The Retired Investor: Suntan Lotion Meets Summerween

This weekend, my wife went shopping for a beach hat but came home empty-handed. A new display of plastic skeletons, smiling pumpkins, and scary costumes occupied the beachwear display at her favorite store. Welcome to Summerween.

 

If you thought holiday merchandise is getting earlier each year, consider the July launch by most retailers of their fall Halloween collection. Walmart calls it their "Summer Frights" section, but it was Home Depot that first set the tone by marketing 12-foot skeletons back in April. Michaels, Lowes, Target, Costco, HomeGoods — you name it — major retailers have jumped into this trend.

 

The fact is that Halloween spending is a multibillion-dollar business. Last year $11.6 billion went into buying candy, home decorations, costumes, parties, and pumpkins. This year, retailers are expecting $12.2 billion, which would be a record spending total, according to the National Retail Federation.

 

That is a 37 percent gain over the last five years, and 47 percent of shoppers in their annual survey said they were beginning their Halloween shopping before October. Early shopping continues to be dominated by the 25-34 age group, with almost 50 percent of consumers saying it was their favorite holiday. But in July? 

 

Think skeletons in beach chairs, ghosts in bikinis, and sun hats on Frankenstein. It all started with an episode of Disney's animated show "Gravity Falls" (season 1, episode 12). The town of Gravity Falls loved Halloween so much that they decided to celebrate it twice a year (June 22 and October 31). That started a trend, but the summer dates are loose with Summerweeners picking the last weekend in July or whenever they decided, as long as it was in the summer.

 

And just like its Fall sister, Summerween has its own lineup of snacks and drinks from mummy hot dogs to marshmallow ghosts. Kids have been known to paint beachballs as pumpkins while parents have crafted ghoulish-themed floral displays from their gardens.

 

Retailers were quick to capitalize on the trend, which has only kick-started this summertime holiday trend. Walmart introduced its July deals with a DIY pumpkin head figure. Michaels beat them to it, launching two out of their five Halloween collections on June 13. Spirit Halloween plans to open more than 1,500 stores and hire 50,000 retail associates sometime in August. And Home Depot launched its full lineup of online Halloween items this week. Their collections will be in stores before Labor Day.

 

Don't think it's all about greed, however, what is pushing consumers to spend so far in advance can be summed up in one word: tariffs. Back in April, the Halloween and Costume Association warned that tariffs were threatening to wipe out Halloween and severely disrupt Christmas unless urgent action was taken to reverse them. Since most Halloween items are imported from China, that threat is real.

 

Currently, there is an across-the-board 55 percent tariff rate on Chinese imports into the U.S. Many retailers have already downsized their orders much earlier in the year, so shoppers who wait risk paying more for the most coveted items, and costumes will be out of stock. At this point, even if the U.S. comes to a trade agreement before the Aug. 12 deadline, it will be too late to alter the supply and demand balance for this year.

 

My advice is not to be too upset over the early Halloween displays. Embrace the change and celebrate along with the 47 percent of shoppers who love the holiday and now get to celebrate twice a year. Just make sure that the Reese's Peanut Butter Cups and M&M's are on ice. Happy Summerween!

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.