Hat Store Business Overview

Hat stores sell various types of headwear, including caps, fashion hats, sun protection hats, and winter hats for men, women, and children, through retail locations or online platforms. These businesses focus on providing a range of styles, sizes, and brands to meet different customer needs and preferences. A hat store’s inventory typically includes products at different price points, from affordable baseball caps to high-end fashion hats.

The most common business models in hat retail include:

• Independent Specialty Store: Local shops focusing solely on hats and related accessories with personalized service and curated selections
• Mall-Based Chain: Retail locations in shopping centers and malls offering popular brands and diverse hat selections
• Sports-Focused Hat Store: Retailers specializing in team-branded caps and sports-related headwear

Related: Checklist To Start A Business

How Do Hat Stores Make Money?

Hat stores generate their main revenue through retail sales, with profit coming from the markup between wholesale and retail prices. A typical hat store purchases products from manufacturers or wholesalers at 40-60% below retail price.

Additional revenue sources these businesses might use include:

• Customization Services: Embroidery, patches, or personalization options for hats and caps
• Accessories Sales: Related items such as hat boxes, cleaning products, and hat care accessories
• Wholesale Distribution: Selling products in bulk to smaller retailers or organizations
• Hat Cleaning Services: Professional cleaning and restoration of different types of hats
• Private Label Products: Store-branded hats manufactured exclusively for the retailer

Industry Statistics

Hat and cap stores sell a variety of headwear for men, women, and children. The industry falls under NAICS code 458110 – Clothing Clothing Accessories Retailers. Here are some statistics that show how this industry has performed in recent years.

Hat Store Industry Size & Growth: The specialized hat and cap store industry generated $3.5 billion in revenue last year. However, the industry experienced a decline in revenue, with an average annual decrease of 2.2% over the previous five years. This decline reflects a shift in where consumers purchase their headwear—moving away from dedicated hat stores to online marketplaces, department stores, and general clothing retailers.

While overall hat sales remain strong across all retail channels, traditional hat stores’ portion of these sales is decreasing. This redistribution of hat sales across different retail channels indicates that specialized hat stores will likely continue to see declining revenue over the next five years. (IBISWorld)

Number of Hat Stores: There are 10,672 hat and cap stores currently operating. The industry remains spread out among many small businesses, with no single company controlling a large portion of the market. Most businesses operate as independent retailers or small regional chains, with some larger retail groups having dedicated hat departments. Online-only retailers continue to join the market, adding to the total number of businesses. (IBISWorld)

Hat Store Profit Margin: Hat stores typically see gross profit margins between 40-50% on their merchandise. After accounting for operating expenses, net profit margins generally range from 8-12% for well-managed stores, whether operating online or in physical locations. (IRS)

Costs To Start a Hat Store

Starting a hat store typically costs between $50,000 and $150,000. This range includes the basic necessities to open a retail location and stock it with inventory. The actual amount will depend on factors like location and store size.

There are several expenses involved with opening a hat store, but here are some of the larger costs to consider:

Initial Inventory: The starting inventory for a hat store usually ranges from $20,000 to $50,000. This amount allows for a good selection of different hat styles, sizes, and brands to attract customers. Most suppliers require minimum order quantities, and having variety is important for meeting different customer preferences.

Retail Space and Buildout: Commercial retail space and store renovations typically cost between $15,000 and $45,000. This includes items like display fixtures, lighting, mirrors, and other necessary retail equipment. The space needs proper fitting areas and display sections to showcase different hat styles effectively.

Store Fixtures and Equipment: Display cases, shelving, mannequin heads, and point-of-sale systems generally cost between $10,000 and $25,000. Quality fixtures help protect inventory and create an appealing shopping environment. The point-of-sale system needs to handle transactions and track inventory.

Security System: Security equipment and installation usually cost between $2,000 and $5,000. This includes surveillance cameras, security tags, and anti-theft devices to protect merchandise from shoplifting.

These estimates provide a general idea of startup costs, but actual amounts will vary.