Consumer Products

Making the mall cool again

Other than teen pop acts, the only thing with a shorter shelf life is teen fashions. One retailer that has paid close attention to this market reality is Hot Topic. Led by CEO Betsy McLaughlin, the chain's 310 mall-based stores sell a variety of goth-style fashions for tweens and 20-somethings. Its formula for success? Mine the music world for new apparel trends, get them in stock as soon as possible, then dump them once you get a whiff that your competitors in the mall might copy them.
November 1, 2001

Other than teen pop acts, the only thing with a shorter shelf life is teen fashions. One retailer that has paid close attention to this market reality is Hot Topic. Led by CEO Betsy McLaughlin, the chain’s 310 mall-based stores sell a variety of goth-style fashions for tweens and 20-somethings. Its formula for success? Mine the music world for new apparel trends, get them in stock as soon as possible, then dump them once you get a whiff that your competitors in the mall might copy them.

While many teen and tween clothing chains can claim to follow this fashion-forward philosophy, none have executed the strategy as well as Hot Topic did this year. Ranked 13th on Fortune’s list of the 100 Fastest Growing Companies, Hot Topic boosted revenues 39.7% over the first half of this year. Store sales also rose 5.2% for the period–an incredible achievement considering the economy has been in a funk for most of the year. McLaughlin’s energetic management style and commitment to regularly soliciting input from the rank and file for improving its stores has greatly contributed to making HT into a cool place for teens and investors alike to spend their money, says Joseph Teklits, an equity analyst who follows the company for Baltimore-based investment banking firm Wachovia Corporation. ‘The store-level employees at Hot Topic are arguably among the best in all of retail. A big part of that is because of Betsy’s skills in managing her people–keeping them motivated and interested in what they’re doing,’ says Teklits.

McLaughlin has also been very receptive to customer feedback. To wit: After receiving complaints from customers about the shortage of shopping venues for young women who are larger than a size 12, the company launched Torrid, a separate chain of stores that caters to the apparel needs of plus-size teens and young adult women.

Biggest challenge facing the company in 2002: Launching new retail concepts–even as seemingly sound as Torrid–in an ultra-competitive apparel market is especially difficult to carry off during a downturn. Success will require more of the steely discipline that McLaughlin et. al have shown with Hot Topic.

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