Arts and crafts retailer Michaels to enter Etsy’s business
Art and craft retailer Michaels plans to compete directly with marketplaces like Etsy, which host some of its best customers: manufacturers.
The Irving, Texas-based retailer is preparing its digital platforms to begin selling its customers’ creations by mid-2022.
Michaels Cos. CEO Ashley Buchanan mentioned plans were in the works Thursday when he spoke at the Texas A&M Retailing Summit in Dallas, and later confirmed more details in an interview.
“The manufacturers gave us feedback. You find points of friction and we react, ”said Buchanan. Michaels has “Hundreds of programmers around the world working to completely redesign and re-code our website and app.”
The move represents an evolution of Michaels’ efforts to accommodate more artists and artisans who make money selling their creations, either through hobbies or small businesses.
Etsy sellers have been selling craft supplies for a number of years. In its most recent annual report, Etsy said craft supplies is one of the six top-selling categories by its sellers, with sales of just over $ 1 billion in 2020.
Etsy, which had sales of $ 1.73 billion from its marketplace, says the largest category of its sellers is “housewares and home furnishings,” which had sales of more than $ 3 billion. Etsy stock is up 44% so far this year after rising last year.
Michaels went private in April and is looking for new sources of income. The retailer’s new owners are encouraging Michaels to take “considered risks,” Buchanan said.
Michaels had sales of $ 5.27 billion last year and sales in the same store rose 4.8% year over year as stay at home mandates inspired more people to try arts and crafts and children with hands-on projects to entertain.
Michaels, who operates 1,200 stores in the United States and Canada, built their online business last year and turned their stores into fulfillment centers when households looked for crafting activities during the pandemic.
Its largest and most direct competitor is Hobby Lobby, based in Oklahoma City, which operates 900 stores in 47 states but does not disclose annual revenue. Buchanan said Hobby Lobby is the most direct competitor with nearly 100 percent range overlap, but more of a home decor mix than Michaels, he said.
Michaels has a huge advantage over the online hobby lobby, he said. “We see our approach to digital and e-commerce as a major factor.”
Ashley Buchanan, 47, chief executive officer of arts and crafts retailer Michaels, took over the helm shortly before the pandemic broke out.
Most of Amazon’s craft items are sold by third-party suppliers, but yarn is supplied direct. Walmart’s craft business is limited and Joann’s overlap with Michael’s range is around 35% as it is mostly sewing. Joann’s operates 855 stores and went public in March.
Getting into a new business subjects Michael’s established competitors, led by Etsy, eBay, Shopify, and Amazon, but Buchanan says he’s not worried about competing against others who are already hosting manufacturers in the market.
“You could say they will have more competition,” he said.
Michaels says it will start selling its clients’ creations in mid-2022.
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