McLaughlin, Betsy

c. 1962 • California

CEO of Hot Topic

As a teenager, Betsy McLaughlin had a plan for her life. She intended to become the chief executive officer (CEO) of a company. She counted on working hard to achieve success, and she expected to make a good living thanks to her hard work. As an adult, McLaughlin has accomplished those goals. Before turning forty, she became the CEO of Hot Topic, a company running a chain of hip, alternative clothing stores for teenagers. She oversaw the tremendous growth of her company, which in 2004 boasted nearly five hundred stores in shopping malls all over the United States. During 2001 McLaughlin led her company's expansion into a new line of stores, called Torrid, which offer plus-size teens the same types of trend-setting fashions sold at Hot Topic. Within two years Hot Topic had opened more than fifty Torrid stores. Named one of Fortune magazine's one hundred fastest-growing companies for several years in a row, Hot Topic has succeeded in tapping into the desires of millions of teenagers by energetically seeking out new trends and capitalizing on them before they become too mainstream.

Betsy's life goals

Elizabeth M. McLaughlin was born around 1962 and grew up in Orange County, California. She was an excellent student, earning straight A's at Estancia High School in Costa Mesa. By the time she graduated from high school in 1978, McLaughlin had mapped out her goals, written on a piece of paper she has carried with her for many years. Among "Betsy's Life Goals," as she termed them, were improving her vocabulary, becoming a CEO by age forty, and learning to be comfortable by herself in social settings. As she told Tiffany Montgomery of the Orange County Register, "I knew I'd be working so much I'd need to be OK traveling alone, going to dinner alone."

Her first step in accomplishing her goals was taking a part-time salesperson job at Broadway, a chain of department stores, when she entered college at the University of California at Irvine (UCI). By age twenty, she was an assistant manager at Broadway. After graduating from UCI with a degree in economics, McLaughlin moved up to Broadway's corporate offices, working in the financial and planning departments. She then went to work for Miller's Outpost, a chain of retail specialty stores, and by age twenty-nine she had been named a divisional merchandising manager, making critical decisions about the items being sold in the stores.

"I don't think we know best. I think we're going to learn so much from [a] customer when that customer walks into our store."

In 1993 McLaughlin decided to take a job with Hot Topic, a company she admired. She began as vice president of operations, and spent the next several years working to expand Hot Topic into more and more malls around the United States. In 1992 Hot Topic had fifteen stores; in just over ten years, that number approached five hundred. Her success at Hot Topic led to a series of promotions, with McLaughlin being named president of the company in February of 2000 and CEO just a few months later. Hot Topic appeals to teenagers and young adults who reject a mainstream look and opt for more rebellious, edgy styles, and the culture of the company reflects this unconventional outlook as well. McLaughlin, unlike most executives, does not have a secretary, nor does she have an office. Her desk sits in the middle of a large room, and she works surrounded by the desks of her employees. "Out here," she told Montgomery, "I get the pulse of what's going on."

Founded by Orv Madden in 1989, Hot Topic came about as the result of Madden's conviction that for many teens, clothing preferences are determined by music. Music is still the driving force behind many of Hot Topic's buying decisions. Monitors displaying television music channels like MTV and Fuse can be found throughout Hot Topic's corporate offices. The company will pay for any employee's concert tickets as long as that employee writes up a report about the fashions seen at the show, both onstage and off. McLaughlin explained to Kristin Young of WWD, "If [lead singer of No Doubt] Gwen Stefani colors her hair cupcake pink and puts a bindi [a colorful dot often worn by Indian women] on her forehead, we're going to have it first because we were there and saw it first." Hot Topic sells clothing, shoes, and a vast assortment of accessories including jewelry, bags, hats, and posters.

All Hot Topic merchandise is influenced by a variety of alternative music scenes, with about half of the items in the stores—and at the Web site, www.hottopic.com—being licensed merchandise sporting a band's name or logo. Critical to Hot Topic's success has been an ability to spot trends that are on the rise and to quickly have those trends represented in the stores. By featuring merchandise with the logo of a hot new band that has a small but loyal following, Hot Topic stays current and hip. McLaughlin understands that the moment a trend becomes too popular, her core audience will lose interest. Whenever possible, she tries to arrange for exclusive licensing agreements, which specify that for a period of several months, only Hot Topic can sell the official merchandise of a particular band. In addition, she has cultivated relationships with U.S.-based suppliers that result in a much faster turnaround time than that of many other retail stores. It takes anywhere from two to eight weeks from the moment Hot Topic orders a batch of T-shirts or jackets until the time those items appear in stores. For many other kinds of stores, that process can take several months. This speedy ordering time means that Hot Topic can offer customers the next big thing well before it gets so big that it is no longer seen as cool.

