Hot Topic... Takes the Teen Scene
[ Home ] [ Up ] [ Cinema - An Insider’s View of the Theater Industry ] [ Downtown Tenants ] [ Entertainment Tenants ] [ Feature - Disney Stores to Get a Global Facelift ] [ Hot Topic... Takes the Teen Scene ] [ Mall Tenants ] [ Observations & Conversations ] [ Outlet Tenants ]

Up

Feature

Hot Topic... Takes the Teen Scene

by Sam Earle

Hot Topic

The hot topic in retailing is always, “What will sell?” Even hotter is “What will sell to teenagers?” It’s not surprising, then, that one of the coolest names in retailing to teens is Hot Topic, a 265-store chain based in City of Industry, California. Hot Topic occupies the zone where backstreet meets Wall Street.  Walking into a Hot Topic store is like seeing MTV become three-dimensional. The music is the thing, and the things are all about the music. Hot Topic has rocked its way into being the nation’s top teen retailer, and the key to that is its relentless tracking of the latest trends. And how does it do that? “We hire our customers,” said Betsy McLaughlin, company president. “Teens are vocal about their likes and dislikes, and if you listen to them they tell you a lot.” Does it work? Bet your nose ring it does. Annual sales growth has averaged 60 percent for five years, and same-store sales were up 21.9 percent, according to the company’s last earnings report. There’s another secret ingredient in Hot Topic’s recipe — real-time inventory management software called Arthur Allocation by JDA Software Group Inc. The system allows the company to track sales by music “lifestyle” categories such as street, punk and lounge.  Because it knows how each category sells in each store, the software is able to predict how new products will sell and allocate inventory to each store accordingly.

Founded in 1988, Hot Topic locates in malls and entertainment centers. Typically, the company signs 10-year leases for 1,400 to 2,000 square feet and looks for construction allowances. Teen-oriented co-tenants are preferred. The company plans to open 60 stores in the next 18 months nationwide.

The stores, dominated by black with red and purple undertones, are the result of CEO Orv Madden’s realization that other retailers weren’t capitalizing on the obvious link between teen fashion and alternative rock bands and their videos.

Competitors are everywhere now, though none seem to be enjoying the kind of growth Hot Topic is having. The retail real estate industry seems to believe the company will continue its success. Industry professionals who were surveyed recently by the International Council of Shopping Centers put Hot Topics on their “A” lists of tenants they would want to include in a new mall today.

For more information, contact Marc Bertone at Hot Topic: 626-830-4681; Fax 626-581-1093; Web site, www.hottopic.com; 18305 E. San Jose Ave., City of Industry, CA 91748.