Why is Five Below a step above?
Last week was a good one for Five Below. The youth-oriented discounter reported a strong holiday quarter, announced that it has accelerated its openings for the current year and reiterated its goal to triple its U.S. stores base. An eclectic mix of merchandise priced at $5.00 or below plays well with its core teen and tween customer base, but management believes it is the in-store experience that drives its outsized performance.
“We’re in the value space and wake up every day trying to deliver more value,” Five Below CEO Joel Anderson told Investor Business Daily in a profile last fall. “We also have to have a great store experience — with music playing and associates who have energy and bounce. At the heart of our competitive edge is some retailers are doing one or the other — not both. We try to deliver value in a great store experience.”
Compared to other dollar stores, Five Below features pumping music, bright colors and playful slogans, such as “$1 Stuff: as close to free as it can be!”
The majority of the mix is non-essentials across tech, toys, beauty, sports, style, home and candy categories aimed at the teen and tween set. The “Wow” comes from the unexpected finds, whether hedgehog headphones, D.I.Y. crystal bath fizzies kits or heart-shaped cat-eye sunglasses. The mix also includes greeting cards, picture frames and yoga mats for older consumers without such basics as laundry detergent and paper towels found at a typical dollar store.
“When you walk into one of our stores, you will discover things you didn’t know you wanted. It’s like a treasure hunt. We’re the T.J. Maxx for kids,” Mr. Anderson told The Wall Street Journal.
Key to recent success has been getting in early on trends such as fidget spinners and make-your-own slime. Encouraging visitors to play with the basketballs, test-drive radio-controlled cars and participate in slime-making contests also leads to Instagramable moments.
“If you spend time in a dollar store or mass merchant like Target or Walmart, it’s not really about letting go because you’re there to meet your needs,” EVP of marketing and strategy David Mauken told The Washington Post. “Our purpose is really simple: we want customers to be able to let go and have fun.”
- Five Below, Inc. Announces Fourth Quarter and Fiscal 2018 Financial Results – Five Below
- Five Below Becomes the Amazon-Proof Store – The Wall Street Journal
- Five Below CEO Joel Anderson Brings The Wow Factor To Retail – Investor’s Business Daily
- Five Below is a wonderland of things no one needs. It’s also one of the most successful retailers in America – The Washington Post
DISCUSSION QUESTIONS: How would you describe Five Below’s formula and why is it clicking with consumers? Do you see any competitive threats or other obstacles that might impede its goal to triple its stores?