Hot Topic walks a fine line between selling merchandise that appeals to rebellious teenagers and selling items that parents and teachers might strongly object to. The stores do not sell items that encourage drug use or violence, and they avoid merchandise with any kind of religious symbol—aside from those that appear as part of a band logo—in order to prevent the appearance of favoring one religion over another.

Customers speak

One of Hot Topic's most important avenues of information about what teenagers want comes from the customers themselves. Hot Topic's Web site asks visitors for feedback on a number of issues, from the store's current merchandise to the customer's favorite bands. In the stores, next to the cash registers, customers can find comment cards to mail in to corporate headquarters. McLaughlin spends hours each weekend reading hundreds of comment cards, from which she has gained invaluable information. She told the Orange County Register, "The wonderful thing about teenagers is, if you ask, they'll answer. You just have to listen."

One thing many customers requested over and over again was a greater selection of plus-size clothing. With a significant and growing number of teenagers struggling with weight problems, and few stores offering stylish, youthful clothes in larger sizes, Hot Topic recognized a need and leapt to fill it. McLaughlin described to Brent Hopkins of the Los Angeles Daily News the limited options available to a young, plus-sized consumer: "She could shop at Lane Bryant and look like her mom, shop at a department store and look like her grandmother, or buy men's clothes and look like her father." Understanding that many teenagers wanted another option, Hot Topic launched a new chain of stores in 2001 called Torrid. Featuring some of the same styles seen at Hot Topic stores, Torrid caters to larger teenagers and young adults, with the typical Hot Topic emphasis on music-influenced trends. The first Torrid store opened in April of 2001 in Orange County's Brea Mall, and dozens of other Torrid stores opened soon thereafter. The new chain was an instant hit with customers. McLaughlin told Peoplemagazine: "Some people thought we had staged customers because when they went into a store, they saw a mom or daughter screaming with joy or crying." Mary Barker, a Torrid store manager in Northfield, California, explained to Hopkins: "We get an emotional response. We're not just selling clothes, we're really empowering people."

McLaughlin had personally experienced the difficulty of buying clothes in larger sizes, and she felt a deep connection to the development of the Torrid chain, becoming closely involved in its launch. Her attentiveness to her customers' needs has paid off, as have as her flexible business practices and devotion to fostering a creative corporate culture for her employees. The company has shown sales that other retailers can only dream of. Even as mall traffic has slowed, Hot Topic continues to attract ever-larger numbers of shoppers, propelling the company to several years of record growth. McLaughlin occasionally loses sleep worrying about possible pitfalls, such as failing to spot a hip new trend, or confronting a new competitor that swoops in and steals Hot Topic's customers. In an interview with Wall Street Corporate Reporter, however, McLaughlin acknowledged the sunny side of her life as Hot Topic CEO: "I am very energized by the chance to lead an organization that gives the customers what they want. Each day of work is filled with high energy and a fast pace. Hot Topic is really a fun place to work."

For More Information

Periodicals

Allers, Kimberly L. "Retail's Rebel Yell." Fortune (November 10, 2003).

Fosse, Lynn. "Betsy McLaughlin." Wall Street Corporate Reporter (November 1, 2000).

Hopkins, Brent. "Hopes High for Torrid Sales." Los Angeles Daily News (May 1, 2002).

People (May 26, 2003): p. 153.

Young, Kristin. "Hot Topic's New Flame." WWD (February 1, 2001): p. 16B.

Web Sites

Montgomery, Tiffany. "Hot Topic's Latest Venture Finds Big Niche." Orange County Register. http://www.ocregister.com/news/torrid00303cci4.shtml (accessed on July 15, 2004).

Weintraub, Arlene. "Hotter Than a Pair of Vinyl Jeans." BusinessWeek Online. http://www.businessweek.com/magazine/content/03_23/b3836716.htm (accessed on July 20, 2004).