Thinking of Buying a Hobby Business in Australia? Here Are 3 Vital Questions to Ask

Australia’s toy and hobby retailing sector generates $1.198 billion in annual revenue, supported by 1,755 enterprises, 2,053 establishments and 6,406 workers nationwide.

Average profit margins sit at 4.4 percent, with the industry experiencing high revenue volatility due to shifting consumer sentiment, economic pressures and competition from department stores and online-only retailers. Revenue is forecast to grow 1.37 percent annually to 2031, supported by population increases, a growing focus on indoor hobbies and ongoing demand for STEM, craft and collector categories.

The industry saw a major pandemic-driven spike in 2020 and 2021, followed by sales contraction as cost-of-living pressures reduced discretionary spending. Retailers that specialise in niche hobby categories, model kits, collectibles and STEM toys now outperform generalist toy stores.

1. Is the Hobby Store Financially Resilient in a Price-Competitive Market?

Why It Matters:

The sector faces strong competition from discount retailers, online marketplaces and department stores that use bulk-buying power to undercut prices. Profit performance has seesawed, with high pandemic-era gains eroded as consumers cut back on non-essential purchases.

Sustainable profitability depends on specialty niches, strong inventory management and loyal hobbyist customers.

What to Check:

• Revenue trends across the past three to five years, noting the pandemic-era sales spike and post-pandemic decline.

• Margin performance relative to the industry’s 4.4 percent benchmark.

• Inventory turnover rate, particularly for trend-based or seasonal hobby items.

• Exposure to discretionary spending cycles, given the industry’s high volatility.

• Whether the business has stable recurring revenue from enthusiasts, clubs or collectors.

2. Does the Business Have a Strong Product Mix and Competitive Position?

Why It Matters:

Hobby retailers succeed by specialising in categories that supermarkets and department stores cannot service well. Niche areas such as model kits, miniatures, remote-controlled vehicles, trading card games, board games and STEM learning kits support stronger margins and customer loyalty.

Broad toy retailers struggle unless they offer unique products or superior customer experience.

What to Check:

• Product diversity across traditional hobby categories, educational kits and collectibles.

• Share of sales from fast-growing categories such as STEM toys, robotics and technology-based hobbies.

• Specialisation or niche focus that differentiates the business from discount and online rivals.

• Store location relative to family areas or community hubs, noting the industry clusters strongly on the east coast where population density is highest.

• Ability to provide expert advice, demonstrations or events that build customer loyalty.

3. Is the Store Equipped for Digital Retail, Subscription Trends and Sustainability Expectations?

Why It Matters:

Online shopping continues to grow rapidly, and hobby buyers increasingly research and purchase products digitally. Retailers without strong ecommerce capability lose market share to online-only competitors.

At the same time, parents are seeking sustainable, long-lasting or educational products, shifting demand toward eco-friendly and STEM focused categories.

What to Check:

• Strength of the store’s ecommerce platform, delivery options and online inventory visibility.

• Capacity to run click-and-collect, online payment plans and subscription-based craft or toy kits.

• Focus on sustainable materials, low-waste products or toy recycling programs, which are growing industry trends.

• Social media engagement, especially in communities centred on gaming, crafting or model building.

• Use of digital tools for stock control, forecasting and data-driven ordering.

Ready to Invest in a Thriving Hobby Business?

Hobby stores continue to attract strong customer loyalty, especially those specialising in niche markets and high-engagement categories such as STEM, collectibles and model building.

Success depends on product expertise, effective digital capability, niche differentiation and the ability to navigate high competition from both discount and online retailers.

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