Orv Madden and Hot Topic free essay sample

In the 80s when MTV was a big thing to the teenagers and young adults with playing modern music and culture, Madden saw that there could be a large market for music influenced apparel and accessories which was being largely overlooked by many national stores. He decided to see if he could capture this market. In 1989 Hot Topic was founded. In a very risky move on his part Madden put all of their savings into starting the first store. This store sold t-shirts with logos of popular bands, music posters and trendy costume jewelry. The store is described as catering to the alternative culture and keeping up with the quick changing tastes of teenagers. The store broke even in the first year. In the next few years Madden raised over $11 million from investors wanting in on this market. With this money Madden started other stores throughout the country still following the â€Å"Gothic†- style lighting that shocked parent and delighted kids. Hot Topics target consumers are kids 12 to 22 years old. Their merchandise is t-shirts, pants, makeup, and jewelry meant to go anywhere but ones ear lobes. Many people thought that Hot Topic would fail because it was based on the trends and tastes of punk or alternative teenagers which changed rapidly. Madden thought about this a lot. He bought a 45,000 foot warehouse for his distribution space and his management team. They employed dozens of buyers who were responsible for keeping up with music and teen fashion. The atmosphere at the headquarters was open and he kept the hierarchy to a minimum. There were no cubicles, no dress code and the entire area was covered with huge video screens playing the newest music videos throughout the day. This was and is totally different from the offices of then and now. This openness is a big part on the companys success and rapid growth. Madden encouraged the employees to take an active role in the development and introduction of new ideas for the company. He would even pay for the ticket to any concert a sales person desired to attend if they would write up a fashion report the following day. This was a very effective way of keeping up with the trends of teens and young adults in any region. By 1996 Hot Topic had opened almost 80 locations nationwide and had sales over $44 million. In May of 1996 Hot Topic started selling stock in the company. Madden retained 30 percent ownership in the company which a year later was valued at over $100 million. In 1997 there were only 79 Hot Topic stores by the end on the next year they had almost double that to 128 locations. This is also the time that Hot Topic undertook the introduction of its own label, which was called Morbid, they produced everything from t-shirts to make-up. Since the majority of the sales consisted on the music-inspired products of t-shirts with band logos to CDs, Hot Topic decided to develop a licensing agreement with the major distributors as Sony Music and Winterland. This allowed them to have a very quick access to popular product lines and logos. They also started selling items that were hooked to the controversial sitcom â€Å"South Park†. Today there are over 690 store locations across the United States and Puerto Rico. The majority of these are still located in shopping malls. They now specialize in music and pop-culture-related fashion and merchandise including: clothing, boos, comics, video games, jewelry, CDs, records, posters, and many other items. They also back major concert festival like Ozzfest and The Rockstar Energy Drink Mayhem Festival. They also offer products from Tripp NYC, Heartcore Clothing, Morbid Threads, Disney, Iron Fist, and My Little Pony: Friendship is Magic just to name a few. Some major brands have allowed Hot Topic to release their concert wear to the general public before they appear on television or at concerts wearing them. The stores have even held what they call in-store â€Å"listening parties† where fans could hear new albums or singles before they were released. They have also branched out to have more merchandise from films and television shows hoping to reach yet another part of the ever changing teenage taste. Always looking for any market that they might be missing, Hot Topic owns and operates a chain of plus-size clothing stores. These stores offer more clubwear and workwear for the young plus-sized woman. This plus-size clothing chain is called Torrid which began it operations in 2001. Since the beginning of the first Hot Topic store they have had very little turnover in their top management. Orv Madden opened the first store in 1988 and retired as CEO in 2000. He was replaced by Betsy McLaughlin, who was the CEO until 2011. The CEO in now Lisa Harper who took over in March of 2011. This low rate of turnover is very helpful in the success of the company. Approximately 30 percent of Hot Topics revenue comes from the sale of licensed band t-shirts. Hot Topic also is an online retailer. Again this is reaching a sector on the population that is not close to a Hot Topic store. So far it seems like Hot Topic is just out to make money for the company and their investors but it is much more. In 2004 the Hot Topic Foundation was formed. This foundation focus on encouraging children and youth in the pursuit of music and the arts. It has granted approximately $4 million to more that 70 organizations throughout the U. S. Recipients have included the Chicago International Childrens Film Festival, Little Kids Rock, Heart of Los Angeles, MIND Institute, the Chicago Humanities Festival, Rock Against Cancer, Inner-City Arts, Big Thought, IFP Chicago, Spy Hop Productions, Footlights Inc. , Carolina Studios Corporation and the KIPP Bayview Academy. Money is raised through sales of guitar picks , exclusive music compilations, mints, and reusable shopping bags. Hot Topic began that foundation because they saw what all of these diseases were doing to the people of the world. So in their reaction to that the started the foundation to see if they would be able to help fund to be able to find a cure. Each store sells Brest cancer bracelets and also pink guitar picks that have the ribbon on them so then that money goes just to finding the cure of breast cancer. In 2010 Hot Topic finally went international and opened two stores in Canada. Keeping up with the original store they are both in shopping malls. Orv Madden and Hot Topic is a great example of a company that had every right to fail. No matter if the economy was good or bad they still seem to keep going and making a profit. I account this to the idea of keeping the upper management to a minimum and doing everything that they can to stay on top of the ever changing tastes of the modern youth.