Diversifying product lines—like adding yarn to fabric and embroidery—helps shops like Fabrications Ottawa maintain steady revenue year-round.

It won’t surprise you to hear that recent changes in the retail craft market are having an effect on independent craft retailers. Besides the shuttering of JoAnn, tariffs and geo-political upheaval create uncertainty. Retail customers are broadening their crafting skills, for example knitters taking up crochet, and quilters expanding to garment sewing.

Craft store owners are facing a critical decision: should they branch out and diversify beyond their original specialty or stick with what they do best? The answer depends on a number of factors, including customer demand, local competition, cash flow, physical space, and the personal interests of shop owners and staff.

The Diversification Spectrum

Some craft businesses launch with a single focus, then gradually expand. Stitch Central in Glenside, Pennsylvania, is one example. Co-owner Danielle Gallagher met her business partner Cybele Perry at a quilt guild. Perry wanted to open a quilt store and asked Gallagher to join her. Gallagher said, “Yes, as long as we can have yarn.” This deliberate dual focus has remained since they opened in 2018.

Other stores have expanded more gradually. Fran’s Sewing Circle in Wilmington, North Carolina started as a Husqvarna/Viking sewing machine dealer set inside a JoAnn, then became a free-standing retailer. Over its 29-year history, it has evolved primarily into a quilt shop that also carries fashion fabric. It is currently situated next to a yarn store, Yarns of Wilmington,  which seems a symbiotic relationship. Now Fran’s Sewing Circle owner Frances Kertesz is adding embroidery because no one else in their area is carrying it, and she sees an opportunity to fill a niche in customer demand.

At the opposite end of the spectrum are businesses that have chosen to remain specialized. Felted Sky, a needle felting kit manufacturer that sells to both wholesale and retail consumers has “decided to stay with needle felting as our only niche”, explains owner Elizabeth Whitton.

“We are not trying to do four or five things well…we are trying to do one thing really really well.”

Stash Charlotte serves knitters and crocheters while embracing customers’ broader interests in sewing and embroidery.

Why Consider Diversification

Customer demand often drives the decision to diversify. Many shop owners report that their customers are interested in multiple crafts. Lucy McDermott of Stash Charlotte discovered early on that “my knitters and crocheters often had other needlework interests”.

She found that “for those who are strictly knitting or crochet customers, they will often bring friends with them who are interested in sewing, quilting or embroidery.”

Sometimes product line choices are more personal. Fabrications Ottawa owner Faustina Konkal says that, although they carried fabric and embroidery, the decision to carry yarn was made because she knits; they were able to add yarn when cashflow was good.

In Denver, North Carolina , bag-maker Andrea Turner purchased a yarn shop in 2024 but quickly added fabric. Now she calls Wicked Stitches and Sew Much More “a fiber enthusiast’s playground.”

Seasonal cashflow is another consideration. As Gallagher from Stitch Central observes, “a yarn store is seasonal [in winter], but it might be different in a tourist area [in terms of seasons]. It’s important to have multiple arms to balance out the slow season.” Konkal of Fabrications Ottawa concurs, saying, “having a diverse range of products helps insulate [us] from seasonality. Our revenue stays steady through each month.”

Considering Expansion

Adding new product lines requires careful planning. Shop owners use various methods to identify promising categories. Some rely on direct customer feedback—listening to what customers are asking for and what they say in casual chats in classes and shop gatherings. Others monitor social media and industry reports, while others admit to relying on instinct and person interests.

Kits or No Kits?

Kits can play a critical role in testing new categories. Sarah Ferguson of Craft Habit explains how they expanded: “We started our wholesale line with hand embroidery kits only but quickly added crochet kits and punch needle kits” when new staff brought in knowledge in those categories. She said the decision was easy because both crafts were “very popular classes in our [retail] store at the time.”

At Stitch Central in Glenside, PA, a dual focus on yarn and quilting attracts multi-craftual customers and helps balance seasonal sales.

