Is Hot Topic's (Nasdaq: HOTT) Torrid chain about to get chilled out? Torrid has been catering to what is arguably an underserved market: plus-sized teens and young women. But according to USA Today,Gap's (NYSE: GPS) lower-priced Old Navy chain is testing the same concept in some of its stores.
Much has been made of Americans' increasing evolution toward the plus-sized market. We've all heard the statistic that 64% of Americans are overweight. NPD Group said that the plus-sized industry was a $30 billion market in 2003.
The retail industry has been slow to embrace the trend -- or recognize that plus-sized teens are a lucrative niche, with the same desire to wear fashionable threads as their single-digit-sized counterparts.
Enter Torrid. Hot Topic launched the concept in response to complaints from plus-sized customers at its edgy, punk/goth/metal retail stores about their lack of options. Recently, Torrid has evolved from being a plus-sized Hot Topic to a destination where plus-sized young ladies can buy fun, "fashion-forward," sexy clothing for clubbing, hanging out, or just feeling good about themselves.
(Something has gone awry lately with Hot Topic's recent same-store sales. Rick Munarriz theorizes that maybe the black-wearing culture is becoming more "subculture" once again. One might also wonder whether everything really is hunky-dory at Torrid. Having ditched its roots, are some of its alternative shoppers alienated again?)
Other brands, such as Charming Shoppes' (Nasdaq: CHRS) Lane Bryant and Liz Claiborne's (NYSE: LIZ) Elisabeth, have set their sights on plus-sized female customers. However, those brands may not exactly appeal to young women looking for cutting-edge fashion choices. Meanwhile, Hot Topic does consider some other retailers formidable Torrid competitors, including clothiers such as Alloy (Nasdaq: ALOY) (along with its subsidiary Delia's) and Debs Shops (Nasdaq: DEBS).
This move pits two threats against Torrid. First off, though the new range of plus sizes is being tested in a mere 50 Old Navy stores, Torrid has a total of only 59 stores thus far in its evolution. One might wonder how many of the Old Navy stores in question might directly compete with Torrid -- and how tough for Torrid if the concept launched in all 800 Old Navy stores.
Second, before now, higher prices for Torrid's threads might have been justifiable. However, Old Navy's known for trendy, inexpensive fashions. Will such encroaching competition force Torrid to return to its more highly specialized -- and possibly less lucrative -- roots?
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Alyce Lomax does not own shares of any companies mentioned.
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