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, Hobby Lobby, and Jo-Ann Stores. Large chains may have locations outside of the US.
Industry Forecast
Hobby, Toy and Game Stores Industry Growth
Recent Developments
Nov 10, 2024 - Services Sector Growth
- Economic activity in the services sector expanded for the fourth consecutive month in October 2024, according to the Services ISM Report on Business. The Services PMI registered 56% in October, up 1.1 percentage points from September. Fourteen of the 18 services industries reported growth in October, including Retail Trade; Information; Transportation & Warehousing; Accommodation & Food Services; Finance & Insurance; Construction; Mining; Public Administration; Utilities; Real Estate, Rental & Leasing; Educational Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Wholesale Trade. Sales for hobby, toy, and game stores declined 2.7% in June 2024 compared to a year ago and were down 3.6% from the previous month, according to the US Census Bureau. Toy, hobby, and games stores have yet to benefit from an increase in consumer spending, which grew 2.6% in June 2024 compared to a year ago and was up 0.2% from the previous month, according to the Bureau of Economic Analysis. Producer inflation for hobby, toy, and game stores rose 4.7% in July 2024 year over year, according to producer price data from the Bureau of Labor Statistics (BLS). Employment by hobby, toy, and game retailers was flat in July 2024 compared to a year ago.
- The US hobby, toy, and game stores industry is projected to grow at a CAGR of -0.5% between 2024 and 2028, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is slower than the overall economy‘s anticipated growth. The report noted that consumer confidence is expected to improve in the forecast period, which bodes well for the retail and wholesale industries. Factors that continue to limit consumer spending are lower consumer sentiment levels, higher interest levels, and elevated price levels. On a positive note, inflation is subsiding, which supports a moderate increase of real disposable income by about 1.9% in 2024 and 2.4% in 2025. Retailers have seen internet sales increasingly grow in share since the pandemic, growing from 12.8% of total sales in February 2020 to 17.9% in April 2024.
- Toys R Us is expanding its reach with a number of planned shop-in-shop locations at Navy Exchange (NEX) stores, according to Chain Store Age. Toys R Us, owned by WHP Global, will open its first shop-in-shop locations in fall 2024 with stores in Virginia Beach, Va., and Jacksonville, Fl., with more planned in 2025. WHP Global has been growing store locations since it acquired the company in 2021. Other deals include a partnership with Mexican retailer El Puerto de Liverpool for Toys R Us locations in Mexico, a licensing agreement with Britain’s WHSmith for shop-in-shop locations, and a partnership with Go! Retail Group for up to 24 flagship stores in the US. Babies R Us is also expanding. Earlier this year, a deal between Babies R Us and Kohl’s will bring Babies R Us shop-in-shops to 200 Kohl’s locations.
- The US toy retail sales declined slightly in the first four months of the year compared to a year ago but remained higher than 2019, according to market research firm Circana. Toy industry dollar sales were down 1% from January 2024 to April 2024, though they performed better than the broader general merchandise category. Toy sales are still 38%, or about $2 billion, over 2019's sales levels. The top-selling toy for the four-month period was Squishmallows plush toys, while trading cards topped the list of the new toys. The top supercategories for dollar growth per Circana were building sets (led by LEGO Icons), explorative toys (led by Miniverse), and vehicles (led by Monster Jam). The adult toy market (buyers aged 18 and older) has been growing since the pandemic, contributing $1.5 billion in sales in the first quarter of 2024, overtaking the 3-to-5-year-old segment to become the most important age group for the toy industry. According to Juli Lennett, VP and toy industry advisor at Circana, "Tailwinds, like the growing adult toy market and spending power of higher income households and grandparents, drive positive trends. However, headwinds like rising household debt, slowing GDP growth, and fluctuating consumer confidence indicate potential challenges.”
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