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Madden launches Metropark for Hot Topic grads

BY ANNA ROBATON

Hot Topic founder Orv Madden is betting that lightning does indeed strike twice as he breaks out with a new retail concept called Metropark.

Metropark will follow Hot Topic’s teen customers into their young-adult years, Madden says. “I spent the last 12 years growing up with this segment at Hot Topic as this big Gen-Y bubble worked its way through the teen years,” he said. “Now the bubble is moving into the 20-year-old age group. It will be one of the fastest demographic growth increases over the next 10 years.”

A trio of Madden, former Hot Topic CFO Jay Johnson and former telecom industry entrepreneur Lawrence Tanenbaum founded this fledgling mall-based chain of designer apparel stores.

The chain, which is based in City of Industry, Calif., and is concentrating initially on major metropolitan areas, opened its first four stores last year at malls in Los Angeles and San Francisco. Metropark plans to open four to six more this year — including its first outside California, slated to open this month at Mall of America in the Minneapolis suburb of Bloomington.

Madden, who launched Hot Topic in 1988 and built it into one of the first national lifestyle chains targeting teens, is Metropark’s chairman and CEO, Tanenbaum is president, and Johnson is CFO.

“Based on Orv’s success with Hot Topic, we were very excited to see what his next concept would be,” said Julie C. Cameron, SCMD, vice president of retailer productivity at General Growth Properties. “We weren’t disappointed.” General Growth owns Glendale Galleria, the super-regional mall near Los Angeles where Metropark opened its first store last October.

“There is a real hole in the malls in the 22-to-35-year-old area,” said Cameron.

‘Y’ they want it
It is not hard to see why Madden and his partners want to fill that gap. The number of teens between 15 and 19 is expected to remain flat over the next decade, but Metropark’s target market — consumers 20 to 35 — will probably grow to more than 62 million, from about 57 million currently, according to the U.S. Census Bureau.

Metropark estimates that Generation Y, which it defines as those born between 1977 and 1994 (today’s 11-to-28-year-olds), currently has about $200 billion in spending power and influences an additional $300 billion-$400 billion in purchases.

Despite this target audience’s size, Metropark is no middle-of-the-road mall chain. It bills itself as “a new breed of lifestyle retailer,” inspired by the overlap between fashion, music and art, the major cultural influences on its young-adult audience. Its goal is to appeal to shoppers who want to stay hip and edgy (or who aspire to).

To set itself apart from chains that emphasize private-label goods, Metropark is relying on vendors that have traditionally served small street boutiques in trendy areas of New York City and Los Angeles, and a handful of department stores. Many of them are artists who have branched out into fashion, or designers who have teamed up with artists to develop clothing lines.

In Metropark stores “you will see a lot of designs on T-shirts or woven [tops] or [garments with] embellishments that have an interpretation of art screened into the fabric,” said Tanenbaum.

Metropark carries only a small assortment of private-label goods, including a line of pet accessories called MetroBark — a nod to the fact that owning a dog, especially a miniature dog, has become trendy.

“We want to maintain the authenticity of the concept by staying true to the brands that are driving boutiques in Los Angeles and SoHo [in New York City],” said Tanenbaum.

At the same time, Metropark wants to avoid defining itself too narrowly by offering multiple brands, including chic denim lines such as True Religion and Joe’s Jeans. “Our stores offer fashion that is really considered cool by all age groups,” Tanenbaum said.

The cost of cool
Metropark’s brand of “cool” doesn’t come cheap. Price points are relatively high, with jeans ranging from $80 to about $200 and some women’s tops going for about $200 each.

To create an environment that reflects the young-adult, hipster lifestyle, Metropark executives and Southfield, Mich.-based design firm JGA drew inspiration from places where the cool converge, including boutique hotels, nightclubs and restaurants in New York City, Las Vegas and Los Angeles.

“What we tried to do is pull from the trendsetting lifestyle destinations where this customer is just starting to spend time and money,” Tanenbaum said.

