might be a littlemore creative writing firepower
on that side. But I understandthe criticisms of spirit because
from the outside it can lookwasteful or maybe predatory in
some ways. But the thing is thatwhat spirits doing is they're
(10:12):
reacting to sort of realities inthe consumer marketplace.
Halloween is a wasteful holiday.
We're getting costumes you'regonna wear once and eating candy
and putting up decorations. Imean, it's it's not necessarily,
you know, if you're rankedholidays in terms of
sustainability, Halloween wouldnot be high on the list. But,
you know, neither is Christmas,neither is what is Thanksgiving?
(10:35):
We eat a whole bunch of food, wehave a ton of leftovers. Fourth
of July, what do we do?
We just shoot rockets up in theair. And so there's not a lot of
holidays I could think of thatdon't have some waste involved.
And what they're doing is justtaking advantage of an
opportunity and certainlythere's ways to be more
sustainable. But I don't knowthat that's what they're
competing on. Really, they'rejust responding to what the
(10:56):
market wants and they figuredout an interesting niche.
You know, I mean there's otherplaces that have tried to do
this kind of thing. I mean ifyou look at say, Party City,
they're sort of year round, buttheir best time really now is
copying what Spirit does in lateSeptember and October and
becoming that kind of store. Sothere's niches everywhere, and
it's an easy target. And partlythe reason I think that that was
(11:20):
such a popular sketch, I watchedthat video a couple times before
I even came here today, isbecause everyone has been to a
Halloween store at some pointand they understand how it
works. I mean, I remember beinglike a five year old and me and
my brothers, this would be atlike a Walmart or something, but
running to the back, grabbingthe swords that were out for
Halloween and just, you know,mom and dad, go get whatever you
(11:41):
need to do and we're just gonnafight back here and wear masks
and have fun.
And so I think partly, yes, SNLis making fun of it, but I also
think some of it is thenostalgia and the fun of going
to the Halloween store. But yes,if you look closely, can you see
beyond the facade? Sure. I waslooking at some pictures of
Spirit Halloween's today gettingready for this and there's ones
of like, yeah, they're in aBabies R Us and so there's all
(12:01):
these scary costumes with apicture of a baby right behind
it that they never even took offthe wall. And so, I mean, it's
kind of janky, I guess, but thatbut I think that's kind of the
charm and I think they sort ofthey sort of lean into that part
of it.
You know, it's like like a ChuckE. Cheese. I mean, do the robots
work great? No, but that's partof the fun of a Chuck E. Cheese.
Speaker 2 (12:23):
How does the model impact the overall supply chain
in other businesses? I mean,what is the it sounds like a
logistical nightmare. They theykind of parachute in to these
like 1,400 bacon storefrontseach year with a ton of
merchandise, not all of whichgets sold. I mean, I have to
imagine that not every costumeis a hit. So what do they do
(12:43):
with the unsold merchandise?
What's the impact?
Speaker 3 (12:46):
A lot of things will get rolled over. So they do
something called hoteling, whichis where we're gonna hold on to
it till next year. And a lot ofstuff, I mean, look, a vampire
costume is still gonna be finenext year. There's some things
maybe that are very topical andwill go away, but you know, saw
somebody dressed up as TigerKing last year, that's from like
four years ago. And probablythey got it discounted because
Kaspira was trying to get rid ofit.
(13:07):
Certainly, you look at somethinglike fast fashion, there are
some key differences. One ofthose would be like if you look
at, say, Zara. Zara turns thingsover very quickly. So Zara is
turning everything over everyfour to six weeks in their
stores. And so what that does,it requires a lot of quick
transportation, where Spirit isbuilding up inventory slowly and
(13:33):
then moving everything out once.
The deployment and theoperations of setting up the
stores, that is difficult. It isnot necessarily any more
difficult than a regular supplychain, though. I mean, you think
about Thanksgiving turkey, so ifyou go down to the Safeway
distribution center offI-seventy in Denver, it supplies
all the Safeways in Colorado, abunch of Wyoming, Kansas, some
other places. They have a bigroom that they keep below zero,
(13:56):
and they start filling it upwith turkeys in February for
Thanksgiving. And so, in someways, when you have something so
seasonal, like spirit or likeThanksgiving turkeys, you can
build your inventory up moreslowly.