Often, kits come not only with all materials and tools needed, but with sufficient tutorials to help the consumer without input from store staff. Kits allow stores to offer a new craft while bringing staff members up to speed on new-to-them techniques.

For manufacturers looking to expand, kits offer an opportunity to branch out not only into fabric and yarn stores, but also into gift shops and other retailers. The “grab-and-go” appeal of having all needed materials together is appealing to many. As Whitten of Felted Sky says, “A kit is easy—with one purchase you know that you have everything you need to get started vs. having to spend time learning about the materials you will need for a new craft.”

The type of kit tends to make a difference. While needle felting, embroidery and punch-needle kits may work well, some quilt shop retailers mentioned that quilt kits are a challenge. Because fabrics go out of availability frequently and because of the time it takes to create them in-store, these kits may not be a viable profit center.

Successful Diversification

Space constraints are a major factor in considering diversification. Kits, stickers, notecards, candles and other small items are often a good option because they don’t create a large physical footprint. They also provide an opportunity for impulse purchases. Fabrications Ottawa’s Konkal suggests, “if it’s under $20 they don’t think about the extra money. It’s an easy decision to add it.”  This impulse-item idea was brought up by several interviewees, with the price point being anywhere from $20 to $40.

A frequently mentioned requirement for successful diversification is having a staff member who is excited about the new category. Gallagher points out,

“it’s important to make sure you have a champion for whatever you bring in.” McDermott says, “If we can’t be enthusiastic about a product, we can’t sell it.”

Suzan Steinberg of Stonemountain Daughter & Fabrics, has a different take with regard to product champions. This long-established fabric retailer focuses on responding to customer requests and current interests.They have displays to show products and do a strong online business without paying special attention to having specific team members aligned to specific products.

Although not every employee needs to know how to do every craft, it is helpful for staff to have some expertise, and for shops to be able to offer education in their main product focus. Stitch Central offers free classes to their employees, while McDermott has built her staff strategy around this principle: “I’ve sought out others who were multi-craftual. I also cross train my staff.”

Of course, financial considerations are crucial. It takes cash to bring in new products, and without proof of success, that decision can be risky. Konkal advises retailers to be willing to get rid of items that don’t move: “Don’t be emotionally attached to a product.”

Owner Faustina Konkal at Fabrications Ottawa added yarn to the shop’s offerings based on personal passion and customer interest.

The Case for Staying Focused

Not everyone decides to embrace diversification. Melissa Galbraith is the fiber artist behind MCreativeJ, a hand-embroidery kit company that sells both wholesale and direct-to consumer. She has expanded her business going deeper into her existing categories at various skill levels, rather than offering a wider range of products.

Some shops have made conscious decisions to stick with their current offerings. In the fabric realm especially, retailers mentioned the challenge of being all things to all customers. Stitch Central evaluated carrying polar fleece but determined they couldn’t compete on price. Carrying denim and corduroy would require too much financial expenditure to be able to offer a deep enough selection, so those fabrics were rejected as well.

Steinberg from Stonemountain & Daughter Fabrics says,

“I’m going to do what I can do and not worry about what I can’t do”.

One person mentioned that JoAnn lost its focus when it tried to carry too many product lines. “And look how that turned out.”

Education, Education, Education

Most independent craft store owners emphasize that their competitive advantage lies in community and education. Classes, video tutorials, and providing edutainment help sell sewing machines and other products.  Offering educational support for new product categories can help ensure their success.

Being able to provide knowledgeable, personal service is what sets smaller retailers apart from the larger retail and online behemoths.

Looking Forward

As the craft landscape evolves and consumers are left with fewer purchasing options, independent craft retailers have a chance to step into the void. As consumers broaden their crafting interests, some specialty stores may decide to diversify their offerings to meet customer demand. Others will continue to specialize, digging deeper into what they already know and that work successfully. As unique as each retailer is, there is no universal formula for success.