Tariffs Give Retail CRE A Halloween Jump Scare

While frightful costumes will still be top sellers come October, tariffs are likely to be the scariest thing Halloween retailers face this year.

The Halloween specialty market and its associated real estate was already poised to shrink following the demise of Party City and the closure of more than 700 of its stores, including its Spirit Halloween clones known as Halloween City.  

Now, tariffs are emerging as a key concern because many holiday decorations and costumes originate in China. The Trump administration slapped a 145% surcharge on goods from that country in April, only to temporarily drop them a month later.

The preeminent retailer for the macabre holiday, Spirit Halloween, alluded to issues with tariffs in May when it announced the company would bypass its annual grand opening celebration for its flagship store in New Jersey due to “international disruptions and supply chain challenges.” 

Whether tariffs impact Halloween goods on shelves will also serve as a test run for the industry’s golden goose, the Christmas shopping season. 

“Time will tell how that all works out,” Scotland Wright Associates CEO Michael Tucker said of the tariff situation. “It'll be interesting to see the challenges and things that come up, and sometimes they can impact things that you don't expect, like a Halloween costume.”

The U.S. and China reached a trade deal last week that will allow a framework for some exports and an easing of tech restrictions, though details haven’t been finalized, according to CNBC. In May, the two countries agreed to a 90-day pause on the dizzying 100%-plus reciprocal and retaliatory tariffs that had been put in place when the trade war kicked off.

As that pause nears its end, many Halloween retailers have already placed orders and are working with suppliers to ramp up shipments to take advantage of lower surcharges, according to Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation.

“This is typically the busiest time of year for retailers as they start to bring in cargo for the all-important fall and winter holiday seasons,” Gold said in an email to Bisnow. “Many [retailers] will look to continue to frontload merchandise, as they did earlier this year, because of the uncertainty of what will happen after the 90-day pause.”

Retailers like Michaels, At Home and HomeGoods have already started selling Halloween items, but how full the shelves will be remains to be seen.

Neil Saunders, a retail analyst and managing director of GlobalData, said some Halloween products from China may be “too expensive to source.” 

“Costs are higher, and these will probably be reflected in the prices charged to consumers,” Saunders told NorthJersey.com.

Consumers spent around $11.6B on Halloween last year, a drop from 2023, but costumes, decorations and candy were still in high demand for shoppers, according to NRF data. The market for Halloween goods was wide open last year, with shoppers visiting discount stores, specialty shops and online outlets in very similar percentages. 

With Party City out of the picture, a big competitor is off the field if other retailers can get ahead on orders.

Despite dealing with tariff-related disruptions, Spirit Halloween pledged it was moving “full speed ahead” with plans to open more than 1,500 of its annual pop-up stores in empty retail spaces across the country beginning in August.

“With the anticipation for Halloween at an all-time high, we are committed to creating the same immersive experience that keeps our fans coming back year after year,” Spirit Halloween CEO Steven Silverstein said in a statement.

The retailer, which is owned by Spencer Gifts LLC, declined requests for further comment. 

Walmart has also latched onto the early Halloween trend with “Summer Frights” sections in some stores, according to Axios. The discount retail giant didn't respond to a request for further comment on its seasonal plans. 

“When you have something like tariffs, it's impossible for it not to impact things in real estate,” Tucker said. “It's just time will tell what that's actually going to be.”

Retail landlords need to pay attention to where their tenants’ supply chains originate, The Counselors of Real Estate Global Chair John Hentschel said at the National Association of Real Estate Editors’ 59th annual conference in New Orleans last month.

Those selling goods originating in China may need concessions and have trouble paying rent, which could increase vacancy, Hentschel warned.

“That's a question nobody used to ask, and now, all of a sudden, everybody's going to have to ask that question,” he said.