Arts and crafts retailer Michaels to enter Etsy’s business

Arts and crafts retailer Michaels has plans to compete directly with marketplaces such as Etsy that host some of its best customers: makers.

The Irving-based retailer is preparing its digital platforms to begin to sell customers’ creations by mid-2022.

Michaels Cos. CEO Ashley Buchanan mentioned that the plans were in the works Thursday while speaking at the Texas A&M Retailing Summit in Dallas and later confirmed more details in an interview.

“Makers have been giving us feedback. They’re finding friction points and we’re responding,” Buchanan said. Michaels has “hundreds of coders around the world working to completely revamp and recode our website and app.”

The move represents an evolution of Michaels’ efforts to cater more to artists and crafters who make money selling their creations either through hobbies or small businesses.

Ashley Buchanan, chief executive officer of the Michaels Cos, at the retailer’s new headquarters in Irving. (Ben Torres / Special Contributor)

Etsy’s sellers have been selling craft supplies for a few years. In its more recent annual report, Etsy said that craft supplies are one of the top six categories sold by its sellers and represented sales of just over $1 billion in 2020.

Etsy, which had revenue from its marketplace of $1.73 billion, says its sellers’ biggest category is “homewares and home furnishings,” which represented sales of more than $3 billion. Etsy’s shares gained 44% so far this year after soaring last year.

Michaels went private in April and is looking for new sources of revenue. The retailer’s new owners are encouraging Michaels to take “thoughtful risks,” Buchanan said.

Michaels had sales of $5.27 billion last year and its same-store sales increased 4.8% from the prior year as stay-at-home mandates inspired more people to try crafts and entertain children with hands-on projects.

Irving-based Michaels operates 1,260 arts and crafts stores.

Michaels, which operates 1,200 stores in the U.S. and Canada, built up its online business last year and turned its stores into fulfillment centers as households sought out craft activities during the pandemic.

Its biggest and most direct competitor is Oklahoma City-based Hobby Lobby, which operates 900 stores in 47 states but doesn’t disclose annual revenue. Buchanan said Hobby Lobby is its most direct competitor with an almost 100% overlap in assortment but more of a home décor mix than Michaels, he said.

Michaels has a big edge over Hobby Lobby online, he said. “We view our approach to digital and e-commerce as a huge factor.”

Ashley Buchanan, 47, chief executive officer at arts and crafts retailer Michaels, took over just before the pandemic hit.

Most of Amazon’s craft supplies are sold by third-party sellers, but it does fulfill yarn directly. Walmart’s craft business is limited, and Joann’s overlap with Michaels assortment is about 35% since its business mostly about sewing. Joann’s operates 855 stores and went public in March.

Going into a new business subjects Michaels to established competitors led by Etsy, eBay, Shopify and Amazon, but Buchanan says he’s not worried about going up against others already hosting makers in the market.

“You could say they will have more competition,” he said.

Twitter: @MariaHalkias

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Flavor Fans, nnWe are building a new Bahama Buck's @ 1842 Precinct Line Road, Hurst, TX. Unfortunately, in the meantime,...

Posted by Bahama Buck's on Tuesday, September 28, 2021

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