UK Halloween 2016 Preview: Stores Ramp Up Participation

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KEY POINTS

  • Halloween normally sees relatively low average spending, which will again benefit discount retailers this year. Aldi, Lidl, Poundland and B&M Bargains are each likely to grow their Halloween product sales by double digits.
  • E-commerce will also see strong growth, with UK online retail sales showing an accelerating trend in recent months. A barrier to e-commerce is that shoppers tend to buy low-value, disposable goods for Halloween, which often does not justify paying for delivery or meet the threshold for free delivery.
  • Major chains continue to ramp up their participation in the event, with Sainsbury’s Local looking like a standout chain this year.

MILLENNIALS MORE LIKELY TO PARTICIPATE, BUT AVERAGE SPEND LEVELS ARE LOW

Brits will spend some £310 million on Halloween products this year, according to research firm Mintel. Its survey research found:

  • Some 40% of UK consumers bought products for Halloween last year, but this was down from the 48% who made Halloween purchases in 2014.
  • Millennials engage more with Halloween, with 50% of those aged 16-35 buying products in 2015.
  • Of those who spend on Halloween, 42% spend less than £10, some 26% between £11 and £25 and 19% between £26 and £50; the remaining 13% spend more than £50.

Mintel based its 2016 estimated spend on a 5% increase from last year’s £295 million. As we explain below, we believe a 5% increase may be optimistic for growth in the Halloween market in 2016.

 

PROSPECTS FOR 2016

Mainly because of calendar effects, we expect low growth in the UK Halloween market this year, despite some retailers increasing their activity around the event. Last year, October 31 fell on a Saturday, allowing for longer festivities on and around the day itself. This year, Halloween falls on a Monday; while many will mark the event on the day or over the preceding weekend, we think the weeknight timing will limit participation, and so spending.

Even in a low-growth market, there will be winners and losers.

 

Discount

Discount retailers are popular for Halloween spending, because it is typically a low-spending event where there is little incentive to invest in quality.

Grocery discounters Aldi and Lidl will almost certainly make headway. In the 12 weeks ended October 11 (latest available data), Aldi grew sales by 11.4% and Lidl by 8.4%, according to market-share measurement service Kantar Worldpanel. We expect their increase in sales of Halloween-themed products to be of similar magnitudes, or possibly even higher should these retailers extend their themed ranges this year.

Mixed-goods discount stores, such as Poundland and B&M Bargains, will also grow sales. Although these retailers have been posting slower underlying growth rates, store openings have supported total sales growth rates. The latest results show B&M Bargains growing its sales by 21.3% in the 13 weeks ended June 25, while Poundland increased its sales by 18.7% in the year ended March 27.

Budget apparel specialist Primark is likely to prove popular for costumes—and for general clothes that can be adapted into costumes.

 

Online

As in practically all categories, e-commerce will gain a share of spend. Overall, Internet-only retailers have been growing faster than online sales at multi-channel retailers, so we expect Internet pure plays such as Amazon to grow share, not only of the total Halloween market, but of the e-commerce channel this year.

The latest data show online retail sales charging ahead: Internet sales surged by 21.9% in September, according to new data from the Office for National Statistics; this marked a strengthening from 21.7% growth in August and an 18.4% increase in July.

One potential barrier to online shopping is the low average spend on Halloween. Many retailers, including Amazon, impose minimum purchase amounts for free delivery, and many shoppers will be dissuaded from buying online if they need to pay for delivery for what may be a low-value, semi-disposable purchase.

 

Convenience and Neighborhood Stores

We expect convenience stores and other proximity grocery formats, such as small supermarkets, to build share. Not only are these types of stores outperforming within the grocery sector, but their market share will be supported by the increased activity of major retailers:

Sainsbury’s: Sainsbury’s has pushed Halloween aggressively through its Local convenience stores this year; the range of food and nonfood products is substantial for a small-store format, and the chain has made more of an effort than rivals in in-store decorations, which should help boost impulse purchases.

Marks & Spencer (M&S): Similarly, M&S looks to have ramped up its in-store offering of small-ticket food products in its convenience stores and food halls. Tesco, meanwhile, has kept Halloween relatively low-key in its Express convenience stores, but the product offering has been bolstered over the past few years.

 

STORE TOURS

We showcase some notable retailers from out store checks below. You can see more images from our store tours on our Facebook page at bit.ly/FungHalloweenStores

 

screen-shot-2016-10-26-at-10-23-19-amPoundland

We found an impressive range of products at Poundland. Last year, we observed that 99p Stores appeared to have a wider range of Halloween-themed products. 99p Stores was acquired by Poundland in late 2015, and the integration of the chain during 2016 may have bolstered Poundland’s range this year.

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screen-shot-2016-10-26-at-10-23-32-amSainsbury’s Local

Sainsbury’s is a standout retailer this year; it has ramped up the Halloween theme at its convenience stores this year, with more decorations and strong ranges.

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screen-shot-2016-10-26-at-10-23-46-amM&S

M&S aims to capture impulse purchases in its food halls and offers costumes in its general-merchandise stores.

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screen-shot-2016-10-26-at-10-23-55-amPrimark

Finally, Primark is aiming to attract small-ticket shoppers as well as those looking for budget Halloween costumes.

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