Halloween Has Retailers Scared as Consumers Trade Down
For American retailers, Halloween 2024 could end up being more trick than treat.
As Bloomberg News reported Saturday (Oct. 12), Halloween consumption is expected to drop this year, the latest in a series of obstacles for stores dealing with rising expenses and cost-cutting consumers.
The report, citing data from the National Retail Federation, says that spending for the holiday will come to $11.6 billion this year, a 5% drop. The largest dip is projected to come from sales of greeting cards and costumes, bad news for retailers who depend on seasonal spending. Making matters worse, families on the lower end of the income spectrum are spending less.
For example, arts and crafts retailer Michaels said on its most recent earnings call that households making under $100,000 per year are cutting costs and spending less.
“2024 has been a perfect storm for retailers of all stripes,” said Erica Weisgerber, a partner at law firm Debevoise & Plimpton.
“Inflation, high operational costs, and reduced consumer spending have been especially challenging for brick-and-mortar retailers, and online retailers have struggled with steep competition from eCommerce giants like Amazon.”
These challenges, Bloomberg said, have hurt the larger retail sector and helped fuel a number of high-profile bankruptcies this year, such as Joann, Big Lots and Conn’s, while also making it more difficult to turn around retailers by reducing costs.
“Retailers are finding that their low-hanging efficiency efforts do not go far enough,” Holly Etlin, a partner in AlixPartners’ turnaround practice, told Bloomberg.
The news comes amid a period of declining consumer sentiment, as Americans continue to feel frustrated with the price of goods and services.
Though consumer sentiment fell a “meager” 1.7%, or 1.2 index points — a number within the margin of error — it represented a change from the increases seen over the last two months, according to preliminary results from the University of Michigan Surveys of Consumers for October released Friday (Oct. 11).
Consumer sentiment was still 8% stronger and almost 40% higher than the low point recorded in June 2022.
“While inflation expectations have eased substantially since then, consumers continue to express frustration over high prices,” Joanne Hsu, director of the Surveys of Consumers, said in the release.
Meanwhile, data last week from the Bureau of Labor Statistics’ Consumer Price Index showed overall slowing of inflation on an annualized basis. However, this 0.2% month-over-month increase was “hotter” than some expected, PYMNTS reported.
The post Halloween Has Retailers Scared as Consumers Trade Down appeared first on PYMNTS.com.