Last week, we wrote about Hershey’s comments that Halloween was breaking late for retailers, including categories beyond treats such as costumes and decorations and the “aspiration” that sales trends would pick up over this past weekend. Unfortunately, the traffic trend did not improve. The sales trend may be better with a step-up in basket size; however, had Halloween been strong, we’d have expected Target’s CEO Brian Cornell to say so during his CNBC interview this week. Not only did he not share about Halloween, but his overall characterization of the consumer was that the consumer was under a lot of pressure, spending remains constrained (trade down and fewer items in the basket), they are cutting back on goods, and that “value” and affordability are what consumers are seeking.
We have two ways of assessing the Halloween event. First, we can look at the October seasonality for those brands that are tightly tied to the event: Party City, Five Below, Target, and Walmart. As the table below shows, Halloween is a far more significant event for Party City compared to the 4th of July and back-to-school as visits for October are nearly three times the average of July-August. By contrast, the 4th of July and back-to-school are larger than Halloween for the other three retailers, as visits are less in October than the July-August average. For 2023, Party City’s October 2023 chainwide visits were 2.33 times its July-August average, far below prior years. Five Below’s October 2023 chainwide visits were also below 2021-2022 levels. Target's October visits were 0.87 its July-August average, which was substantially below 2021-2022 but modestly down from pre-pandemic levels (These measures line up with Cornell’s commentary). Walmart was appreciably down from 2021-2022. We suspect that the 2021 and 2022 figures were boosted by enhanced SNAP benefits and stimulus dollars, which are absent this year.
The year-over-year weekly visitation momentum also weakened for Five Below, Target, and Walmart (Party City's year-over-year visit trends were impacted by store closures, so we have removed them from this analysis). We suspect it was this trend that Hershey was picking up on in its channel/ consumer indicators. Unfortunately, the last week didn’t positively inflect.
Earlier this year, we wrote about how the consumer had shown up for the 4th of July and back-to-school. Why the slower showing here, especially as some forecasters were calling for a double-digit increase? Well, first there is the decline in SNAP and stimulus that we referenced above coupled with much higher prices for treats. For example, Hersey’s confectionary items are up +12% year-over-year and +36% since 2019 per Nielsen. However, that should result in more households buying bulk bags of bite-sized treats at Target and Walmart, amongst other retailers, not a bite out of the holiday season. As the table above shows, October 2023 was below the pre-pandemic seasonality for these two retailers.
What else is new this year, that was absent in prior years? Temu, which we discussed last week. Placer doesn’t track Temu’s dollar sales volume, but we do see the lack of seasonal pop at U.S. retail. Temu’s Halloween presence on Google and other digital advertising platforms was significant in terms of landing page placement and listings. Google searches for “Temu Halloween” were also significant as shown below (per Google Trends).
Temu had large Halloween ad campaigns on TikTok, Instagram, Facebook, and Pinterest–recall that Temu drove outsized growth for Meta's advertising platforms in Q3 2023 and October. Temu’s Halloween business is focused on costumes and decorations. These are the two categories that were likely soft for the aforementioned retailers. As such, Temu may explain the softer Halloween visit trends above. Forecasters may have been correct calling for a double-digit increase in seasonal Halloween sales. However, it looks like the lift may have come elsewhere, making Halloween 2023 and Temu pretty spooky for these retailers.