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How Hot Topic went from a store in a garage to a growing chain that is defying the retail apocalypse.
How Hot Topic went from a store in a garage to a growing chain that is defying the retail apocalypse.
Shoshy CimentSep 7, 2019, 18:03 IST
Shoshy Ciment/Business Insider
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Hot Topic is a teen retailer that has over 670 stores across the US and Canada.
The company has maintained a strong brick-and-mortar presence as a haven for fandom and niche obsessions, even amid the retail apocalypse and an increase in mall vacancies.
"We thrive because we are first to recognize current and emerging trends in music and pop culture, and are fast to market to meet our consumers' demands," Steve Vranes, the CEO of Hot Topic since June 2016, told Business Insider.
Here is the full story of how Hot Topic made it big, from its humble start in a California garage to its soaring presence in malls across the continent.
In a world of declining mall traffic and increasing vacancies, the brick-and-mortar chain is beating the odds.
The company has not publicly disclosed its finances since it was bought by private equity firm Sycamore Partners in 2013 for around $600 million, The New York Times reported. But its over 670 stores across the US and Canada and strong online presence are a testament to the company's strong niche in a temperamental market.
"We thrive because we are first to recognize current and emerging trends in music and pop culture, and are fast to market to meet our consumers' demands," said Steve Vranes, the CEO of Hot Topic since June 2016.
That much is clear upon entry to the store. Hot Topic is a haven for pop-culture addicts and fans, boasting merchandise that runs the gamut from costumes to body piercings. It has a reputation as a brand for punks, but it carries merchandise for consumers with diverse interests. Over 75% of the products at Hot Topic are licensed by intellectual property owners such as entertainment studios, music labels, and music vendors, Vranes explained.
Today, Hot Topic is huge, but the company started small - in a garage in Southern California in 1989. The first store, which opened in Montclair, California, had its headquarters in the store's backroom. Throughout the years, Hot Topic expanded its merchandise, introducing clothing and capitalizing on a growing market for anyone obsessed with anything.
The company still maintains remnants from its early days as a sanctuary for the teen with a penchant for the dark. Though today, customer requests and analytical data-sifting tools help determine what merchandise is "hot" enough to sit on the shelves. The community that converges in stores represents an array of diverse passions, usually celebrating the atypical.
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"To our customers, Hot Topic is more than a retailer," said Vranes. "We represent community and self-expression."
Here's the story of how the chain was able to get to where it is today, a store that is constantly adapting to meet the demand for what's hot in the world of fandom.
The company's headquarters were located in the cramped space in the back of the store, where Cindy Levitt, the very first employee hired by Hot Topic, sat to do the store's buying.
The original Hot Topic logo from the '80s featured a cartoonish green lightning bolt design that was seen on the front of the store, the register, and the t-shirts of the store's employees.
When it first started, Hot Topic did not carry any clothing, which made for some interesting-looking mannequins. The store mostly focused on selling accessories like belts and scrunchies and the owners quickly realized that dark colors and gothic styles were selling.
... hair dye, and other items that weren't standard for regular mall shops.
One of the more iconic items from Hot Topic was this Jaded Jenny rag doll that sold in the early days of the store. This limited edition plush toy has been listed on resale marketplaces for as high as $75.
1990 was a crucial year for Hot Topic. The store began to sell different music t-shirts and introduced the first-ever "rock wall" in the stores. CEO Steve Vranes told Business Insider that today, "Music remains very important to Hot Topic. Our wall of music tees is iconic and a staple in all stores."
Sure enough, we found more than one iconic t-shirt wall when we went to visit a Hot Topic in Queens, New York.
Hot Topic's first-ever punk band t-shirt was this graphic tee featuring the True Sounds of Liberty (TSOL), a band known for its hardcore punk music. By 1991, Hot Topic was known as a punk haven, blasting music daily from its space in the mall.
Hot Topic began to embrace the atypical, celebrating the punks, rockers, goths, and music-lovers. Associates and employees had a specific look that usually included bright hair colors and facial piercings.
Also in 1991, Hot Topic expanded into clothing by initiating partnerships with Tripp NYC clothing and Lip Service. These partnerships ushered in a wave of lace-up pants and leather galore.
Not everything in Hot Topic was tinged with darkness. According to the company's website, the store sold a lot of these Homey the Clown t-shirts from a television series from the early '90s, "In Living Color."
And in 1993, Hot Topic hosted its first-ever in-store appearance with Riki Rachtman, the host of MTV's headbanger ball, a television program featuring heavy metal and hard rock.
Tim Burton's hit stop-motion film "The Nightmare Before Christmas" was released in 1993. By 1994, Hot Topic was selling a ton of merchandise from the movie, which would become a cult classic for decades to come.
Today, Hot Topic still prominently features merchandise from the movie in its stores.
By 1996, Hot Topic was still evolving. With a new design that shed the '80s lightning bolt, the store was selling items like body piercings and UFO print pants. Also in 1996, Hot Topic launched its online store and became a publicly-traded company.
Online sales are still an important revenue source for the company, Vranes told Business Insider. "We're proud to offer our fans the largest and best assortment of exclusive and 100% officially licensed merchandise on the web," he said.
Hot Topic was developing a sense for what was going to take off in the world of fandom and obsession — and it capitalized on that. In 1997, the store became the first mall location to carry merchandise from South Park, the adult animated series.
And in 1999, Hot Topic brought in SpongeBob SquarePants merchandise. "We thrive because we are first to recognize current and emerging trends in music and pop culture, and are fast to market to meet our consumers’ demands," Vranes said.
Hot Topic introduced a plus-size label in 2001 called Torrid after much success with selling those options in Hot Topic stores. Hot Topic was one of just a few young-adult retailers to make that move at the time.
The Hot Topic Foundation was established in 2004 to help fund art and music programs for kids across the country by taking contributions from customers online and in stores.
The movie "Napoleon Dynamite" exploded in popularity in 2004 and Hot Topic was ready for the hype, selling a Vote For Pedro t-shirt that fans could not seem to get enough of. A similar cultural phenomenon occurred in stores in 2008 when "Twilight" ignited the vampire craze.
Also in 2008, Hot Topic introduced ShockHound, a website for discovering and downloading music that didn't find much success and cost the company over $3 million.
In 2005, Fortune Magazine ranked Hot Topic #20 in the 100 best companies to work for, climbing from the ranks of #44 in 2004. By 2008, the company was hosting secret concerts for customers with bands like Panic! At The Disco and Black Tide.
In August of 2010, Hot Topic opened its first Canadian store in Mississauga, Ontario.
The company fell into a rut near the 2008 financial crisis. In November of 2010, the Los Angeles Times reported that Hot Topic would be closing 40 to 50 stores by early 2011.
But the store was still considered wildly successful. It was referenced on television shows like South Park and Californication and by celebrities like Nicki Minaj, Daniel Tosh, and Jimmy Fallon. It was also the answer to a Jeopardy question in 2014.
Hot Topic founded BoxLunch in 2015, a similar chain targeting a slightly older demographic of millennials. The store partnered with Feeding America to provide meals to people in need. Vranes said there will be over 140 BoxLunch locations across the US by the end of this year.
Today, Hot Topic has over 670 stores across the US and Canada. Its stores carry a mix of classic goth items from its inception as well as hot fandom merchandise of the day.
Explaining the store's success, Vranes said, "What’s popular with our consumer is always changing, and we’ve thrived for 30 years because we’ve stayed ahead of those changes and continue to ask the question, 'What do customers want that they are not getting anywhere else?'"
