Sewing, Needlework, and Piece Goods Stores

SIC 5949

Industry report:

This category includes establishments primarily engaged in the retail sale of sewing supplies, fabrics, patterns, yarn, and other needlework accessories.

Industry Snapshot

Although a few large national chains dominate this industry, hundreds of small shops are scattered throughout the country. Because many of these small businesses are privately owned, the size of the industry is difficult to determine. In 2007, the two largest companies in this sector, Jo-Ann Stores, Inc. and Hancock Fabrics, Inc., generated approximately $2.2 billion in sales, or one-fourth of industry totals.

Because all the stores in this industry carried limited product lines, albeit deep selection within those product lines, they are classified as specialty retailers. Within the broad category of specialty retailers, the sewing, needlework, and piece goods industry is populated by two different retail formats. In the sewing and fabric category, large "super stores" are the norm. The needlework stores, on the other hand, are usually small boutique-like shops.

Although these two types of stores often carry similar products, they have different competitive priorities. While the large fabric retail chains, such as Hancock Fabrics and Jo-Ann Stores, carry large inventories of varying quality, the small independent shops focus on providing high quality products and services. Rather than competing on the basis of price, they pursue customer satisfaction strategies with low turnover rates and more sales expertise than the large chain stores. The small stores, moreover, usually carry products related to only one or two segments of the industry, such as quilting or knitting. The local stores, therefore, exude distinctive competence in service and quality, while the national chains emphasize selection and price.

An increase in the popularity of arts and crafts and a surge in home decorating in the 1990s prompted renewed growth in the sewing, needlework, and piece goods industry. Although the industry demonstrated enviable vitality, competition was intense. The attractive growth rate encouraged new entrants to the industry and convinced discount retailers to devote more resources to craft items. Retailers in this industry also compete with some hobby retailers classified in SIC 5945: Hobby, Toys, and Game Shops, that carry craft supplies such as yarn and fabric.
Faced with competitive pressure and the threat of new entrants, industry leaders worked hard to maintain market share. The businesses in the sewing, needlework, and piece goods industry were searching for new ways to gain a competitive edge. Super store conversion, increased customer service, more creative marketing, and expanded inventories were high on the agenda for these companies.

In the late 2000s, the sewing, needlework, and piece goods stores were faring better than the overall retail sector where vacant retail space increased to 120 million square feet by October of 2010. As the economy continued to weaken, consumers provided a boost for craft and hobby stores, including industry leader, Jo-Ann Fabrics where sales were holding steady.

In the late 2000s, the total number of sewing, needlework, the piece goods stores fell to 11,998, as did sales to nearly $2 billion in 2009 with industry-wide employment of 43,995 workers. Sewing, needlework, and piece goods retailers held 22.6 percent in market share with sales of $875.5 million, while fabric stores piece goods retailers accounted for 27.5 percent in market share and sales of $526.2 million. The sewing supplies industry sector captured 17.3 percent in market share with sales totaling $132.7 million.

Background and Development

Many of the businesses in this industry opened in the 1940s and early 1950s as basic fabric outlets. Carrying garment-oriented sewing supplies, these stores catered to the post-World War II mother who sewed a large percentage of her family's clothing. Throughout the 1950s and into the early 1960s, businesses in the home-sewing industry prospered. Some businesses, such as Fabri-Centers of America (now Jo-Ann Stores), were able to grow from small local enterprises into national chains by acquiring or merging with other fabric retailers. In the late 1960s, however, the home-sewing market began to decline.

The two factors that influenced the demise of home sewing were the increase in affordable "off the rack" clothing, and an increase in the number of working mothers. In the first case, the influx of inexpensive clothing, especially from Southeast Asia, virtually eliminated the cost savings associated with sewing. This cost factor, coupled with the fact that a working mother barely had time to cook and clean, made sewing a costly alternative to buying clothes. As demand for home-sewing related fabrics and notions declined, fabric retailers were forced to search for new product lines.

Fortunately for these retailers, the decline of home sewing was succeeded by a series of fads in other sewing and needlework segments. Entering the 1970s, the yarn and needlework crafts fared better than garment sewing. These types of crafts, such as knitting, typically involved less time than sewing and were convenient for time-pressed women. One critical difference between garment sewing and needlework is that sewing required a person to sit at a sewing machine, while crafts such as knitting or needlepoint are portable. Many large fabric retailers diversified into yarn crafts in response to growing demand.

The popularity of these types of crafts, especially knitting, caused a boom period in the number of small yarn shops during the 1970s. These knit shops carried full lines of yarn, knitting and crocheting supplies, and usually offered classes. Unlike the large fabric retailers that stocked average-quality acrylic yarn, the small knit shops sold a wide variety of expensive natural fibers such as mohair and cotton. While fabric chain stores targeted price-conscious customers, small shops catered to the quality-oriented consumer. This customer segmentation continued throughout the 1980s and into the 1990s.

