Hobby, Toy and Game Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 4,700 companies in the US sell new toys, games, and hobby and craft products. Large firms and many small firms may engage in online sales in additiol to brick-and-mortar retailing. Companies may offer a broad selection of merchandise or specialize in an area, such as educational toys, model trains, or scrapbooking supplies. In the video game retail category, firms may sell used merchandise or offer trade-in programs.
Seasonality of Sales
The fourth quarter is critical for toy and game stores and extremely important for hobby stores.
Competition from Online Retail
The advent of online retail has fundamentally altered the toy and video game markets.
Industry size & Structure
The average hobby, toy, or game store operates out of a single location, employs about 22 workers, and generates $4-5 million annually.
- The hobby, toy, and game store industry consists of about 4,700 firms that employ 102,000 workers and generates about $21 billion annually.
- The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for 86% of industry revenue.
- Large firms include Toys ‘R’ Us (owned by WHP Global), Gamestop, Michaels, and Hobby Lobby. Large chains may have locations outside of the US.
Industry Forecast
Hobby, Toy and Game Stores Industry Growth
Recent Developments
Mar 5, 2025 - Joann’s Closing Reshapes Industry
- Intense competition and inventory management problems contributed to the demise of leading craft retailer Joann, which is closing its 800 stores by May 2025, according to an NPR report. The 82-year-old company had filed for Chapter 11 bankruptcy twice in less than a year, most recently in January 2025, amid declining sales and deteriorating market conditions. The retailer is part of a trend of higher retail closures, which are expected to reach 15,000 in 2025, and continuing bankruptcy filings. Joann had seen a resurgence during the pandemic when consumers looked to occupy themselves with crafting projects, but conditions soured post pandemic when rising inflation led to lower consumer spending. The craft store industry has continued to evolve in the past decade as competition from Michaels and Walmart increased and competitor Hancock Fabrics shut down. Joann’s closing may lead to more customers for big chain retailers, online outlets, and local businesses.
- Long-tail effects from Covid-19 on retailers include fewer hirings, and higher store closures and bankruptcy filings, according to a recent report in Retail Dive. Store closures are expected to be worse in 2025 than in 2020. Per Coresight data, 15,000 stores are expected to permanently close in 2025 compared to 9,698 in 2020 at the height of the pandemic. The high levels of closures are due to a combination of factors including the lingering effects of the pandemic, a weak housing market, the overflow impacts from bankruptcies, and competitive pressures from companies such as Temu. The pandemic environment and its recovery period caused tremendous stress for some retailers, which is still driving retail bankruptcy filings. Hirings in 2024 were 40% lower than in 2019, as the pandemic shifted how firms staff and operate their stores. Retail staffing decisions are also influenced by ongoing economic uncertainty and falling consumer confidence. The pandemic kicked off explosive growth for e-commerce; e-commerce as a percentage of total retail sales (excluding automotive) grew from 15% in Q4 2019 to 22% in Q4 2024. The e-commerce growth curve is maturing and expected to plateau around 35% in the next decade, according to a report from FTI Consulting. In addition, hard-hit categories such as electronics and home, which suffered some retail whiplash due to consumers’ pulling back on spending mid-pandemic, may be close to a recovery.
- Toys R Us continues its expansion plans with a new partnership that will bring stores to Latin America and the Caribbean for the first time, according to a report in Retail Dive. The collaboration between Toys R Us parent company WHP Global and Cotton Candy International will begin with a new store in Panama, which is expected to open in 2025. The company has been expanding its reach internationally with deals last year for new locations in Mexico and a shop-in-shop licensing agreement with Britain’s WHSmith. Toys R Us also has a partnership with Go! Retail Group for up to 24 flagship stores in the US.
- Retailers are facing a nearly 30% increase in the rate of returns compared to last year, which could cut overall profit margins on the industry’s $1.2 trillion in global sales, according to Salesforce data reported in PYMNTS. Shoppers have already returned $122 billion in merchandise, per the report. According to Salesforce’s Consumer Insights Director Caila Schwartz, “Retailers had a robust holiday season, but a 28% rise in the rate of returns compared to last year is a cause for some concern.” AI tools are expected to be important in minimizing revenue losses on returns and reengaging with shoppers, per Schwartz. Returns volumes have increased in part due to the growth in online shopping and shopper practices such as “bracketing,” involving ordering multiple sizes or variations with the intention to return unwanted items, according to Hannah Bravo, head of Loop Returns. She said retailers are taking different approaches to managing returns such as offering longer return windows, charging fees related to item returns, and letting customers keep low-value items instead of returning them.
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