Michaels is jumping into the void left by the collapse of Joann, announcing Thursday that it’s buying the fabric retailer’s private label and drastically expanding its sewing selection. In a press release, Michaels said that searches on its website for the word “fabric” have jumped nearly 80% over the past year and “sewing” has increased by about 40%, prompting the retailer to make a “significant investment” in the category in hopes of attracting Joann’s fans. In response, Michaels is adding 600 products across several categories, including sewing and quilting supplies, fabric and yarn as well as sewing machines. So far, 680 of its 1,300 stores have received the increased selection, with plans for 280 more locations by the end of the year. Shoppers will also begin to see products from Joann’s fan-favorite “Big Twist” yarn and fabric private label as part of the deal. The lineup is being “developed as part of Michaels portfolio of brands and will be available in-stores and online later this year,” the company said. “This acquisition allows us to better serve both new and existing customers, respond to rising demand across categories, and build on our momentum as the destination for creating and celebrating in North America,” said Michaels CEO David Boone in a release. Michaels also bought Joann’s intellectual property, including its name, although no specific plans were announced for that. Joann’s 800 brick-and-mortar stores have all closed over the past few months. This isn’t the first time Michaels is taking advantage of the collapse of a rival. In April, the closure of about 700 Party City stores prompted Michaels to expand its selection of balloons and other celebration-themed supplies. Despite the expansion into new categories, financial consulting firm Debtwire said that it added Michaels to its “Retail Distressed Watchlist” because of the toll on tariffs, since 75% of its suppliers are from China. However, Michaels is privately held and doesn’t give people a full look at its financials. “Purchasing the Joann intellectual property and private label brands is an inexpensive way for Michaels to expand its product line, as there were probably not many other buyers interested in those assets,” Tim Hynes, head of credit research for Debtwire, told CNN.
Michaels is expanding its fabric selection following Joann’s collapse
TruthLens AI Suggested Headline:
"Michaels Expands Fabric Selection Following Joann's Closure"
CNN
8.2
TruthLens AI Summary
Michaels is seizing the opportunity created by the recent collapse of Joann, a prominent fabric retailer, by announcing an expansion of its own fabric selection. The company revealed that searches for fabric on its website have surged by nearly 80% over the past year, while inquiries related to sewing have also increased by about 40%. In response to this growing demand, Michaels is making a significant investment in its sewing category, which includes the addition of 600 new products across various segments, such as sewing and quilting supplies, fabrics, yarns, and sewing machines. Currently, 680 of Michaels' 1,300 stores have begun to offer this enhanced selection, with plans to roll out the new offerings to an additional 280 locations by the end of the year. Among the new products will be items from Joann's popular private label, 'Big Twist,' which will be integrated into Michaels' portfolio and made available both in-store and online later this year.
In addition to the fabric selection, Michaels has acquired Joann's intellectual property, including its name, although specific plans for leveraging this acquisition have yet to be disclosed. Joann's closure of its 800 brick-and-mortar locations over the past few months has created a gap in the market that Michaels aims to fill. This strategy is not unprecedented, as Michaels previously expanded its product offerings in response to the closure of around 700 Party City stores earlier this year. Despite this growth strategy, Michaels has been placed on Debtwire's 'Retail Distressed Watchlist' due to concerns over tariffs affecting its supply chain, particularly since 75% of its suppliers are based in China. Financial experts note that acquiring Joann's private label brands and intellectual property presents an economical opportunity for Michaels, as the lack of competition for these assets likely made the acquisition more feasible.
TruthLens AI Analysis
Michaels is making a strategic move in the wake of Joann's recent collapse, positioning itself to capture a market segment that has suddenly become available. This decision to expand its fabric offerings and sewing supplies suggests that Michaels is responding to a clear demand signal from consumers, as evidenced by the significant increase in online searches for fabric and sewing materials. The article indicates that this expansion is not only a reaction to Joann's exit but also a proactive measure to enhance Michaels' brand as a go-to destination for crafting enthusiasts.
Market Response and Consumer Demand
The announcement highlights a nearly 80% increase in fabric searches and a 40% increase in sewing-related searches on Michaels' website over the past year. This suggests a growing interest in crafting, particularly in sewing and fabric-related projects. By investing in this category, Michaels aims to attract Joann's former customer base and solidify its market position. The introduction of 600 new products, including popular items from Joann's brand, underscores the intent to cater to existing and potential customers effectively.
Strategic Acquisition and Brand Development
Michaels’ acquisition of Joann's private label and intellectual property, including its name, indicates a broader strategy to leverage existing brand equity in the marketplace. Although specific plans for the use of the Joann brand were not disclosed, owning the intellectual property could provide Michaels with additional marketing and product development opportunities in the future. This strategic maneuver aligns with Michaels’ past actions, such as expanding into balloon supplies following Party City’s closures, showcasing a pattern of capitalizing on competitors' misfortunes.
Financial Implications and Market Risks
Despite the positive market response, there are underlying financial concerns. The inclusion of Michaels on Debtwire's “Retail Distressed Watchlist” due to tariff impacts presents a cautionary note. With 75% of its suppliers based in China, Michaels faces potential supply chain vulnerabilities that could affect profitability. This financial strain could play a role in the long-term sustainability of its expansion efforts.
Community and Economic Impact
Michaels is tapping into communities of crafters and sewing enthusiasts, aiming to cultivate a supportive environment for these groups. The expansion may foster a sense of loyalty among customers who are looking for alternatives following Joann’s closure. The potential economic impact could range from job creation due to increased store inventory needs to shifts in consumer spending patterns as Michaels seeks to dominate the crafting market.
Political and Global Context
The news reflects broader economic trends, particularly in retail and consumer goods sectors, where shifts in supply chains and market demands are increasingly scrutinized. As Michaels navigates these challenges, the implications of tariffs and international trade policies may also influence its operational strategy and pricing.
Technology and AI Influence
While the article does not explicitly mention the use of AI in crafting the news, it’s possible that AI tools were employed for data analysis regarding consumer trends and market conditions. Such technologies could have informed Michaels' decision-making process, especially in understanding shifts in consumer behavior and preferences.
The overall credibility of the article appears strong, as it is based on verifiable trends and statements from Michaels' CEO. However, the emphasis on market challenges and the mention of the distressed watchlist suggests that the narrative also serves to promote a sense of urgency around Michaels’ new strategy. The potential for market manipulation exists, given the competitive nature of retail, but the overall tone remains informative rather than alarmist.