Hobby Lobby entering a crowded craft field in
North Jersey
JULY 5, 2014
LAST UPDATED: SATURDAY, JULY 5, 2014, 3:39 PM
BY JOAN VERDON
STAFF WRITER
THE RECORD
Hobby Lobby, which opened its first North Jersey store on Route 46 west in Totowa on
Thursday, three days after winning a landmark Supreme Court decision upholding the
religious rights of closely held for-profit corporations, is entering a market with three
veteran competitors, Michaels, Jo-Ann Stores and A.C. Moore.
JOAN VERDON/STAFF
Merchandise at the Totowa store, which opened on Thursday.
In addition, retail experts said, Hobby Lobby is entering a region where there are lots of
places to shop, and plenty of other stores that carry craft and home décor items along
with other products.
"There are a number of competitors that are already well established in northern New
Jersey," said Ray Cirz, senior managing director of Integra Realty Resources, a leading
commercial real estate valuation firm, with offices in Whippany and New York City.
"And you have indirect competitors, too, like Walmart," he said.
There are 10 major crafts stores in Bergen and Passaic counties, in addition to retailers
such as Walmart, Target and Toys "R" Us that sell crafts and activity kits.
The three biggest craft specialty chains — Michaels, Jo-Ann Stores and Hobby Lobby —
are vying for a piece of a pie that research firm IBISWorld estimates will have annual
growth of less than 2 percent over the next four years. In a report on the fabric, craft and
sewing supplies stores, IBISWorld said discounters such as Walmart and Target, and
online retailers have cut into revenue at the specialty stores, with average profit margins
of only 1.9 percent in 2013. But, IBISWorld said, that pressure has been offset somewhat
by an increased interest in crafts, especially do-it-yourself fashion activities such as
sewing or making accessories such as jewelry.
Cirz said Hobby Lobby, because its prices are low and profit margins are slim, generally
needs to look for less expensive real estate for its stores, which has kept it out of the
pricier retail areas, such as Paramus. Hobby Lobby's New Jersey locations have tended
to be in more modest-rent areas. "I would think that Paramus is too high of a rent
district for them to be successful," he said.
Square feet
Michaels stores, in contrast, tend to be smaller and located in more densely populated,
higher-income areas. Michaels has stores in Paramus, Wayne, Edgewater, Ramsey and
Clifton. The Totowa Hobby Lobby has 43,000 square feet of sales floor space, while a
typical Michaels is in the 30,000-square-foot range.
Retail analyst Howard Davidowitz said the chains such as Hobby Lobby are positioned
well for the current economy, when Americans are still feeling strapped financially and
looking for lower-cost activities such as crafts.
"People want to do things at home, and people are looking to spend less money," said
Davidowitz, chairman of Davidowitz & Associates, a national investment banking and
retail consulting firm based in New York City.
"This category has caught the imagination of the consumer," Davidowitz said. "The
category continues to grow and continues to be successful."
Davidowitz doesn't think the Supreme Court decision and threats of boycotts by
opponents will impact Hobby Lobby's sales. "Nobody's going to boycott anything," he
said.
According to IBISWorld, Jo-Ann Stores is the market leader in fabric, craft and sewing
supplies, with a 26.1 percent share. It gives Michaels a 20.4 percent share and Hobby
Lobby a 10 percent share. In North Jersey, Hobby Lobby also faces competition from
A.C. Moore, based in Berlin, with 140 stores on the East Coast, including three in North
Jersey.
Email: verdon@northjersey.com
http://www.northjersey.com/news/business/hobby-lobby-s-gamble-1.1046693#sthash.5ry22Z5o.dpuf