Torrid to Expand to Strip-Mall Locations
For Hot Topic Inc.’s Torrid division, the future is in strip malls.
The City of Industry, Calif.–based mall retailer announced Nov. 16 that it will open more than 20 plus-size fashion Torrid stores in 2012, and many of them will be located in strip centers rather than traditional malls.
Hot Topic Chief Executive Lisa Harper made the announcement during a conference call for the retailer’s third-quarter results. Economics and consumer choice were the top reasons for the experiment with strip centers, which the International Council of Shopping Centers defines as a row of attached stores and service outlets. Typically, strip centers offer parking, but the stores are not interconnected by enclosed walkways like a mall.
“Essentially, it is much better economics,” Harper said of strip centers. Consumers shopping strip centers are more apt to make purchases compared with shoppers browsing at a traditional mall, she said. Also, occupancy rates are cheaper compared with a traditional mall—often 30 percent to 40 percent lower, according to Wall Street analysts.
In addition, the Torrid customer often is a destination shopper. “This size range is interested in going to a store instead of shopping an entire mall,” Harper said. “The customer is very happy to go to a Torrid destination.”
Later in the conference call, Marni Shapiro, managing partner of consulting firm The Retail Tracker, noted that strip-center locations would offer more privacy than a mall. Torrid consumers would not have to shop at a mall with their skinny friends. Harper applauded the comment and noted that it was a good point.
Opening strip-mall locations could be a new strategy for plus-size stores, said Jeffrey Van Sinderen, an analyst for B. Riley & Co. Plus-size retailer Charming Shoppes Inc. has opened stores at off-mall locations. Juniors/fast-fashion retailer The Wet Seal Inc. also has experimented with opening boutiques at power centers, defined by the ICSC as retail centers dominated by discount department stores and warehouse clubs. Wet Seal has been taking a wait-and-see approach to judge the success of its handful of off-mall locations, Van Sinderen said.
Building a fashion store outside of a mall or a fashion retail neighborhood is unorthodox, said Mike Rielly, executive vice president for Santa Monica, Calif.–based real estate company Townsend & Associates Inc.
“Fashion likes to be with fashion and excels in high-traffic zones, so strip malls have traditionally not been vehicles for users in that vein,” he said. But interest has been building for strip malls. Some strip malls have been improving their design, he said. Vacancy at top malls also happens to be highly competitive.
Hot Topic Inc. has been struggling in recent years. The company reported total sales for the third quarter decreased 4 percent to $175.8 million, compared with $183.2 million in the third quarter of the previous year. Total company comparable-store sales declined 1.6 percent for the third quarter of fiscal 2011.
Halloween traditionally is Hot Topic’s top shopping season, with Goth- and rock-inspired youth shopping at the mall-based chain for their Halloween costumes. However, this Halloween was a bust for Hot Topic.
“Halloween was clearly our biggest disappointment,” Harper said. “We learned that our assortment needs to be sexy, edgy and scary.” She promised that Hot Topic merchandisers would improve the company’s Halloween selection next year.
Hot Topic runs more than 634 Hot Topic stores and 146 Torrid stores, mostly in the continental United States. It also runs locations in Canada and Puerto Rico. Harper said the fleet of Torrid stores could grow to more than 335 locations.— Andrew Asch