The result is a concept, about 3,000 square feet in size, intended to make shoppers feel like they have stepped out of the traditional mall environment and into an exciting street boutique, he says.

To “create a feeling of being on the outside of [a nightclub’s] velvet rope,” in JGA Chairman Ken Nisch’s words, and pique the interest of passersby, Metropark’s storefront features slatted walls offering a glimpse of what’s inside — including high-tech DJ tables where local disc jockeys spin music on weekends.

A central feature of each store is a large “boutique table element” for displaying accessories. Made mostly of dark wood, it consists of bins and shelves that can be rearranged. Leather ottomans are usually tucked under the fixture to provide seating for customers while they sift through the moveable bottom bins. This fixture, which separates the men’s and women’s departments, “has implicit references to a bar one might find in a club or lounge, creating a natural gathering place for the customer,” said Nisch.

To the rear of the store is a lounge area where customers can sip energy drinks as they look over fashion and art magazines, books and original art on the walls. The lounge area is located near the fitting rooms, thus providing a place to kick back for those waiting while someone tries on clothes.

Plasma-screen TVs show music videos and movies. Music plays constantly, an eclectic mix of styles ranging from sultry vocalist Norah Jones to hip-hop performer Jayzee.

The concept “has a unique ability to draw people in off the lease line,” said Neil Stern, a senior partner at McMillan/Doolittle, a Chicago-based retail consulting firm.

It also has ambitious expansion plans. Executives say they plan to open as many as 20 additional stores next year and up to 30 more the year after that. Ultimately, the goal is to have more than 300 stores, mostly in high-traffic regional malls with high-end, fashion-oriented department stores and in some lifestyle centers, says Tanenbaum.

Mall habit
Malls are an ideal fit for Metropark because they are so ingrained in the shopping habits of young adults, Madden says.“[Generation Y] was the first generation that grew up in a mall,” he said. “We all did a pretty good job of training them to want to come to the mall for fashion when they shopped at all the teen retailers.”

Though Metropark is one of the first retail concepts aimed specifically at Generation Y, the competition for young adult shoppers is only expected to grow more intense, sources say. Already, established chains such as Banana Republic and J. Crew are updating their offerings to boost their appeal to 20-somethings, says Lois Huff, a senior vice president at Columbus, Ohio-based consulting firm Retail Forward.

Others are rolling out entirely new concepts aimed at Generation Y. Among these is Abercrombie & Fitch, with its new Ruehl chain. Some lower-priced players, like Target and H&M, have built a strong following among young adults too.

Indeed, some say it remains to be seen whether Metropark’s prices are too steep. Consumers in their 20s and early 30s may be less fickle than teens in their fashion tastes, but they aren’t in their peak earning years yet and tend to spend much of their disposable income on electronics, cars, entertainment and dining out, says Huff. “This customer has a lot of spending requirements without a high level of income,” she said.

Also uncertain is whether Metropark will get the same strong reception in other parts of the country as it has in California. Tanenbaum says Metropark stores are already exceeding the average sales per square foot levels in the malls where they are located, though he declined to provide more specific sales data.

The chain is well positioned to withstand increased competition, he says, because of its unusual store design and focus on hard-to-find vendors. “I don’t think there are any similarities in terms of store environment or vendor structure,” he said. And he is confident that many young adults are willing to spend $200 on a pair of jeans, and that they are in a better position to do so than earlier generations.

“Our [research] on this customer segment showed it is spending considerably more money than its baby boomer parents did at the same age,” he said, “and its disposable income is greater because of a much higher level of education.”

Today’s young adults also have access to many more media outlets than their parents did and so they do not need to live in major urban areas to know what is trendy, says Tanenbaum. That bodes well for Metropark’s long-term expansion plans, he says.

Thanks to the popularity of MTV, reality shows, the E! Entertainment Network and the Internet, “regardless of where these kids grew up, they all had access to the same information,” he said. “You don’t have to live in New York or Los Angeles to know what’s cool and what’s not.”