This category includes establishments primarily engaged in the retail sale of sewing supplies, fabrics, patterns, yarn, and other needlework accessories.
451130 (Sewing, Needlework, and Piece Goods Stores)
Although this industry was dominated by a few large national chains, hundreds of small shops were scattered throughout the country. Because many of these small businesses were privately owned, the size of the industry was difficult to determine. In 1999, the two largest companies in this sector, Jo-Ann Stores, Inc. and Hancock Fabrics, Inc., generated approximately $1.76 billion in sales—one-fourth of industry totals.
An increase in the popularity of arts and crafts and a surge in home decorating prompted renewed growth in the sewing, needlework, and piece goods industry during the 1990s. 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 competed with some hobby retailers classified in SIC 5945: Hobby, Toys, and Game Shops, that carried craft supplies such as yarn and fabric.
As the industry emerged from the mid-1990s, the business environment was changing. Small shops were experiencing increasing competitive pressure from the larger craft/fabric super stores. Consumers, moreover, were attracted to the enormous variety offered by such stores. Consequently, several smaller chains were acquired by bigger firms during this period. Consolidation was typical as many large fabric chains closed small shops and operated fewer but more expansive stores.
In the late 1990s, many firms reported increased profits with fewer but larger outlets. Significantly expanded inventories and retailers' emphasis on home decorating fabrics added a much-needed boost to the lackluster sales figures of earlier years. In 1997, the 6,590 establishments in this industry totaled $6.6 billion in sales and employed 45,351 people.
Since all the stores in this industry carried limited product lines, albeit deep selection within those product lines, they were classified as specialty retailers. Within the broad category of specialty retailers, the sewing, needlework, and piece goods industry was populated by two different retail formats. In the sewing and fabric category, large "super stores" were the norm. The needlework stores, on the other hand, were usually small boutique-like shops.
Although these two types of stores often carried similar products, they had different competitive priorities. While the large fabric retail chains, such as Hancock Fabrics and Jo-Ann Stores, carried large inventories of varying quality, the small independent shops focused on providing high quality products and services. Rather than competing on the basis of price, they pursued customer satisfaction strategies with low turnover rates and more sales expertise than the large chain stores. The small stores, moreover, usually carried products related to only one or two segments of the industry, such as quilting or knitting. The local stores, therefore, exuded distinctive competence in service and quality, while the national chains emphasized selection and price.
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 reevaluate store size and location. Hundreds of stores in this industry were 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.
These structural and organizational changes were not unique to this industry, however. These developments were typical of the retail industry overall. Competitive pressure in the sewing, needlework, and piece goods industry was, however, unusually strong.
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.
Two factors influenced the demise of home sewing: 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 was that sewing required a person to sit at a sewing machine, while crafts such as knitting or needlepoint were portable. Working mothers could work on these portable needlework projects while commuting or during their lunch hours. 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 and embroidery popularity. Though the colors changed year after year, the different crafts required the same raw materials like fabric, yarn, and notions.
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 recessionary period 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 finished consolidating stores 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, the average number of different craft activities engaged in was 4.5 among the households surveyed.
The explosion in the number of customers meant rising profits for companies in this business. During 1999, Hancock Fabrics, Inc. reported a sales increase of 2.7 percent over the previous year. Jo-Ann Stores, Inc.'s sales were up 11.2 percent from 1998.
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 the 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.
Evidence of competitive pressure in the sewing, needlework and piece goods business could be seen as the industry entered the post-1995 period. The proliferation of new and bigger stores coupled with competition from discounters created a difficult operating environment. Retailers responded by using promotional pricing tactics, television advertising, and more creative direct-mail circulars and catalogs.
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."
The sewing, needlework and piece goods industry was dominated by two companies: Hancock Fabrics and Jo-Ann Stores (formerly Fabri-Centers of America).
With 1999 sales of $1.38 billion, Jo-Ann Stores was 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.
Jo-Ann Stores operates all of its stores under either the name 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.
Following Jo-Ann Stores was Hancock Fabrics, the Michigan-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' 1999 sales totaled $381.6 million.
Although they dominated industry sales, leaders in the sewing, needlework, and piece goods business were not lacking for competition, as many stores in different retail categories offered similar products. One extremely successful competitor classified in SIC 5945: Hobby, Toys, and Game Shops was Michaels Stores, Inc., a hobby and craft retailer that enjoyed tremendous growth in the 1990s.
Faced with this competitive pressure and the threat of new entrants, industry leaders worked hard to maintain market share. As they entered the new millennium, 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.
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