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 4,500 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 24 workers, and generates $3-4 million annually.

    • The hobby, toy, and game store industry consists of about 4,500 firms that employ 106,200 workers and generates about $25.1 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

                                  May 2, 2023 - New Licensing Deal Between Mattel, Hasbro
                                  • Mattel and Hasbro have entered a multiyear licensing deal to create co-branded toys and games, pairing some of their top-selling brands for the first time, according to The Hollywood Reporter. Examples of upcoming co-branded products include Barbie-branded Monopoly Games, Transformers-branded UNO games, and a line of Transformers-branded Hot Wheels vehicles. Both companies have major theatrical releases in the summer of 2023, with Hasbro’s Transformers: Rise of the Beasts from Paramount coming out in June and Mattel’s Barbie from Warner Bros. scheduled for July. The deal arrives as the toy industry looks to rebound from difficulties such as the COVID-19 quarantine and supply-chain issues that followed for products made in China.
                                  • Slower consumer spending, reduced credit availability, and rising e-commerce use are expected to contribute to the closure of 50,000 stores by 2027, according to a new forecast by UBS reported in Retail Dive. The forecast assumes that 25% of online orders will be fulfilled by a retail store by 2027, up from 15% currently. The US presently has about 940,000 retail stores, excluding fuel and food service. Since January 2021, more than 5,000 stores across all retail segments have closed or are set to close due to several factors, such as higher costs and a decline in units per store. Store closures likely will disproportionately affect smaller chains. Per the UBS report, “We believe this trend should continue in the years to come, with consumers consolidating their trips and shifting towards online channels. As underperforming retail stores are shuttered, it should help the store productivity of surviving locations.”
                                  • Craft and hobby retailer Michaels has launched an online marketplace called ”Michaels Marketplace” that allows third-party sellers to list their products on the company’s official website, according to NewsBreak Original. The company plans to add 750,000 products to its online offerings through the third-party sellers. Customers using the Michaels website will see the marketplace products displayed along with the Michaels items. The third-party sellers will handle the shipping of the marketplace items. Michaels invited the first group of marketplace sellers to participate as “experienced, professional sellers in the arts and crafts space.” The website has an application for new third-party sellers interested in participating.
                                  • The global tabletop games market is expected to grow at a CAGR of 11.8% from 2022 to 2028, climbing from $34.9 billion to $48.7 billion in revenue, according to a research report from Arizton. The report found that the tabletop market has remained strong in the face of stiff competition from digital entertainment options. Growth can be attributed to the emergence of tabletop game conventions, gaming cafes, nerd culture, and an increase in millennial spending for nostalgia. Both US-style tabletop games and European-style tabletop games dominate the global market. Millennials and Gen Z are driving demand for European-style tabletop games, which are based on strategy more than luck. An example of this type of game is “Settlers of Catan,” a German tabletop game where players strategize to build settlements on the fictional island of Catan.
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