With a regular standard retailsupply chain, you have to be
very just in time. Things comein and they leave and you're
(14:16):
very quick. Spirit and reallyany kind of holiday stuff has a
little more leeway to buildthings up than others do. Now
the deployment certainly is verytough, but the store does seem
to come out of one truck. Youpop it up, maybe they get one or
two deliveries and then you'reoff to the races.
Speaker 2 (14:33):
The hot costumes seem to be very topical. So I'm
thinking about, you know, thethe Ray Gun Australian Break
Dancer Horror Show that we gotto watch. And I'm thinking about
how many green tracksuits arebeing purchased right now.
Speaker 3 (14:49):
Well, you know what would be a fascinating case
would be Kamala Harris masks.Oh, Because usually during an
election, one of the thingspeople look at, because
Halloween always happens a weekbefore the election, is which
candidate gets more masks boughtfor them. And a lot of times,
that's actually been anindicator of who's going to win
the election.
Speaker 2 (15:06):
Really?
Speaker 3 (15:06):
So Obama sold more masks than Romney and McCain,
Trump sold more masks thanClinton, Clinton sold more masks
than Dole. And so becausepresidential masks are always
popular, those big rubber maskslike they were in Point Break.
And I'm sure that SpiritHalloween is sitting on a big
couple crates, probably morethan a couple crates, of Joe
Biden masks that they can't moveanymore because of the switch to
(15:27):
Kamala Harris in July. And sothat would actually I'd be
fascinated to know if they wereable to repurpose any old masks,
if they I mean, whatever theycould do and and how quickly
they could because the masks aretough to manufacture. You've to
get the mold in and everything,and so it'd be interesting to
see if they were able to get ina bunch of Vice President Harris
(15:47):
masks ahead of time, and ifthey're able to offload any of
the President Biden masks.
Speaker 2 (15:51):
Oh my gosh. With it being so profitable, why haven't
we seen maybe more businessesadopting this kind of model?
Besides Spirit, I feel likethere's no one else doing this.
Speaker 3 (16:02):
There's a lot of competition here, and in some
ways Spirit kind of when theywere established was at the
right time. It started in'eighty three, sold dispensers I
think in 1999, right when mallstores would have had some money
to throw around. They havewhat's called a first mover
advantage, where they came inand they've built up big
(16:23):
economies of scale. They havethe cash on hand to lease all of
these stores. They've got thehuge warehouse in North Carolina
and the distribution network setup to move things out when they
need to.
And so it would be difficult forlike sort of a new store to open
in this space. You'd be smalland if you're competing for the
same space against a spirit,you're gonna get outspent
(16:47):
probably is is what I wouldguess. And there's not that much
room really, because yes, youknow, spirit comes in, but I
mean, think about all theHalloween stuff sold by Amazon,
Walmart, Costco, Target, yourbig traditional retailers, even
Dollar Store. There's not a lotof space. Then even if you're
like, okay, we'll come in on thelow end.
Well, that's what Goodwill andSalvation Army and whatever your
(17:09):
local thrift store might do too.And so there's a lot of pressure
for Halloween and Spirit hassort of carved out this niche.
And I don't know that that nichewould exist anywhere else.
Speaker 2 (17:19):
We've been talking a lot about Halloween and also
another holiday, Christmas. Andand I just saw that Spirit
Halloween is now expanding toChristmas. This year, they'll be
taking the same model and addingSpirit Christmas storefronts.
They're doing kind of a softlaunch. They've been able to
make it in the Halloween worldbut now they're going up against
the big boys, the legacy brickand mortars, not to mention
(17:41):
online stores.
How do you think they're gonnafare there?
Speaker 3 (17:45):
Yeah, these are the major leagues now. Everybody
knows Christmas. I think theycan be successful. It is
interesting. I think in 2024,they're launching with 10 stores
around like New York, NewJersey, Connecticut, kind of tri
state area up there.
And it'll be interesting to seehow they do because it's not as
obvious maybe what you would buylike that for Christmas because
(18:06):
at Halloween it's like, okay, Ineed a costume. A costume is
kind of a kitschy thing thatyou're not gonna get a bunch of
places or candy or whatever. ForChristmas, and maybe you could
sell things like wreaths, trees,ornaments, kind of very specific
stuff like that, and thereprobably is a market for that. I
would say though that thepresents, you're not going go to
(18:28):
Spirit Halloween to get somebodyChristmas present. Maybe.
