In response to Joann's downfall, Michaels broadens its fabric offerings.
Gearing up for the Crafting Kingdom: Michaels’ Expansion Strategy Post-Joann
Witness the inventive surge as Michaels dives into the vacant niche left by Joann's downfall, declaring on Thursday its takeover of the fabric retailer's private labels and a marked upheaval in its sewing selection.
According to a press statement, Michaels has reported a skyrocketing interest in its online fabric searches, with a staggering 80% increase in the past year, and an equally impressive 40% spike in "sewing" queries. This robust demand has instigated a substantial investment in the fabric category, aimed at luring Joann's loyal fanbase.
To accomplish this mission, Michaels plans to augment its offerings with 600 new products across myriad categories, encompassing sewing and quilting supplies, fabrics, yarn, and sewing machines. At the time of writing, 680 of its 1,300 stores have already seen the expansion, with aspirations of kicking off operations in an additional 280 locations by the year's end.
But it's not just about the numbers. Shoppers can also look forward to adding products from Joann's beloved “Big Twist” yarn and fabric line to their carts, as part of the deal. These goods will be assimilated into Michaels' portfolio and made available in-store and online, gracing retail shelves and virtual shops later this year.
David Boone, Michaels' CEO, exuded enthusiasm in his statement, declaring, "This acquisition empowers us to cater to both fresh and returning customers, cater to the escalating demand across categories, and capitalize on our burgeoning popularity as the go-to destination for creativity and celebration in North America."
In addition to seizing Joann's intellectual property, Michaels also pocketed the retail giant's intellectual properties, although specific strategies for utilizing these assets have yet to be announced. Over the last few months, all 800 of Joann's brick-and-mortar stores have bitten the dust.
This isn't the first time Michaels has seized the opportunity following a rival's demise. In April, Michaels seized the moment after nearly 700 Party City stores shut down, paving the way for an expansion of celebration-themed supplies.
Despite the strategic expansion, financial consulting firm Debtwire admitted Michaels to its "Retail Distressed Watchlist" due to the fiscal strain of tariffs, as an estimated 75% of Michaels' suppliers hail from China. However, Michaels' private ownership constrains full disclosure of its financials to the public.
Tim Hynes, head of credit research for Debtwire, shed light on the acquisition, stating, " Buying Joann's intellectual property and private label brands serves as a budget-friendly method for Michaels to grow its product spectrum, as there were probably not many other buyers interested in those assets."
In light of the acquisition, Michaels is set to broaden its offerings in the retail and finance sectors, appealing to a wider audience and enhancing its product spectrum with Joann's intellectual properties and private labels. The expansion strategy, fueled by the surge in demand for sewing and craft supplies, also includes an investment in the fabric category and the addition of popular Joann brands like "Big Twist" yarn and fabric line.
