Five Below: A Dollar Store for Teens and Pre-Teens

Discussion
Aug 17, 2009
Tom Ryan

By Tom Ryan

The former founders of Zany Brainy have come up with a concept aimed at budget-conscious tweens and teens. With around 100 stores currently, management recently announced plans to double its store count over the next two years.

The Philadelphia-based retailer, which opened the first Five Below in 2002, takes its name from a merchandising strategy calling for the sale of all products for $5.00 or less in a “trend-right, extreme value, upbeat, cool environment,” according to company marketing literature. Appealing to both boys and girls, the mix includes candy, party supplies, costume jewelry, bath & body, stationary and school supplies, sports games, posters and other simple home décor, novelty and “gag” items, and various media products, such as iPod cases and chargers, DVDs, and video game accessories.

“My favorite way to describe it is as a five and dime for the iPod generation,” Elizabeth Romaine, the marketing manager for Five Below, told the Pittsburgh Business Journal.

In an interview with DSN Retailing Today in 2006, Tom Vellios, co-founder and CEO, said that many 10- to 15-year-olds don’t have a store that they can call their own after they graduate from Toys R’ Us. Hipper stores such as Hot Topic appeal to older teens, he said.

“Something had to fill the void…when the old five and dimes went out of business,” Mr. Vellios said. “Here’s an opportunity to try and offer a destination for teens and preteens to go to.”

More recently in announcing plans to enter the Pittsburgh market, Mr. Vellios said Five Below is ramping up its expansion efforts. It is opening 20 stores this year and plans to open 30 or 40 next year. Five Below operates in nine states on the East Coast, from New Hampshire to Virginia.

“Our performance continues to be strong, and we’re thrilled to be able to accelerate our growth plans,” said Mr. Vellios. “This is an opportune time to bring high-value retail opportunities to new markets. Our model drives traffic to shopping centers and positions us well to continue capitalizing on available real estate throughout the Eastern U.S. Landlords have been seeking us out, as we are one of the few tenants in the 7,000-10,000 square foot size range that can bring traffic to their centers, and is looking to open a lot of new stores.”

With the tough economy, the founders also believe the format fits in today’s climate.

“Our offering of brand-name, trend right merchandise, all at extreme-value prices, continues to attract a growing customer base among teens, tweens and people of all ages,” said David Schlessinger, chairman and co-founder.

Discussion questions: What do you think of the Five Below concept? How big an opportunity are dollar stores aimed at the younger crowd?

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15 Comments on "Five Below: A Dollar Store for Teens and Pre-Teens"


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Susan Rider
Guest
Susan Rider
11 years 8 months ago

This is a very big opportunity if merchandised right. It will definitely be a merchandising/marketing success or failure. This age demographic is very fickle and follows the trends.

Mel Kleiman
Guest
11 years 8 months ago

Real winner. Great concept, great demographics, great timing, and an under-served market.

Doug Stephens
Guest
Doug Stephens
11 years 8 months ago

They use the term “trend-right” to describe their positioning. I think their success will come down to their ability to hold to their promise on that. If you’re off-trend, teens show very little forgiveness.

Anne Howe
Guest
11 years 8 months ago

I think part of the fun teens have with trends is getting there first with up and coming brands. And for that to happen, they really do spend time browsing all over the mall, and roaming throughout the high-end boutiques.

Look at what teens did for Roxy and The North Face brand. They love to shop the higher-end stores. It will be VERY TRICKY over the long run to keep teens shopping at a true “dollar store” location to save money. They seem to gravitate as far up the retail food chain as they can go. I think this format could be the first to lose them and I think shopping down will get old quicker for them than for their parents.

Warren Thayer
Guest
11 years 8 months ago

A scary and fickle demographic, not for the faint of heart. I wish them well, and could see strong success at least for awhile. But my fear is that this will be one of those shooting stars.

Gene Hoffman
Guest
Gene Hoffman
11 years 8 months ago

“Get two trucks, I’ve got five bucks.” This is a concept that’s a natural for teens and pre-teens … particularly in this era.

Justin Time
Guest
11 years 8 months ago

You don’t have to be a tween or teen to enjoy the savings and coolness of Five Below.

I have written the customer contact at Five Below various times in recent years, urging them to open locations in the Pittsburgh area, and they are finally doing that.

Five Below does fill a big gap and honors the fun aspects of the five and dime. And in these difficult economic times, it helps those struggling to buy great looking merchandise at fantastic savings, especially back to school.

G.C. Murphys had such a great tradition as a five and dime and discounter in Western PA. So I see this move as a no brainer.

Five Below will bring back some of that great shopping experience to the Pittsburgh area.

Anne Bieler
Guest
Anne Bieler
11 years 8 months ago

What a fun idea–the right path for tweens and teens. A store for them, with right-priced, trendy items is right time, right place. With a continuing supply of well-managed inventory, it could do well in many markets.

Jonathan Marek
Guest
11 years 8 months ago

This is a fascinating idea. Has anyone ever been inside their stores? What do they look like?

Ted Hurlbut
Guest
Ted Hurlbut
11 years 8 months ago

As strange as it may sound, the one thing they may have going for them in pursuing the trendy-teen market is that they’re not in the trendiest, and riskiest, category, which is fashion apparel.

Gene Detroyer
Guest
11 years 8 months ago

This is a cool concept. However, I hope that the $5 is conceptual, not set in concrete. In addition to the trickiness of staying on trend, there is a fine line between junk and cool for this demographic. While their mothers might buy counterfeits, teens never will. It has to be just right!!!

Kai Clarke
Guest
11 years 8 months ago

This is a good concept that will work, but begs the question as to why limit this to just marketing the store to this segment? Why not keep it positioned to “young adults” so that the appeal to teenagers is still there, while also taking advantage of the full, young adult market? Exclusionary marketing limits success….

Jennifer Keller
Guest
Jennifer Keller
11 years 8 months ago

I think it’s a great idea for teens/tweens since their trends are ever-changing. So, a $5 outlet will be a great way of experimenting for the demo without the costs. I’m eager to see how this up and coming generation will shop differently from their older college siblings that had everything in their teen years.

William Passodelis
Guest
11 years 8 months ago

I think this really has great potential but must be executed well and marketed correctly. Attention must be paid to the assortment. It does run the risk of simply being another “dollar” store if not done right but they really seem focused and “on,” at least right now.

Tom Ryan
Guest
11 years 8 months ago

I did visit a Five Below location well before I thought of writing this story so my memory is a little vague. But the format definitely felt much more like a dollar store than a teen store. Maybe a little less cluttered but packed with merchandise across aisles and on the back wall. In fact, I didn’t even recognize they were intentionally targeting teens. They just had a lot of fun, cheap stuff. My wife bought a hula hoop.

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