But it's more like you go to aregular store, Amazon or
whatever. And then the otherstuff around it, you know,
Halloween works well becauseeverything is disposable. A lot
of it is single use. You know,in the SNL thing, he said, you
can buy a single use fogmachine. There's no equivalent
of a Christmas single use fogmachine.
(18:50):
And you have trees, but, youknow, either of a tree you're
gonna go cut down somewhere or afake tree that you've had since
your mom gave it to you incollege. And you have ornaments
and stuff like that that I don'tthink are as sort of consumable.
I think Christmas is probably aless consumable holiday for the
(19:11):
things that aren't gifts.Certainly Christmas gifts, we
buy more than we need, givepeople more needs, spend more
than we have. That's, you know,we've been saying that since
Charlie Brown.
But it's less obvious to me whatthis is going to be. Now, it's
less obvious to me, but Ihaven't been to a spirit
Christmas store. So maybe theyhave a great idea and they
nailed Halloween, so maybe theycan do this. I will say they're
(19:32):
not the same brand that they arein Christmas as they are on
Halloween. They've reallychanged.
You know, it's not the scaryGrim Reaper guides like Santa
winking at you. I've seen theirlogo. I don't know that people
will immediately know, oh, thisis Spirit Halloween, but for
Christmas. And there's so muchcompetition retail wise around
(19:53):
that time of the year. I mean,there's whole industries that
they don't make money untilOctober.
I mean, that's why Black Fridayis called Black Friday. That's
when companies go from the redto the black. And so there's a
lot of competition. I wish themwell. But there's a lot of
competition.
Maybe it'll work, and it isinteresting. And I'm sure people
will go in and look around andsee if there's anything there,
(20:14):
but it will be the test thisyear to see if it works. And
then, I mean, we see them inColorado in 2026, we'll know,
hey, all right, I guess this agood idea. But right now, I'd
say definitely the jury's out.But they have the infrastructure
to do it.
It's just do they have theproduct in the right market?
Speaker 2 (20:32):
So time will tell.
Speaker 3 (20:33):
You know, think you might honestly be better off
with Spirit Valentine's Day.Just again, more candy, cards,
little I mean, comes fromSpencer's gifts, right? So, you
know, they already have like thecheesy romance items they can
sell.
Speaker 2 (20:48):
I Some I'm with Stupid t shirts.
Speaker 3 (20:50):
Exactly. Yeah. They're both both pointing at
each other, but I'm in love withstupid or whatever. Yeah, so I
think there's a marketopportunity there. We can talk
about it after we turn the micsoff, if you want to go in on
that.
Speaker 2 (21:02):
Sounds good. Yeah, Spencer's, don't be stealing our
idea here.
Speaker 3 (21:06):
Exactly.
Speaker 2 (21:07):
We're trademarking this. Well, Zach, thank you so
much for talking with me today.I really appreciate it.
Speaker 3 (21:12):
Yeah. It was it was a lot of fun.
Speaker 2 (21:14):
That was CSU associate professor Zach Rogers
talking about Spirit Halloween'sunique business model. I'm your
host, Stacy Nick, and you'relistening to CSU's The Audit.
Welcome to Colorado State University's podcast, The
Audit, where host Stacy Nicktalks with CSU faculty about
topics ranging from their latestresearch to current events.
Speaker 2 (00:13):
In 1983, Spirit Halloween stores began popping
up with a very unique businessmodel. Rent out a large vacant
storefront, fill it withHalloween costumes and temporary
employees for about eight to tenweeks, and then as of November
1, poof, they vanish like aghost into the mist. Today I'm
talking with Colorado StateUniversity College of Business
Associate Professor Zach Rogers.Rogers researches the financial
(00:36):
impact of supply chainsustainability, emerging
logistics technologies, as wellas purchasing and logistics
issues. We're gonna talk abouthow the spirit store model has
impacted the supply chain andhow it's influenced how we do
business.
Hi Zach, thanks for being here.
Speaker 3 (00:51):
Hi, thanks for having me.
