Marketing 50

Hot Topic

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Retailing is competitive, but selling to fickle youth is especially cutthroat. Merchandise that's hot one day can grow cold faster than a retailer can say, "Cancel that order." That's why Hot Topic, a 491-store chain, and its leader, CEO Betsy McLaughlin, stand out. This fast-growing operation catering to 12-to-22-year-olds has been bringing the funky fashions and accessories of Melrose Avenue to suburban malls since 1989. "The best advertising is word of mouth," Ms. McLaughlin says.

Lots of companies pay lip service to staying in touch with the customer, but Hot Topic actually does so. Staffers keep their eyes glued to MTV and attend rock concerts to spot trends. It orders merchandise as little as two weeks ahead. Ms. McLaughlin, a 10-year company veteran who learned retailing in financial and strategic planning posts at The Broadway department stores and Millers Outpost, personally pores over hundreds of "comment cards"-surveys that shoppers fill out at Hot Topic stores-as well as e-mails to its Web site. "I get tremendous feedback," she says.

Analysts credit the 42-year-old Ms. McLaughlin for recognizing the opportunity in targeting the underserved plus-size market two years ago, when Hot Topic started a retail spinoff called Torrid. It aims for a slightly older crowd (15-29). Lauren Cooks Levitan, senior research analyst at SG Cowen, foresees huge potential. Torrid "could be even bigger than [Hot Topic's] core concept," she says.

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