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How do I Open a Yarn Shop?

By Sheri Cyprus
Updated May 17, 2024
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Opening a yarn shop can be an ideal retail business option for those with a passion for knitting, crochet or needlepoint. A lot of research and preparation should be done before starting a yarn shop business. Since many businesses don't survive the first year, a business plan is essential. You should decide on your business model -- such as whether you'll also sell yarn through the Internet to expand your customer base.

Getting information and advice from local small business centers in your area is a great idea. You should also be sure to get feedback from potential customers about which types of yarns and supplies they're looking for. You could attend community craft fairs and perhaps hand out surveys asking for opinions. You could feature some of your yarn handiwork items and by knitting or crocheting something during a community event, you can attract attention from potential customers and have a chance to ask them what they would like to see in a yarn shop in the area. If they are interested in lessons, this may be another source of income to consider for your store.

Learning the ins and outs of making a profit from a retail business is essential. Remember that having a retail store is not just about offering yarn for sale, but that advertising, accounting and ordering supplies must be done efficiently in order to make a profit. In addition to getting information from a small business help center, retailers in the area your yarn shop is in questions about the amount of customer traffic. If you have decided to sell yarn on the Internet in addition to having a brick and mortar yarn shop, research online yarn websites to determine which e-commerce options would best suit your business. Estimate the additional expenses for online needs such as creating and maintaining a website.

Once you’ve received enough information, you’ll need to analyze what you’ve gathered and estimate what your profit is likely to be in relation to your expenses. Research commercial space in your area and compare the expected traffic with the price to lease the space. Of course, you must also research yarn suppliers and make sure you’ll be able to stock what you’ve determined your customer base desires in terms of yarn. Not only will you need to be able to get the yarn customers want, but your price will have to fall within their expectations. Research your local and online competition, decide what will make your yarn shop different and beneficial to customers and decide how you’ll communicate those benefits to attract your customer base.

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Discussion Comments
By KoiwiGal — On Jan 30, 2015

@pleonasm - Just remember that if a person is hoping to run a store online they will have to compete with wholesalers that also sell online. Wool can be so expensive and I use a lot of knitting yarn making hats and scarves to sell, so I usually try to get the absolute cheapest price possible.

I might make an impulse buy in a real store, or occasionally prefer to buy in person because it means I can be sure of the quality, but if I'm buying online I'm absolutely going to be going for the lowest price. If a store isn't competitive, I'm not even going to bother.

By pleonasm — On Jan 30, 2015

@irontoenail - Well, the other thing that people could do, particularly if they are selling small amounts of stock, is to set up an online store rather than a traditional wool and yarn shop. I know a couple of ladies who sell alpaca wool that they dye themselves and they don't ever have enough stock to really open a full shop, but they have plenty of regular, devoted customers online.

You could get yourself started at a craft fair and just use it as a chance to build an email customer base. There's always a market for high quality, specialized products like this.

By irontoenail — On Jan 29, 2015

One thing you might like to do in terms of on-the-ground research, is to open what they call a "pop-up" shop in the general area where you want to sell your yarn. These seem to be more and more popular in my town and are often there to sell surplus stock, but I'm sure you could use one to sell knitting yarn and see how much interest there is in it without a long term commitment on the lease and stock.

Alternatively, you could start with a stall in a market. There are often regular markets in big cities with a emphasis on crafts or handmade items, which would attract the right kind of customer.

It's something to consider even once you get a shop set up, since it can be invaluable for advertising.

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