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 4,600 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 21 workers, and generates $3-4 million annually.

    • The hobby, toy, and game store industry consists of about 4,600 firms that employ 98,500 workers and generates about $17.3 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 Tru Kids (new parent of Toys ‘R’ Us), 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Dec 4, 2022 - Retailers Find Benefits In Higher Inventory Levels
                                  • Many retailers are discounting, canceling orders, and otherwise reducing a glut of goods filling their stores and warehouses, but some are embracing their higher inventory levels, according to The Wall Street Journal. The tactic appears to have paid off for the Black Friday shopping holiday. Real-estate services firm CBRE Group said that its survey of 13 malls and outdoor shopping centers it manages found no problems with shortages during Black Friday this year. The overall retail sector’s ratio of inventories to sales, a measure of how much companies have in stock compared with what they sell, remains tight by historical standards, however. The most recent Census Bureau data show the ratio was at 1.25 in September 2022, compared with 1.47 in September 2019.
                                  • Retail sales are expected to increase between 6% and 8% year over year from November 1 through December 31 to between $942.6 billion and $960.4 billion, according to the National Retail Federation (NRF). The figures exclude spending at car dealers, gas stations, and restaurants. Sales increased 13.5% year over year in 2021 and totaled $889.3 billion. Consumers, especially lower-income shoppers, are grappling with higher prices this year on a range of necessities, but they are still spending, said the NRF. Sales volume—or amount of items purchased—is also expected to increase from last year. NRF noted that some holiday shopping may have started before November, as retailers have pushed holiday deals earlier each year, in part to boost overall spending.
                                  • Retailers are focusing on delivering packages to customers on specific dates this holiday season, rather than competing on delivery speed, according to The Wall Street Journal. Experts say that a race for e-commerce delivery speed has narrowed retailers’ sales profit margins. Inflation-conscious consumers now dialing back their online shopping, however, so many retailers are focused on restraining the high costs of fulfillment and last-mile delivery. Online shoppers are now more willing to wait for certain deliveries, having gotten used to supply-chain disruptions at the height of the COVID-19 pandemic, said Terry Esper, associate professor of logistics at the Ohio State University’s Fisher College of Business.
                                  • Retailers are promoting their readiness to meet demand this holiday season. Experts say that the heightened readiness is partly due to higher-than-usual levels of inventory across the board as a result of delayed orders from Q1 and Q2 that have only recently arrived, compounding existing orders for the season. Current economic trends such as inflation will likely encourage consumers to spread out their shopping over a longer time period, according to Neil Saunders, managing director of GlobalData. He added that shopping earlier also mitigates the risk of order delays due to supply chain challenges.
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