bryceleinan wrote: ↑April 23rd, 2024, 7:09 am
storewanderer wrote: ↑April 22nd, 2024, 1:58 pm
ClownLoach wrote: ↑April 22nd, 2024, 1:52 pm
I've never seen a Michaels close after a a Hobby Lobby opens. They are next door to each other all over SoCal and have been for a while now.
Both chains have diverged quite a bit, Hobby Lobby has a fraction of the arts and crafts merchandise it did 15 years ago when they started the western expansion. Michaels has far less home decor than they used to, no lamps anymore or small furniture, and they have really downsized seasonal goods over the years. Hobby Lobby is more of a HomeGoods minus the towels, kitchen tools, and food than a craft store.
Joann on the other hand I have seen close or downsize due to Hobby Lobby. They're definitely more negatively affected. They carry all of the same items but less of each at higher prices.
Take a look at the Carson Jo-Ann. It is probably one of the worst stores in that chain. Old House of Fabrics. I have no idea how it stays open. I think the corporation forgot to tell it to close years ago.
The issue with Michaels in Carson City is the location. This is a small market to begin with. Customers from the Carson City side will be driving out of their way past the Hobby Lobby to get to it, it is inconvenient. No impact on customers from the Minden/Gardnerville side but I am not sure how many of those customers go to Michaels, I suspect not very many. We will see how it plays out. That is part of why I proposed Michaels should consider relocating closer "in" to Carson City.
There was previously a Ben Franklin franchisee in Carson City who relocated their store there (was in a visible location in the shopping center that now has 99 Only/Grocery Outlet; that used to be a Scolaris anchor) and debranded it to "Craft Market." They closed around 2014. Their new building which wasn't visible from the road was at 2750 South Carson Street in a very odd location. They eventually closed due to owner retirement, it probably made a little bit of money. They kept a Reno location branded Ben Franklin until closing it in 2012.
That JoAnn is in a former Sprouse-Reitz location, and I agree, it is probably going to wind up closing with Hobby Lobby coming to town. Ben Franklin was a great store when it was here - I remember going there a lot while I was a student at Corbett and Mark Twain Elementary in the late 80s/early 90s. We had a neighbor that worked at the Coast-to-Coast next door.
Outside of Best Buy and In-N-Out, I rarely go to the shopping center where Michael’s is - it’s too far out. I also tend to go to the north Walmart more for the same reason, even Costco is a bit of a stretch.
Thing is these craft stores all do very little business. Basket size is probably $20 or less. Doing the math on Michaels their entire chain does $5.2B a year and they have 1290 stores. That means an average Michaels brings in only $4 million a year. Every Costco in the west does the same amount of business in any given 5 day period as a Michaels does in a year.
Joann does $2.4B a year and they have 815 stores with a real mix. Many are larger buildings than any Michaels, some are larger than Hobby Lobby for reasons I cannot comprehend. That puts an average Joann at just less than $3M a year in revenue. Once again a Friday, Saturday and Sunday at any Costco is equal to one year of that Joann sales.
Based on what you are all saying I would assume these stores do half of chain average.
So not only would it cost many times annual revenue to relocate either store, which would never be profitable, ironically it would also likely cost more than a year or two of annual revenue to close such a store unless it's at end of lease since typical early severance is a few million dollars... And then you have to take the loss on the inventory liquidating it or moving it at great cost.
This is why you don't see much remodeling, updates, or relocations that happen with these craft stores. The new Joann prototype is beautifully done but I would imagine the build out is $7M to $10M and requires an average Bed Bath And Beyond size box around 40K Sq ft. Michaels new stores are really bare bones in small boxes like former Rite Aid stores, plain concrete floors and block walls with cheap looking fixtures and self checkout only so maybe they're only spending a couple of million. Either way the costs to move for such a small market are too high, and ironically the costs to close are probably too high for both chains. Considering Joann is in bankruptcy and chose not to close this store for free by rejecting the lease, they probably either own it or have a dirt cheap lease since it's a dirty old store. In both cases they can probably break even and it sounds like neither location would be in demand by another retailer so both chains could probably work their landlords hard on rent decreases at renewal time with Hobby Lobby now in town. The landlords would probably be better off keeping them for less rent versus having to spend money to bring either building up to modern standards to entice a new tenant to take over.