Residents of major cities are accustomed to transient retail space; locations for seasonal outlets and special event stores that pop up, hire temporary staff, and disappear within six to eight weeks of high volume business. It’s not uncommon in smaller cities and towns even to see Halloween shops and Christmas villages take over otherwise desolate storefronts in strip and indoor malls. Privately owned company Spirit Halloween will open 850 temporary stores across the United States this October, paying high lease rates on prime locations for just a single month, doing astronomical business, and closing up shop after just thirty days.
This year, though, will see a number of major national retail chains opening up their own seasonal stores, thus bringing on significantly more temporary employees than are typically hired for the holiday shopping season. Beleaguered book, music, and movie retailer Borders Group (NYSE: BGP) will open Borders Express stores in 25 small city markets starting in October, the majority of which will be located in the north eastern United States with others scattered throughout Illinois, California and other states.
Borders has been on the verge of bankruptcy for years now, and its share price has fallen 95% of the course of five years. Their business eroded almost entirely by competitors Amazon.com (NASDAQ: AMZN) and Barnes & Noble (NYSE: BKN). Their 25 seasonal stores will begin stocking Halloween-themed items transitioning to Christmas and Hanukkah-themed items in November. The stores will also stock major book, music and movie releases as well as a variety of electronics such as e-readers.
Privately owned toy retailer Toys “R” Us will be doing the same. The company announced yesterday that they would opening 600 Toys “R” Us Express stores across the country and taking on 45,000 temporary employees.
The strategy aims to boost mediocre sales while keeping overhead low. Most of the work force brought on for these seasonal outlets will not be retained after the holiday season. Property rental costs will be outpaced by revenue, provided customers are actually spending again this holiday.
While Toys “R” Us and Borders Group open their Express locations, however, other retailers are looking at the coming holiday rush as a time for actual expansion. Best Buy Inc. (NYSE: BBY) CEO Brian Dunn announced his company’s plans to bring on 29,000 seasonal employees this holiday, while also opening 44 to 50 new Best Buy Mobile outlets. Best Buy will also be expanding its used video game business to 1000 of its existing stores. Best Buy is relatively healthy right now after rebounding from a 25% dip in share price at the beginning of the month, but shareholders have to wonder if the company might be better served by the low risk approach of only opening seasonal retail outlets rather than opening new permanent Mobile stores.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
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