Speaker 2 (00:52):
Let's start by talking about how spirit
Halloween stores kind ofoperate. I think everybody knows
that they they seem to kind ofpop up overnight, they stay open
for a short amount of time. Ithink the Fort Collins one I saw
opened about late August thisyear.
Speaker 3 (01:07):
Right.
Speaker 2 (01:07):
And then as of you know the next day after
Halloween they are like done.They just close-up and
disappear. Now clearly this is abusiness model that has worked
for them. I mean last yearAmericans spent more than
12,000,000,000 on Halloween and1,100,000,000.0 of that was
spent at spirit stores. Why doesthis model seem to work so well
for them?
Speaker 3 (01:27):
The reason the model works is because it's incredibly
targeted. You have somecompanies that try to do too
many things, be all things toall people. Spirit is not that.
Spirit is not Cheesecake Factorywhere you walk in and they give
you an encyclopedia. They're inand out.
Look, we got three things, youknow what they are. They're
gonna be good. If you don't wantit, don't come here. And that's
(01:48):
sort of in the spirit Halloweenethos. And because they do that,
they can be incredibly focusedand really build economies of
scale on their supply chain.
The only permanent building theyhave is in Charlotte, North
Carolina. They have a bigdistribution center, hold all
their costumes there all year,and then everything else moves
out and they're veryopportunistic about the places
(02:09):
where they put in retail stores.And they work on those stores
twelve months out of the year,you just said they're going to
pull out in November. A weeklater, they'll have people on
the ground saying, Okay, whereare things going to close? What
is like the old mall wherethings are failing?
And fortunately for them, wehave been going through a period
(02:30):
where there's a lot of options,which has really opened up the
places they can be. You know, itused to be okay, Spirit
Halloween, that might be in anold Kmart somewhere. Now they're
everywhere. They're in stripmalls, they're in actual malls,
and it's part of the ongoingretail apocalypse is the term
that's been used for it, that'sbeen going on for the last seven
years, where we've had literallytens of thousands of retail
(02:53):
stores closed. A lot of that isdue to folks moving to e
commerce.
Pre pandemic e commerce wasabout 7% of all retail. Today,
it's about 16%. So if you thinkabout that, okay, well, percent
of retail, we don't really needanymore. And so that creates a
lot of openings for a companylike Spirit who can come in, do
(03:13):
something very targeted, andachieve great economies of scale
because they're not trying to dotoo many things. The other piece
you mentioned I think isinteresting is how early they
started this year.
They were here in August. Seemsearly for Halloween.
Speaker 2 (03:25):
Yeah, it's a little earlier than usual, it felt
like.
Speaker 3 (03:27):
And there's a couple reasons for that. One is,
inventories came in early thisyear. So there's a few things
that were happening in 2024. Themain thing people were trying to
avoid was the port strike on theEast Coast. And even if Spirit
doesn't use the East Coast muchbecause a lot of their stuff is
gonna come in from Asia, so it'sgonna come in to the West Coast,
They were trying to avoid apotential traffic jam at the
(03:49):
West Coast because everyone elsemoved over to the West Coast.
If you look at the West Coastports, I believe for the
October, because this right nowwe're in the height of bringing
stuff in for the holiday season,October, it's up 70% year over
year from last year and 75% fornext week. Now, part of that was
an unforeseen surge we couldn'thave seen due to hurricanes and
(04:09):
things like that. Butessentially, Spirit got
everything in early, like allthis stuff was here early on
this summer. And so at somepoint, it becomes more
efficient. Well, maybe we'llmove it out.
It will get out of the centralwarehousing and if these stores
are ready for us, we can go inthere. The other piece of it is
during the pandemic, we reallyhad supply chain traffic jams
(04:30):
everywhere. And so because ofthat retailers stopped thinking
that the holiday season startson Black Friday. They don't
think that anymore. You know,Amazon has two Prime Days now,
because they're trying to spreadthings out.
Speaker 2 (04:41):
It feels like more than that.
Speaker 3 (04:43):
But it is it is only two I know, they come close
together. So you got one in Julyand one in one in October. And
so what happened is all of theseretailers now instead of
focusing on Black Friday, CyberMonday, it's not Black Friday,
it's Black Fall. And so theypush to have folks start buying
holiday stuff in mid October,which has traditionally been
(05:05):
Halloween territory. And so it'slike a reverse nightmare before
Christmas.
