Yarn Shop Business Overview

A yarn shop sells knitting, crocheting, and other fiber craft supplies to crafters and hobbyists. These retailers provide yarns of various fibers, patterns, tools, and accessories while often fostering a space for the crafting community.

The most common types of business models in the yarn shop industry include:

• Brick-and-Mortar Only: A physical store location that stocks yarn and supplies, and offers in-person shopping experiences
• Online and Physical Store: A combination of digital and physical retail spaces to reach both local and remote customers
• Online Only: A digital storefront that ships yarn and supplies directly to customers
• Studio and Shop: A retail space combined with an area for classes, workshops, and community gatherings

Related: Checklist to Start a Business

How Do Yarn Shops Make Money?

Yarn shops generate income through multiple channels that serve both casual crafters and dedicated fiber artists. The revenue streams vary based on the shop’s location, size, and business setup.

The most common ways yarn shops bring in money can include:

• Product Sales: The primary source of revenue comes from selling yarn, needles, hooks, and patterns. This typically represents the largest portion of income because yarn shops stock hundreds of products that customers need regularly for their projects.
• Class Registration: Teaching knitting, crocheting, and other fiber arts through scheduled courses brings in additional revenue through registration fees.
• Private Lessons: One-on-one instruction sessions allow shops to offer personalized teaching at premium rates.
• Project Kits: Bundled packages containing yarn, patterns, and necessary tools for completing specific projects create additional sales opportunities.
• Community Events: Hosting knitting circles, craft nights, and special workshops generate income through attendance fees while building customer relationships.
• Pattern Sales: Offering original or curated patterns for purchase, either as digital downloads or printed copies.
• Notions and Tools: Selling accessories like stitch markers, row counters, and project bags supplement yarn sales.

Industry Statistics

The yarn and fiber craft retail industry operates under NAICS code 45113 – Fabric, Craft & Sewing Supplies Stores. This retail segment provides products and services for knitting, crocheting, and other fiber arts enthusiasts. Here are some details about the current state of the industry:

Industry Size & Growth: The fabric, craft, and sewing supplies retail sector generated $5.1 billion in revenue last year, with a modest annual increase of 0.2% over the previous five years. The industry shows steady potential for growth due to rising consumer interest in DIY crafting and personalized projects (IBISWorld).

Market Demographics: Approximately 45 million Americans possess knitting or crocheting skills, with one-third of these crafters purchasing supplies monthly, creating a substantial customer base for yarn retailers (We Are Knitters).

Yarn Shop Profit Margin: Businesses in this sector typically maintain profit margins between 6% and 10% after accounting for overhead costs, inventory, and operating expenses (IBISWorld).

Also See: Ideas for Naming a Yarn Shop

Costs To Start a Yarn Shop

Starting a yarn shop could cost between $10,000 and $85,000, with online-only stores on the lower end and physical retail locations on the higher end.

Here are some of the main costs to consider when starting a yarn shop:

Initial Inventory: Opening inventory ranges from $3,000 to $35,000. Online stores can start with a smaller selection, while retail stores need more extensive stock. A new yarn shop will stock various yarn types, fiber contents, price points, needles, hooks, patterns, and accessories.

Location Setup: For physical stores, first and last months’ rent, security deposit, and basic renovations could range from $10,000 to $25,000. Online stores can avoid these costs, especially as a home-based business, but need a clean, organized space for inventory storage.

Store Fixtures and Storage: Physical stores need display cases, shelving units, and storage solutions ranging from $5,000 to $15,000. Online stores require fewer fixtures but still need proper storage systems, which could cost $1,000 to $5,000.

Equipment and Technology: Both business models need technology solutions, but costs vary. Physical stores need point-of-sale systems, computers, and security systems costing $2,000 to $4,000. Online stores require e-commerce platforms, product photography equipment, and shipping stations ranging from $2,000 to $6,000.

These estimates provide a general framework for planning purposes, but actual costs will vary based on your business model.

Resources:
The National Needlearts Association
Knitting Guild Association