The industry continued to evolve as different sewing and needlework segments gained and lost popularity. Successive waves of craft trends dictated store inventories. In the late 1980s, for example, quilting became popular, immediately followed by fabric painting. The 1990s saw a revival of cross stitch, embroidery, and knitting popularity. Though the colors changed year after year, the different crafts required the same raw materials such as fabric, yarn, and notions.

Like most retail industries, the popularity of discount retailers changed the competitive structure of the sewing, needlework, and piece goods industry. By the early 1990s, department stores, once the industry's primary competitors, had virtually eliminated their fabric and craft departments. In their place, however, emerged discount retailers such as Wal-Mart.

In the sewing, needlework, and piece goods industry, the influence of off-price retailers was particularly strong because the arts and crafts trend of the 1990s encouraged discounters to augment their craft departments. Shifts in consumer preferences, moreover, favored discounters. A 1996 Hobby Industry Association (HIA) nationwide consumer study revealed that the key consumer motives in the craft industry were price, merchandise selection, convenient store location, and merchandise quality, in that order. Consequently, the well-stocked discounters found themselves with an advantage over niche-oriented shops with limited selections.

By the mid 1990s, however, consumer needs and the popularity of discount retailers encouraged the national chains to re-evaluate store size and location. Hundreds of stores in this industry moved out of malls and into strip shopping centers. The new locations, which were usually 10,000 to 12,000 square feet in size, were more accessible and expansive than the traditional mall-based stores. The dizzying pace of store conversions lasted nearly a decade.

As the sewing, needlework, and piece goods industry emerged from the mid 1990s, earnings had begun to show signs of recovery from a slump earlier in the decade. Competition among the larger chains was somewhat reduced through massive store closures and the recession of the early 1990s. Conditions improved as retailers expanded craft inventories. An increase in consumer demand for home decorator fabrics and supplies also contributed to the rise in sales. By this time, many of the large chains completed store consolidation and the industry outlook began to brighten.

Fueled by continued growth in crafts, the industry saw a surge in home decorating as well. The Hobby Industry Association's nationwide consumer study for 1996 revealed that in 84 percent of U.S. households, one or more persons participated in crafts or hobbies. Moreover, an average of 4.5 craft activities were pursued among the households surveyed. In 1997, the 6,590 establishments in this industry totaled $6.6 billion in sales and employed 45,351 people.

Retailers in the industry responded to the increased demand for craft supplies by building bigger stores and by increasing selection. By the late 1990s, Hancock Fabrics had about 460 stores in 40 states, while Jo-Ann Stores operated approximately 1,050 stores in 49 states. These stores were mainly located in strip shopping centers.

In addition to expanding inventories, retailers in the sewing, needlework, and piece goods industry changed the type of goods and services they offered during the mid 1990s. Fabric retailers reduced apparel-type fabrics in favor of decorator fabrics and quilting supplies, while many yarn shops stocked more needlecraft kits than in previous years. Most notably, however, classes and in-store consultations, once the hallmark of small stores, were offered by most retailers. The addition of these services reduced the competitive advantage enjoyed by the small shops and increased the popularity of craft specialty chains.

Jo-Ann Stores partnered with Martha Stewart Living Omnimedia in 1999 to bring a line of 89 home decorating fabrics to its stores nationwide. The partnership was seen by Jo-Ann Stores to signify an important growth opportunity for them. Chairman, President, and CEO of Jo-Ann Stores Alan Rosskamm was quoted in the Akron Beacon Journal as saying "The new collection reflects our strategy to develop partnerships with highly respected, nationally known entities to further build our brand identity."

By the mid-2000s, the industry seemed permanently changed. The proliferation of inexpensive ready-made goods made sure that sewing would no longer be anything other than a hobby, as the days of necessity were over. The industry moved into the arts and crafts and home decorating sector, where creativity in sewing and needlework could be practiced, and it seemed there to stay.

In 2008, there were 14,390 sewing, needlework, and piece goods shops accounting for a total of $9.1 billion in sales. These shops had also moved away from the traditional offerings. While three-quarters of the business was still related to embroidery, to stay competitive the shops in this market were branching out into the growing screen printing and promotional product categories.

Evidence of competitive pressure in the sewing, needlework and piece goods business continues to be seen. The proliferation of new and bigger stores coupled with competition from discounters has created a difficult operating environment. Retailers responded by using promotional pricing tactics, television advertising, and more creative direct-mail circulars and catalogs. In 2005, leader Jo-Ann Fabrics planned to open about 30 new superstores, many replacing traditional stores in the same location.

Current Conditions

According to the Retail Federation, national retail sales fell 7.4 percent in November 2008 compared to the previous year. That trend continued with some 120 million square feet of retail space that became available between January 2008 and October 2010 as numerous retail stores were forced to shut their doors as the recession took a firm hold. In contrast, according to research firm, IBISWorld the total number of craft stores was on the rise. For instance, Jo-Ann Fabrics who is part of the $5.9 billion in annual revenue craft sector was contemplating signing a lease for one former Mervyns store freeing up some 25,000 square feet of vacant space. In all, the company planned to open an estimated 20 stores in 2010 and another 30 in 2011.

