Halloween Sales to Hit Record High of $8B

Americans are expected to be more liberal with holiday purchases in 2012, especially for Halloween. According to industry research firm IBISWorld, Halloween spending is expected to grow 10.7 percent from 2011 to reach a record-setting $8 billion this year, as more consumers participate in festivities and purchase small-ticket items like home decorations and candy. Furthermore, larger budgets will allow consumers to spend more on store-bought, ready-made costumes, rather than do-it-yourself (DIY) alternatives that were popular during the recession.
 

“Rising consumer sentiment and disposable incomes have allowed total spending on Halloween to increase every year since its low of $5 billion in 2009, which was a massive 18.5 percent decline from 2008,” says IBISWorld analyst Olivia Tang. “Halloween spending fully recovered in 2011 when it surpassed its 2008 peak of $6.1 billion. This year, as Americans continue to relieve their pent-up demand that lingered from the recession, IBISWorld expects almost every category to benefit.”
 

Costumes make up the largest proportion of Halloween spending at 35.8 percent, representing a 12.2 percent increase to $2.9 billion in 2012. Consumers will shift from DIY projects to pricier, ready-made costumes that save time and more accurately represent popular characters, IBISWorld reports. This year’s anticipated costumes include Captain America, Batman and other characters from recent blockbuster movies; traditional characters like vampires and witches; and possibly even President Obama or Republican candidate Mitt Romney. A larger number of pets will also be donning Halloween costumes compared with 2011, providing additional revenue to costume makers.
 

The price of sugar, candy’s main input, has surged at an estimated 11.6 percent per year on average during the five years to 2012, according to IBISWorld. Although this factor drives up the price of chocolate and other candies, sales will remain strong, accounting for about 29.3 percent (or $2.4 billion) of Halloween sales. Nestle’s Halloween candy sales, for example, rose 5.0 percent in 2011 and are anticipated to grow at a similar rate in 2012. Americans still struggling from the recession, however, will likely slow total candy expenditure growth to only about 2 percent.
 

Revenue for the decorations segment is anticipated to grow the fastest, jumping 23.7 percent in 2012 to total $2.4 billion, according to IBISWorld. Social media sites like Pinterest, which prompt users to develop and share decoration ideas and instructions, have largely driven this trend. Creative inspiration and higher consumer sentiment will drive consumers to buy more high-priced decorations.
 

Consumers are anticipated to spend less on greeting cards this Halloween, causing this segment’s revenue to fall 7.7 percent to an estimated $440 million in 2012, IBISWorld reveals. As consumers allocate more of their funds to costumes, candy and decorations, people will spend less on Halloween greeting cards. Instead, homemade cards and free or cheaper e-cards will provide an alternative.
 

IBISWorld’s five-year Halloween spending data is below: