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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                                  Coronavirus Update

                                  May 14, 2022 - Physical Store Sales Led Growth In 2021
                                  • Sales at physical stores grew faster than e-commerce sales in 2021, according to a New York Times analysis of US Department of Commerce retail sales data. Americans spent 18% more year over year in 2021 on food, cars, furniture, electronics, and other retail products. Online retail sales increased by 14%. The difference indicates that e-commerce lost ground last year to brick-and-mortar stores.
                                  • Hobby, toy, and game stores may face higher costs for and increasing shortages of imported items due to a wave of COVID-19 clusters in China that is resulting in lockdowns and restrictions in key manufacturing hubs. The effects of lockdowns in southern Chinese megacity Shenzhen — home to the nation’s most-important port after Shanghai — will affect the Los Angeles-area sea-cargo hubs, the busiest container gateway in the US, according to Noel Hacegaba, of the Port of Long Beach. Backups building at other ports in China may be indicate what's to come at Shenzhen, according to Alex Charvalias, of maritime-analytics firm MarineTraffic. The number of container vessels waiting to berth in the eastern city of Qingdao climbed to 22 from 9 in one week, he said, and the queue is also growing at the biggest port in Shanghai, he said. This will affect the US in the next month or so, because fewer vessels will leave for the West Coast, he added.
                                  • Scientists who study aerosols, air flow, and ventilation say that barriers intended to protect against coronavirus transmission rarely help and probably give people a false sense of security, according to The New York Times. Research suggests that in some instances, a barrier protecting a clerk behind a checkout counter may redirect the germs to another worker or to a customer. Rows of clear plastic shields, like those installed in some stores, can also impede normal air flow and ventilation. Erecting plastic barriers can change air flow in a room, disrupt normal ventilation, and create “dead zones,” where viral aerosol particles can build up and become highly concentrated. A study published in June and led by researchers from Johns Hopkins, for example, showed that desk screens in classrooms were associated with an increased risk of coronavirus infection.
                                  • Financial and investing advice company The Motley Fool says that the pandemic had largely killed the in-store experience for independent brick-and mortar toy shops. Many don't have enough square footage to allow for normal capacity, so they've been forced to limit customers, and bringing a child into a store is too risky for some parents. Many Americans who have seen their income decline during the pandemic can't afford to pay more for toys and games that may be cheaper online.
                                  • Sales at sporting goods, hobby, musical instrument, and book stores increased 3.2% month over month on an adjusted basis in March but decreased 5.7% year over year during the period, according to the US Department of Commerce. The sales data measures dollars spent at US businesses, so the increase partly reflects inflation in the cost of everyday products from food to gasoline. Consumer prices are increasing at the fastest pace in years, a phenomenon largely attributed to the uneven reopening of the global economy.
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