Thus, Jo-Ann Fabrics, the leader in craft goods with 19 percent market share was reaping the benefits of craft enthusiasts as the economy worsened and sales of sewing and craft supplies, which account for half of its revenue were on the rise as 42 million families opted to forgo shopping for Christmas gifts in place of personal hand made crafty items, according to data from the Craft & Hobby Association (CHA). The company admitted "it benefits from consumers' thrifty spending patterns and the recession, which has forced people to make cost-efficient and handcrafted purchases," cited from the Roanoke Times in July 2010. The company continued to expand signing the lease for a 22,980 square foot store in Roanoke, Virginia bringing its total to 750 stores in 48 states.

Interest in crafts and home decorating continued to spur demand for sewing, needlework, and piece goods stores as the end of the decade nears. The craft and hobby industry maintained annual sales totaling $27.3 billion in 2008 to $27.4 billion in 2009. Statistics released from CHA revealed 56 percent of U.S. households completed a minimum of one project during the coarse of 2009, with a strong showing from the home decorating with sales of more than $2.1 billion, followed by knitting and wedding and bridal crafted items.

Industry Leaders

The sewing, needlework and piece goods industry was dominated by Jo-Ann Stores (formerly Fabri-Centers of America) and Hancock Fabrics.

With fiscal year 2008 sales of $1.87 billion and 194 large-format and 580 small-format stores, Jo-Ann Stores is the leading company in the industry. The company was started in 1943 as a single fabric store in Cleveland, Ohio, and was incorporated in 1951 as Cleveland Fabric Shops, Inc. The name Fabri-Centers of America was adopted in 1968.

Fabri-Centers grew by acquiring fabric and craft stores throughout the country. These acquisitions included Sewing Shops, Inc., a ten-store chain in Washington, DC; Giltberg's Fabrics of northern Florida, Alabama, and Georgia; New York Fabrics of San Francisco; and Missouri-based Cloth-World. The company continued to operate stores in selected markets under the name New York Fabrics, though most stores used the name Jo-Ann Fabrics. Fabri-Centers acquired the 261-store House of Fabrics chain in 1998, and officially became Jo-Ann Stores to more closely align its corporate identity with that of its retail locations.

Fabri-Centers of America adopted its strategy of super store conversion in 1988, after years of ceding sales and market share to large discounters. By 1996, nearly all of Fabri-Centers 916 stores had been converted to super stores, and the total retail space had nearly doubled, from 3.2 million square feet in 1988 to more than 7.4 million in 1996. According to Jo-Ann Stores, these super stores produced higher revenues and profit margins than the mall-based stores and were entrusted with the future of the company. The traditional store format averages just under 15,000 square feet, and had per store net sales of about $1.5 million in 2007. The large-store formats are approximately 35,000 square feet and averaged $5.8 million per store in 2007.

Jo-Ann Stores operates all of its stores under the names of Jo-Ann Fabrics and Crafts or Jo-Ann etc. The Jo-Ann etc. stores are fabric, craft supply, and home decorating megastores where customers are offered demonstrations, classes, and specialized customer service. The Jo-Ann etc. stores debuted in 1996.

For fiscal 2010 that ended in January 2010, Jo-Ann Fabrics reported $66.6 million in sales. Approximately 44 percent were derived from general craft items, 26 percent constituted needlecraft and sewing items, and 20 percent from painting and finishing products.

Following behind Jo-Ann Stores is Hancock Fabrics, a Missouri-based fabric specialty store. Formerly a division of Lucky Stores, Hancock Fabrics became independent in 1987. By the late 1990s, the company operated almost 500 stores averaging 14,000 square feet. Hancock Fabrics' 2004 sales totaled $443.6 million. By March 2007, though, Hancock Fabrics had filed for Chapter 11 bankruptcy and was expected to close more than 130 stores. As of 2008, it had 300 stores in 35 states as well as an online presence. Its 2007 sales were $376 million.

While Hancock Fabrics emerged from Chapter 11 bankruptcy protection in mid-2008, the company continued to struggle with declining sales. The company's 265 stores had combined revenues reported of $276.4 million in 2009 falling slightly to $274.1 million in 2010 with 4,200 employees. To offset declining interest in sewing clothes, the company branched out offering craft and home decorating products, including drapery and upholstery fabrics and home accent pieces.

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News and information about Sewing, Needlework, and Piece Goods Stores

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...Primary services 451120-P Hobby, toy, and game store services 451120-1 Sewing, needlework and piece goods stores 45113 Sewing, needlework, and piece goods stores 451130 Primary services 451130-P Sewing, needlework, and piece goods store...
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PPI Detailed Report; September 1, 2009; 700+ words
...Primary services 451120-P Hobby, toy, and game store services 451120-1 Sewing, needlework and piece goods stores 45113 Sewing, needlework, and piece goods stores 451130 Primary services 451130-P Sewing, needlework, and piece goods store...
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...Primary services 451120-P Hobby, toy, and game store services 451120-1 Sewing, needlework and piece goods stores 45113 Sewing, needlework, and piece goods stores 451130 Primary services 451130-P Sewing, needlework, and piece goods store...
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