Christmas is horning in onHalloween. And I mean, for for
instance, second Prime Day wasthe October. I know that there
was Christmas presents bought atmy house in the October. So how
does Spirit deal with that?Well, we'll move the Halloween
season up and now it's what it'sbutting up right against back to
(05:27):
school.
So their strategies becomealright, back to school is done.
Let's move in now. So we will bethe next sort of Halloween
group. And you know, it's notjust spirit. There was big
werewolves at Costco in Augustand 12 foot skeletons.
Speaker 2 (05:40):
Right.
Speaker 3 (05:41):
And all kinds of stuff. So it's not just Spirit
that's on it. They're theeasiest ones to see because it's
a whole new store. Spirit,Target, Walmart, all of these
people know holiday shopping hasto start in mid October. That
means if we're going to squeezethat $12,000,000,000 out of
people, we need to then moveHalloween shopping up maybe to
August.
Speaker 2 (05:58):
And something you mentioned earlier that I really
I love the retail apocalypse.So, one of the things that I'm
wondering is you know Spirit isknown for pardon the pun but
haunting large vacant formerToys R Us or Bed Bath and
Beyond's. Basically, they'rebenefiting off of the death of
retail. Is this actually helpfulfor the economy? Are they are
(06:20):
they making use of the space andcontributing to the community's
economy or are they takingadvantage of it?
Speaker 3 (06:25):
I would say they're taking advantage in sense of an
opportunity. I don't believethat they're preying on the
economy in any way because thething is, those stores will get
filled in, even if it's notSpirit Halloween. Honestly, the
more attractive open stores,those are Dollar General's now
or Dollar Trees. If you look,General's the fastest growing
(06:45):
store in the country and hasbeen for the last six years. I
think in 2023, they added over athousand stores.
And what that is is, okay, lotof retail is gone. And so now we
can replace it with somethingelse. And partly what those
stores are is it's a lot ofsecondary market things, so
things that maybe were supposedto sell at Target and then
didn't, or Walmart. And now,okay, well, we have two
(07:07):
Palisades lunch boxes extra. Whydon't we put them in a Dollar
General?
And actually, what I think is,in some ways, we've right sized
retail. And here's what I meanby that. We used to have more
square feet of retail per personin The US than anywhere else in
the world of physical stores. Wehad more physical stores really
than we needed and we've movedthings now online. And what that
(07:30):
does is it allows in some waysmore inclusive stores into these
spots.
So if you think about what aDollar General is versus like an
Aeropostale or American Eagle orany of the places I got a shirt
from in high school, it's moreinclusive. It has more types of
products and more people aregonna be able to shop there. And
so there's actually a socialgood in some ways to these
(07:52):
things opening up because you'renot paying much for these
contracts to be in these places.And it's replacing maybe what
was an expensive store withsomething that's a little more
affordable and brings things topeople that they wouldn't have
had otherwise. You know, everykid deserves to be a Ninja
Turtle on Halloween if they wantto and get candy.
And really what I think SpiritHalloween does is they see an
opening in the market and theybring opportunities to people to
(08:16):
have Halloween. I mean, make itcloser to people's house. I'm
gonna go to Spirit Halloween atsome time in the next couple
weeks before Halloween starts.I'll let you know my Halloween
costume now. You know, we'resupposed to be the scariest
thing we can dress up as, so I'mgonna be a polar bear with a
scuba suit.
I'm with consequences of climatechange. That's the kind of humor
you get from professors. Butanyway, I'll probably go into
(08:38):
spirit to see if they got apolar bear. Gosh, it was very
convenient. And so, yes, thereis this idea that, oh, they come
in and they're out, they're kindof like a plague of locusts, but
what would be the alternative?
They're moving into thesebuildings because they can't be
filled. And so the alternativeis we have something that's
boarded up, that we're notgenerating tax revenue, not
creating jobs, kind of aneyesore. I don't know that
(08:59):
that's necessarily a bad thing.Yes, it's cheap and it's
transactional, but that's whattheir quality niche is. I mean,
it's like, okay, what does TacoBell exist?
