Multi-Channel Merchandising

A retailer's priority list is contingent based on the type of business it is in. With 690 stores, Hot Topic, a mall-based specialty retailer offers an extensive line of musically inspired products to its core customer, which is a 12 to 24 year-old male. In the past, the retailer's best sellers were products featuring Metallica, Steppenwolf and the Ramones. Today, there is a push for products featuring Paramore, Lincoln Park and other emerging artists.

The retailer's other brand, Torrid, has approximately 145 stores and targets plus- size females that are 18 to 35 years-old. This mall-based chain offers products that are fashionable, yet musically inspired.

Although the two stores operate as separate brands, both stores share a very similar business process. Recently, the retailer has been focused on the integration of buying, planning and allocation.  The retailer is addressing this challenge by evaluating the marketing and loyalty aspects and customer-facing functions.

"You can only change so much of a business once it has matured," says Thomas Beau-champ, CIO and senior vice president, Hot Topic. "It is important for us to apply changes to the areas where we will get the best return.  Every retailer is probably starting from a different point, but in the end, we are all going in the same direction."

Hot Topic and Torrid spend a great deal of time on the cross-channel aspect of the business. Through its loyalty program, the retailer has found that the majority of its shoppers do not shop in a single channel. From a planning standpoint, the retailer must have a continual focus on the store and the Web. From a buying standpoint, the Web business can support a much broader market, particularly in some of the higher priced items.

"We don't buy anything for the stores only," says Beauchamp. "Some of the challenges we have are in the supply chain." Beauchamp pinpoints some of the major challenges: In terms of vendor collaboration, there were problems early on in the production cycle and delivery cycle. The biggest challenge for the retailer has been with inventory visibility. 
Hot Topic once operated its Web site as a completely separate line of business, with separate systems and separate buying. With more consistency, the retailer now can see inventory in stores and is able to transfer inventory to other store locations or via the Web.

Multi-Channel Shopping

The retailer also has recognized that the customer is using multiple channels to shop.  "Consistency doesn't mean exactly the same," says Beauchamp. "It also doesn't mean exactly the same pricing or promotions.  Be very clear when something is different in stores --is it a Web-only or store-only promotion."

For instance, the retailer used to handle its markdowns completely independently.  Now, price changes are reflected consistently and need to be communicated very clearly if they are store-only or Web-only promotions.

The retailer emphasizes that consumer and product intelligence is priority. "Both are needed," says Beauchamp. "Both are sourced from the same data. In this case, we find out who is buying what and where consumers are buying the products."

From a merchandising standpoint, the retailer uses localized buying, in which assortments are tailored to individual stores. "We want to understand the consumer, so if he or she is buying tops, we should also know if they are also buying specific bottoms."

"Cross-channel is something we will continue to work on," says Beauchamp.  "I don't believe it will ever be finished. Overall, our challenges continue to be visibility of inventory across channels and being able to put them together."

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