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
Jan 10, 2025 - Toys R Us to Open Latin American, Caribbean Locations
- 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.
- Hobby, toy, and game retailers will have to monitor minimum wage changes in 2025, as 21 states and 50 local jurisdictions increased their minimum wages, according to Chain Store Age. States with the highest minimum wage in the US are Washington ($16.66 per hour), California ($16.50), and New York ($16.50). Nearly 30 cities in California and seven towns in Washington will raise minimum wages in 2025, with Tukwila, Washington, offering the highest minimum hourly wage in the US at $21.10. Some retailers, such as Hobby Lobby, keep their minimum wages high to attract help and reduce turnover. Hobby Lobby raised its minimum full-time hourly wage in October 2024 to $19.25. Hobby Lobby was one of the first retailers to establish a national company minimum hourly wage above the federal minimum wage. Unchanged since 2009, the federal minimum wage is $7.25 an hour, and some 20 states, primarily located in the South and the Midwest, use the federal minimum as their wage floor. According to the Economic Policy Institute, the minimum wage increases will affect more than $9 million workers and raise pay by a combined $5.7 billion.
- 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.
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