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 $4-5 million annually.

    • The hobby, toy, and game store industry consists of about 4,500 firms that employ 106,200 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 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 1, 2024 - Hello Kitty, LEGO Top Fastest-Growing, Most Valuable Brand Lists
                                  • Several toy brands saw significant growth in 2023-2024, including Hello Kitty (27%), One Piece (18%), Hot Wheels (13%), LEGO (6%), and Barbie (3%), according to a new report by Brand Finance. The Hello Kitty brand, in particular, has benefited from massive exposure and immense popularity in its home market, generating strong sales growth. Brand Finance also released its top 10 list of most valuable toy brands in 2023-2024, with first place LEGO increasing its brand value by 6.5% to $7.9 billion. LEGO has been the most valuable toy brand for ten consecutive years. “Fueled by a year of solid sales growth, the brand has opened 147 new LEGO-branded stores worldwide, bolstered its digital presence, and rolled out innovative new product lines,” per the report. LEGO is followed in value by Bandai Namco, Barbie, Fisher-Price, Hot Wheels, Nerf, Dragon Ball, Mobile Fighter G-Gundam, Mattel, and Hatchimals.
                                  • Consumer confidence levels fell in April 2024 from March 2024, marking a third consecutive month of weakness, according to data from The Conference Board. The Conference Board’s consumer confidence index was 97 in April 2024 from 103.1 in March 2024. According to Dana Peterson, Chief Economist at The Conference Board, “Confidence retreated further in April, reaching its lowest level since July 2022 as consumers became less positive about the current labor market situation, and more concerned about future business conditions, job availability, and income.” Peterson added that confidence declined among consumers of all age groups and for all income groups except those in the $25,000 to $49,999 range. Plans for vacations, home purchases, and large appliances decreased on a six-month basis.
                                  • Global toy sales were up 26% in 2023 compared to 2019, but experienced a 7% decrease from 2022, according to Circana’s Retail Tracking Service. The report examined sales performance across 12 global markets, including Australia, Belgium, Brazil, Canada, France, Germany, Italy, Mexico, Netherlands, Spain, the United Kingdom, and the United States. Licensed toys accounted for nearly a third of the total toy market, with the highest-performing properties being Pokemon, Barbie, Star Wars, Marvel Universe, and Hot Wheels. Building sets performed well, with sales growth of 4% year over year. LEGO Icons, a line of building sets aimed at older consumers, was the top-gaining property. The average selling price increased just 1% in 2023 compared to the previous year but was up 18% compared to 2019. According to Frédérique Tutt, global toys industry advisor at Circana, “With inflation at the highest level we have seen in decades and birth rates at their lowest in many countries, the global toy industry faced new challenges in 2023. Consumers across many regions had to make difficult trade-offs and reduced their spending on toys and games.”
                                  • A new report from the National Retail Federation and Appriss Retail shows returns for the retail industry reached $743 billion in merchandise in 2023, according to Chain Store Age. The return rate in 2023 was 14.5%, lower than the 16.5% in 2022 and 16.6% in 2021. The average retailer faces $145 million in merchandise returns for every $1 billion in sales. Online sales have a higher return rate; 17.6% of merchandise purchased online is returned compared to 10% for pure brick-and-mortar returns. Over 15% of holiday gifts are expected to be returned, totaling some $148 billion. Fraudulent returns account for 16.5% of total holiday returns. Types of return fraud in 2023 included returns of used, non-defective merchandise (49%), the return of shoplifted or stolen goods (44%), returns of goods purchased on fraudulent or stolen tender (37%), and return fraud from organized retail crime organizations (20%).
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