đ âHalloween Inc.â â Spirit Halloweenâs zombie retail. Microsoftâs house of brands. Costcoâs Kirkland clothing.
Oct 16, 2023
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Spirit Halloween, Microsoft, and Costco discuss their unique approaches to retail and branding. Spirit Halloween's real estate operation is calculated, Microsoft's 'house of brands' rivals Apple, and Costco's clothing sales outperform luxury brands. The hosts also touch on news sources, Microsoft vs Apple's branding strategies, Costco's addiction to profit margins, and diverse topics from QR codes to Hulk's color.
Spirit Halloween strategically selects temporary store locations to dominate the seasonal costume market.
Microsoft's acquisition of Activision Blizzard solidifies its position as a major player in the gaming industry and showcases its successful 'house of brands' strategy.
Deep dives
Spirit Halloween: Zombie Retail
Spirit Halloween is a successful retail chain that sells costumes during a limited two-month season. With 1,400 locations and sales of $650 million, Spirit Halloween dominates the costume market. Their business model revolves around finding abandoned stores for short-term rentals and transforming them into temporary Halloween stores. They meticulously choose locations with specific criteria, such as a three-month lease, a minimum square footage, and a high number of daily passing cars. While the appearance may be chaotic, Spirit Halloween follows a calculated approach to maximize their seasonal business.
Microsoft's Acquisition of Activision Blizzard: Diversified House of Brands
Microsoft recently closed the $69 billion acquisition of Activision Blizzard, making it the largest video game deal ever. This acquisition adds to Microsoft's impressive portfolio, which includes Xbox, LinkedIn, OpenAI, and more. Unlike Apple's branded house strategy, Microsoft operates as a house of brands. Each of its businesses functions as an independent brand, allowing Microsoft to thrive in various industries and product categories. This approach has contributed to Microsoft's status as the world's second most valuable company. The acquisition of Activision Blizzard solidifies Microsoft's position as a major player in the gaming industry.
Costco: Sell More Clothing, Make Less Profit
Costco, known for its bulk products, also sells a significant amount of clothing. They generate $9.1 billion in annual clothing sales, surpassing major brands like Lululemon and Levi's. Costco's clothing line appeals to a diverse demographic, from 45+ males seeking functional clothing to Gen Z embracing Kirkland hoodies. Despite their clothing success, Costco purposely keeps its profit margins low. While the average fashion markup is around 75%, Costco adheres to a strict 14% maximum markup. Forgoing higher profits, Costco prioritizes delivering quality clothing at an affordable price, a key factor in maintaining customer loyalty.
Odds are youâre getting a costume from Spirit Halloween this week, at one of their 1,400 seasonal locations â But Spiritâs real estate operation follows a strict 3-part calculation.
Microsoft just completed its biggest acquisition ever: $69B for video games â Microsoftâs âhouse of brandsâ is 2nd in value only to Appleâs âbranded houseâ.
And Costco makes more money selling clothing than Lululemon or Ralph Lauren do â And itâs all because Costcoâs co-founder believes prices can be like a drug.