Halloween Spending Expected to Decline

Survey Predicts a Drop in Halloween Expenditure

The National Retail Federation's annual Prosper Insights & Analytics survey predicts a 5% decrease in total Halloween spending this year, amounting to $11.6 billion, down from last year's record $12.2 billion. This decrease is expected due to the current high inflation and interest rates, leading low- to mid-tier consumers to reduce their seasonal spending.

Consumers Plan to Spend Less

The survey, which questioned nearly 8,000 consumers about their Halloween shopping plans in early September, revealed that respondents, on average, intend to spend approximately $103.63. This figure is about $4.62 less than last year's record of $108.24, indicating a reduction in purchases of costumes, decorations, and party supplies, particularly among lower-income households.

Survey Highlights

According to the survey, 72% of consumers plan to celebrate Halloween this year, a figure consistent with last year's record of 73%. Popular holiday activities include handing out candy (67%), decorating homes or yards (52%), dressing up in costume (49%), carving a pumpkin (43%), and throwing or attending a party (29%).

Impact on Retailers

The National Retail Federation's gloomy forecast for Halloween spending is another setback for heavily indebted retailers, adding to the ongoing pressure from spending slowdowns among low- to mid-tier consumers. "2024 has been a challenging year for retailers across the board," said Erica Weisgerber, a partner at law firm Debevoise & Plimpton LLP. "Inflation, high operational costs, and reduced consumer spending have hit brick-and-mortar retailers hard, while online retailers have had to contend with stiff competition from e-commerce giants like Amazon."

Distressed Retailers

Many struggling companies, including Michaels and At Home Group Inc., are owned by private equity managers whose buyouts during the pandemic proved ill-timed when interest rates rose and inflation squeezed household budgets. Home, clothing, and hobby retailers are particularly distressed due to their large debt, which leaves them without the liquidity to compete with better-capitalized competitors, according to Moody's Ratings.

Indications for the Holiday Season

The bleak outlook for Halloween spending could be an early sign of a worsening consumer environment. This could serve as a warning for the major holiday spending season, which begins with Black Friday and Cyber Monday in late November.

Bottom Line

The predicted decrease in Halloween spending may be a harbinger of a challenging holiday season for retailers. As consumers tighten their belts, retailers may need to brace for a potential downturn. What are your thoughts on this? Feel free to share this article with your friends and discuss. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.