Because you want something fastand relatively affordable, and
is it good for me? Am I gonnalook like Ryan Reynolds if I
start eating Taco Bell? Probablynot, but you know what?
Sometimes you want a Mexicanpizza. And so, it's the same
(09:20):
way.
In many ways, Spirit Halloweenis the Mexican pizza of retail
where, look, it has a time and aplace, and I don't think that
they're necessarily beingpredatory in any way.
Speaker 2 (09:30):
You know, and not everyone is a fan of this model.
Spirit was recently skewered ina Saturday Night Live skit.
Spirit responded with a meme ofa fake costume for a quote
irrelevant 50 old TV show. Whatdo you think about these
criticisms that you see withthis model? Is it fair?
Then where is Spirit reallydoing things well?
Speaker 3 (09:50):
Yeah, the first thing I would say, I am sure they felt
like they had to respond, but ifthere was somebody I wasn't
gonna get into a fight with, itwould be Saturday Night Live. I
think there might be a littlemore creative writing firepower
on that side. But I understandthe criticisms of spirit because
from the outside it can lookwasteful or maybe predatory in
some ways. But the thing is thatwhat spirits doing is they're
(10:12):
reacting to sort of realities inthe consumer marketplace.
Halloween is a wasteful holiday.
We're getting costumes you'regonna wear once and eating candy
and putting up decorations. Imean, it's it's not necessarily,
you know, if you're rankedholidays in terms of
sustainability, Halloween wouldnot be high on the list. But,
you know, neither is Christmas,neither is what is Thanksgiving?
(10:35):
We eat a whole bunch of food, wehave a ton of leftovers. Fourth
of July, what do we do?
We just shoot rockets up in theair. And so there's not a lot of
holidays I could think of thatdon't have some waste involved.
And what they're doing is justtaking advantage of an
opportunity and certainlythere's ways to be more
sustainable. But I don't knowthat that's what they're
competing on. Really, they'rejust responding to what the
(10:56):
market wants and they figuredout an interesting niche.
You know, I mean there's otherplaces that have tried to do
this kind of thing. I mean ifyou look at say, Party City,
they're sort of year round, buttheir best time really now is
copying what Spirit does in lateSeptember and October and
becoming that kind of store. Sothere's niches everywhere, and
it's an easy target. And partlythe reason I think that that was
(11:20):
such a popular sketch, I watchedthat video a couple times before
I even came here today, isbecause everyone has been to a
Halloween store at some pointand they understand how it
works. I mean, I remember beinglike a five year old and me and
my brothers, this would be atlike a Walmart or something, but
running to the back, grabbingthe swords that were out for
Halloween and just, you know,mom and dad, go get whatever you
(11:41):
need to do and we're just gonnafight back here and wear masks
and have fun.
And so I think partly, yes, SNLis making fun of it, but I also
think some of it is thenostalgia and the fun of going
to the Halloween store. But yes,if you look closely, can you see
beyond the facade? Sure. I waslooking at some pictures of
Spirit Halloween's today gettingready for this and there's ones
of like, yeah, they're in aBabies R Us and so there's all
(12:01):
these scary costumes with apicture of a baby right behind
it that they never even took offthe wall. And so, I mean, it's
kind of janky, I guess, but thatbut I think that's kind of the
charm and I think they sort ofthey sort of lean into that part
of it.
You know, it's like like a ChuckE. Cheese. I mean, do the robots
work great? No, but that's partof the fun of a Chuck E. Cheese.
Speaker 2 (12:23):
How does the model impact the overall supply chain
in other businesses? I mean,what is the it sounds like a
logistical nightmare. They theykind of parachute in to these
like 1,400 bacon storefrontseach year with a ton of
merchandise, not all of whichgets sold. I mean, I have to
imagine that not every costumeis a hit. So what do they do
(12:43):
with the unsold merchandise?
What's the impact?
Speaker 3 (12:46):
A lot of things will get rolled over. So they do
something called hoteling, whichis where we're gonna hold on to
it till next year. And a lot ofstuff, I mean, look, a vampire
costume is still gonna be finenext year. There's some things
maybe that are very topical andwill go away, but you know, saw
somebody dressed up as TigerKing last year, that's from like
four years ago. And probablythey got it discounted because
Kaspira was trying to get rid ofit.
