Hobby, Toy and Game Stores NAICS 459120

May 5, 2025 - Slower Growth Forecast

• The US hobby, toy, and game stores industry is projected to grow at a CAGR of 3.55% between 2025 and 2029, 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 retail and wholesale sectors are driven by consumer spending, along with expenditure by businesses and government. A factor that may limit consumer spending is higher tariffs on consumer goods. On a positive note, lower inflation supports a moderate increase of real disposable income by about 2% in 2025 and 1.9% in 2026. Real income could suffer if prices rise due to tariff implementation. The forecast said retail spending could soften with the growth of spending on consumer services, but noted that consumers so far have maintained spending on goods even as travel and live entertainment spending has risen.
• According to a report in Retail Dive, the US toy industry may see devastating effects from tariffs, including the closure of many toy businesses. The Trump administration has raised duties on imports from China to a total of 145%; China accounts for about 80% of the toys imported into the US. A recent survey by The Toy Association showed that nearly half of small-and-medium-sized toy businesses said they may shutter due to the current tariff policies, which have frozen the toy production supply chain. Toys typically have a low price point, with over two-thirds of products priced under $25, and margins are typically thin. With the high tariffs, many toy companies cannot absorb the additional costs and are expected to pass the costs to consumers. “The costs of those goods are going to skyrocket,” according to Greg Ahearn, president and CEO of The Toy Association. According to the report, Isaac Larian, the CEO of MGA Entertainment, a large private toy maker which makes Bratz, L.O.L. Surprise, and Little Tikes, said he would have to lay off workers if the tariff situation does not improve. While the company does make goods at its US factories, about 65% of MGA Entertainment’s toys are imported.

• Intense competition and inventory management problems contributed to the demise of leading craft retailer Joann, which is closing its 800 stores by May 2025, according to an NPR report. The 82-year-old company had filed for Chapter 11 bankruptcy twice in less than a year, most recently in January 2025, amid declining sales and deteriorating market conditions. The retailer is part of a trend of higher retail closures, which are expected to reach 15,000 in 2025, and continuing bankruptcy filings. Joann had seen a resurgence during the pandemic when consumers looked to occupy themselves with crafting projects, but conditions soured post pandemic when rising inflation led to lower consumer spending. The craft store industry has continued to evolve in the past decade as competition from Michaels and Walmart increased and competitor Hancock Fabrics shut down. Joann’s closing may lead to more customers for big chain retailers, online outlets, and local businesses.
• Long-tail effects from Covid-19 on retailers include fewer hirings, and higher store closures and bankruptcy filings, according to a recent report in Retail Dive. Store closures are expected to be worse in 2025 than in 2020. Per Coresight data, 15,000 stores are expected to permanently close in 2025 compared to 9,698 in 2020 at the height of the pandemic. The high levels of closures are due to a combination of factors including the lingering effects of the pandemic, a weak housing market, the overflow impacts from bankruptcies, and competitive pressures from companies such as Temu. The pandemic environment and its recovery period caused tremendous stress for some retailers, which is still driving retail bankruptcy filings. Hirings in 2024 were 40% lower than in 2019, as the pandemic shifted how firms staff and operate their stores. Retail staffing decisions are also influenced by ongoing economic uncertainty and falling consumer confidence. The pandemic kicked off explosive growth for e-commerce; e-commerce as a percentage of total retail sales (excluding automotive) grew from 15% in Q4 2019 to 22% in Q4 2024. The e-commerce growth curve is maturing and expected to plateau around 35% in the next decade, according to a report from FTI Consulting. In addition, hard-hit categories such as electronics and home, which suffered some retail whiplash due to consumers’ pulling back on spending mid-pandemic, may be close to a recovery.