Hobby & Craft Retail Industry Trends

Declining Retail Prices

Retail prices for toys, games, hobbies, and playground equipment declined 25 percent between 1998 and 2005. Large mass merchandisers expand toy and seasonal merchandise departments during Christmas, and price popular toys at a loss to drive store traffic. Toy stores must match pricing to compete, and hope to generate profits on less popular and specialty toys.

Declining Employment

Industry employment declined almost 7 percent between 2000 and 2004, driven primarily by recession effects on large and small toy stores. Intense price competition from mass merchandisers and consumer electronic stores has forced small toy stores and large chains like Toys "R" Us to close locations. Large craft retailers have expanded due to lack of major competition and diversified product offerings.

Increasing Popularity of Electronic Entertainment

Children are maturing faster and abandoning traditional toys earlier in favor of consumer electronics and video games. Sales of traditional toys decreased 2 percent while sales of video games increased almost 6 percent in 2005, according to the Toy Industry Association (TIA). Toy stores must accommodate cyclical demand for video games, which depend highly on new hardware platforms about every five years.

Increasing Popularity of Crafts

Four million new people take up crafts every year, according to the Craft and Hobby Association (CHA). More craft-oriented TV shows, websites, books, and magazines make crafting accessible to a wider audience. Cable stations like HGTV (Home and Garden Television) and DIY (Do-It-Yourself Network) provide new ideas and help increase the popularity of crafts.

Expansion of Hobby Store Chains

Market growth for crafts and hobbies has resulted in geographical expansion by large and regional chains. Between 1997 and 2005, AC Moore added over 90 stores; between 2001 and 2005, Michaels added over 200. Both companies anticipate continued expansion.