(13:07):
Certainly, you look at somethinglike fast fashion, there are
some key differences. One ofthose would be like if you look
at, say, Zara. Zara turns thingsover very quickly. So Zara is
turning everything over everyfour to six weeks in their
stores. And so what that does,it requires a lot of quick
transportation, where Spirit isbuilding up inventory slowly and
(13:33):
then moving everything out once.
The deployment and theoperations of setting up the
stores, that is difficult. It isnot necessarily any more
difficult than a regular supplychain, though. I mean, you think
about Thanksgiving turkey, so ifyou go down to the Safeway
distribution center offI-seventy in Denver, it supplies
all the Safeways in Colorado, abunch of Wyoming, Kansas, some
other places. They have a bigroom that they keep below zero,
(13:56):
and they start filling it upwith turkeys in February for
Thanksgiving. And so, in someways, when you have something so
seasonal, like spirit or likeThanksgiving turkeys, you can
build your inventory up moreslowly.
With a regular standard retailsupply chain, you have to be
very just in time. Things comein and they leave and you're
(14:16):
very quick. Spirit and reallyany kind of holiday stuff has a
little more leeway to buildthings up than others do. Now
the deployment certainly is verytough, but the store does seem
to come out of one truck. Youpop it up, maybe they get one or
two deliveries and then you'reoff to the races.
Speaker 2 (14:33):
The hot costumes seem to be very topical. So I'm
thinking about, you know, thethe Ray Gun Australian Break
Dancer Horror Show that we gotto watch. And I'm thinking about
how many green tracksuits arebeing purchased right now.
Speaker 3 (14:49):
Well, you know what would be a fascinating case
would be Kamala Harris masks.Oh, Because usually during an
election, one of the thingspeople look at, because
Halloween always happens a weekbefore the election, is which
candidate gets more masks boughtfor them. And a lot of times,
that's actually been anindicator of who's going to win
the election.
Speaker 2 (15:06):
Really?
Speaker 3 (15:06):
So Obama sold more masks than Romney and McCain,
Trump sold more masks thanClinton, Clinton sold more masks
than Dole. And so becausepresidential masks are always
popular, those big rubber maskslike they were in Point Break.
And I'm sure that SpiritHalloween is sitting on a big
couple crates, probably morethan a couple crates, of Joe
Biden masks that they can't moveanymore because of the switch to
(15:27):
Kamala Harris in July. And sothat would actually I'd be
fascinated to know if they wereable to repurpose any old masks,
if they I mean, whatever theycould do and and how quickly
they could because the masks aretough to manufacture. You've to
get the mold in and everything,and so it'd be interesting to
see if they were able to get ina bunch of Vice President Harris
(15:47):
masks ahead of time, and ifthey're able to offload any of
the President Biden masks.
Speaker 2 (15:51):
Oh my gosh. With it being so profitable, why haven't
we seen maybe more businessesadopting this kind of model?
Besides Spirit, I feel likethere's no one else doing this.
Speaker 3 (16:02):
There's a lot of competition here, and in some
ways Spirit kind of when theywere established was at the
right time. It started in'eighty three, sold dispensers I
think in 1999, right when mallstores would have had some money
to throw around. They havewhat's called a first mover
advantage, where they came inand they've built up big
(16:23):
economies of scale. They havethe cash on hand to lease all of
these stores. They've got thehuge warehouse in North Carolina
and the distribution network setup to move things out when they
need to.
And so it would be difficult forlike sort of a new store to open
in this space. You'd be smalland if you're competing for the
same space against a spirit,you're gonna get outspent
(16:47):
probably is is what I wouldguess. And there's not that much
room really, because yes, youknow, spirit comes in, but I
mean, think about all theHalloween stuff sold by Amazon,
Walmart, Costco, Target, yourbig traditional retailers, even
Dollar Store. There's not a lotof space. Then even if you're
like, okay, we'll come in on thelow end.
Well, that's what Goodwill andSalvation Army and whatever your
(17:09):
local thrift store might do too.And so there's a lot of pressure
for Halloween and Spirit hassort of carved out this niche.
And I don't know that that nichewould exist anywhere else.
Speaker 2 (17:19):
We've been talking a lot about Halloween and also
another holiday, Christmas. Andand I just saw that Spirit
Halloween is now expanding toChristmas. This year, they'll be
taking the same model and addingSpirit Christmas storefronts.
