Michaels Announces Plans to Expand Assortment and Lower Prices on Fabric
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The decision of Michaels to expand its fabric assortment and reduce prices represents a strategic move aimed at capturing a larger share of the arts and crafts market. The market research perspective highlights the importance of understanding consumer trends, which in this case is reflected by the 26% of arts and crafts purchasers who included fabric in their recent buys. This suggests a significant market segment that Michaels is targeting.
Moreover, the competitive landscape within the retail craft supplies industry is such that differentiation and value proposition are critical. By expanding its fabric assortment, Michaels is likely attempting to position itself as a one-stop-shop, which could increase customer loyalty and average transaction sizes. However, it's important to consider the inventory risks associated with such an expansion, as well as the potential impact on supply chain dynamics. The reduction in fabric prices could squeeze margins, so it will be essential to assess whether the increase in sales volume compensates for this.
From a financial perspective, the announcement by Michaels has several implications. The introduction of lower-priced fabric starting at $.89 per yard could attract price-sensitive consumers, potentially increasing foot traffic and sales volume. However, investors should closely monitor gross margins in subsequent financial reports to evaluate the impact of the lower pricing strategy on profitability.
Additionally, the cost implications of expanding the fabric assortment to hundreds of additional stores must be weighed against the expected incremental revenue. This strategy could lead to economies of scale if managed effectively, thereby reducing the overall cost of goods sold (COGS) per unit. It's also critical to analyze the cash flow implications of this inventory expansion and the company's ability to manage working capital efficiently.
From an industry-specific standpoint, Michaels' strategy can be seen as a direct response to the evolving needs within the DIY and craft industry. The fabric expansion taps into the growing trend of personalization and customization in consumer products. By offering a broader range of fabrics at competitive prices, Michaels is likely aiming to appeal to both casual hobbyists and more serious crafters.
It is also indicative of the omnichannel retailing approach, where physical store expansion is complemented by accessible pricing strategies that could be mirrored online. The move could potentially put pressure on niche fabric stores and other competitors who may not have the scale to match such price points. The long-term success of this strategy will depend on Michaels' ability to maintain product quality and supply chain resilience, especially as it scales up its offerings.
Enhanced fabric assortment rolling out to hundreds of additional locations starting this month
IRVING, Texas, March 06, 2024 (GLOBE NEWSWIRE) -- Michaels, the best place for all things creative, today announced plans to expand the assortment and distribution of fabric to hundreds of store locations, as well as lower prices on the current fabric offering, beginning this month.
Further establishing itself as the single destination for, “Everything to Create Anything,” Michaels continues to evolve its product assortment to cater to a wider audience of creative customers, while also filling gaps in the marketplace. According to a recent survey1,
“At Michaels, we are constantly assessing and evolving our assortment of products to anticipate the needs of our customers,” said John Gehre, Chief Merchandising Officer at Michaels. “We know that our customers prioritize value and choice, and we believe enhancing and extending our fabric offering, as well as lowering our prices, is another way we can ensure Michaels is the best place for all things creative.”
Customers can shop lower prices on Michaels current fabric assortment this month, starting at $.89 per yard. The expanded assortment of fabric begins rolling out this month and will be available in hundreds of additional store locations by fall 2024.
About The Michaels Companies, Inc.
At The Michaels Companies Inc, our purpose is to fuel the joy of creativity. As the leading creative destination in North America, we operate over 1,300 stores in 49 states and Canada and online at Michaels.com and Michaels.ca. The Michaels Companies, Inc. also owns Artistree, a manufacturer of custom and specialty framing merchandise, and MakerPlace by Michaels, a dedicated handmade goods marketplace. Founded in 1973 and headquartered in Irving, Texas, Michaels is the best place for all things creative. For more information, please visit www.michaels.com.
Press Contact:
Rachel Petersen
prcontact@michaels.com
1 General Population Survey on behalf of Michaels with 2,600 arts and crafts buyers in the U.S. in January and February 2024.
FAQ
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