They're doing kind of a softlaunch. They've been able to
make it in the Halloween worldbut now they're going up against
the big boys, the legacy brickand mortars, not to mention
(17:41):
online stores.
How do you think they're gonnafare there?
Speaker 3 (17:45):
Yeah, these are the major leagues now. Everybody
knows Christmas. I think theycan be successful. It is
interesting. I think in 2024,they're launching with 10 stores
around like New York, NewJersey, Connecticut, kind of tri
state area up there.
And it'll be interesting to seehow they do because it's not as
obvious maybe what you would buylike that for Christmas because
(18:06):
at Halloween it's like, okay, Ineed a costume. A costume is
kind of a kitschy thing thatyou're not gonna get a bunch of
places or candy or whatever. ForChristmas, and maybe you could
sell things like wreaths, trees,ornaments, kind of very specific
stuff like that, and thereprobably is a market for that. I
would say though that thepresents, you're not going go to
(18:28):
Spirit Halloween to get somebodyChristmas present. Maybe.
But it's more like you go to aregular store, Amazon or
whatever. And then the otherstuff around it, you know,
Halloween works well becauseeverything is disposable. A lot
of it is single use. You know,in the SNL thing, he said, you
can buy a single use fogmachine. There's no equivalent
of a Christmas single use fogmachine.
(18:50):
And you have trees, but, youknow, either of a tree you're
gonna go cut down somewhere or afake tree that you've had since
your mom gave it to you incollege. And you have ornaments
and stuff like that that I don'tthink are as sort of consumable.
I think Christmas is probably aless consumable holiday for the
(19:11):
things that aren't gifts.Certainly Christmas gifts, we
buy more than we need, givepeople more needs, spend more
than we have. That's, you know,we've been saying that since
Charlie Brown.
But it's less obvious to me whatthis is going to be. Now, it's
less obvious to me, but Ihaven't been to a spirit
Christmas store. So maybe theyhave a great idea and they
nailed Halloween, so maybe theycan do this. I will say they're
(19:32):
not the same brand that they arein Christmas as they are on
Halloween. They've reallychanged.
You know, it's not the scaryGrim Reaper guides like Santa
winking at you. I've seen theirlogo. I don't know that people
will immediately know, oh, thisis Spirit Halloween, but for
Christmas. And there's so muchcompetition retail wise around
(19:53):
that time of the year. I mean,there's whole industries that
they don't make money untilOctober.
I mean, that's why Black Fridayis called Black Friday. That's
when companies go from the redto the black. And so there's a
lot of competition. I wish themwell. But there's a lot of
competition.
Maybe it'll work, and it isinteresting. And I'm sure people
will go in and look around andsee if there's anything there,
(20:14):
but it will be the test thisyear to see if it works. And
then, I mean, we see them inColorado in 2026, we'll know,
hey, all right, I guess this agood idea. But right now, I'd
say definitely the jury's out.But they have the infrastructure
to do it.
It's just do they have theproduct in the right market?
Speaker 2 (20:32):
So time will tell.
Speaker 3 (20:33):
You know, think you might honestly be better off
with Spirit Valentine's Day.Just again, more candy, cards,
little I mean, comes fromSpencer's gifts, right? So, you
know, they already have like thecheesy romance items they can
sell.
Speaker 2 (20:48):
I Some I'm with Stupid t shirts.
Speaker 3 (20:50):
Exactly. Yeah. They're both both pointing at
each other, but I'm in love withstupid or whatever. Yeah, so I
think there's a marketopportunity there. We can talk
about it after we turn the micsoff, if you want to go in on
that.
Speaker 2 (21:02):
Sounds good. Yeah, Spencer's, don't be stealing our
idea here.
Speaker 3 (21:06):
Exactly.
Speaker 2 (21:07):
We're trademarking this. Well, Zach, thank you so
much for talking with me today.I really appreciate it.
Speaker 3 (21:12):
Yeah. It was it was a lot of fun.
Speaker 2 (21:14):
That was CSU associate professor Zach Rogers
talking about Spirit Halloween'sunique business model. I'm your
host, Stacy Nick, and you'relistening to CSU's The Audit.
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