Five Below Goes Far Above For Teens

It turns out “brick and mortar” isn’t as dead as everybody thought. Walmart stock is trading at an all-time high of around $100 a share. Kohl’s reported sharply higher sales over the holidays. Amazon purchased Whole Foods, and some analysts speculate it will take over Target to further grow its footprint. Now, the popular catchphrase is “omnichannel retail.”

In teen retail, few brands are doing better than Five Below. According to Stores, the National Retail Federation’s online publication, Five Below operates about 600 stores in 32 states; is opening about 100 new stores each year; posts year-over-year sales growth of 20%; and grosses over $1 billion a year. Five Below accomplishes all of this while selling everything in its stores for $5 or less. But its stores aren’t traditional “dollar stores,” selling cheap staples to heads of household; instead, Five Below targets teens and tweens, and focuses on eight key categories: tech, sports, room, party, style, create, candy and now (representing seasonal items).



CEO Joel Anderson recently shared some of the brand’s secrets with Stores. Anderson mentions how closely Five Below follows tween and teen trends at the store and customer level, and then acts upon them. Last January, his team heard that fidget spinners were big with their customers, and six weeks later, they put them on their shelves. Anderson points to “three S’s” that drove success in 2017: spinners, slime and smileys (emoji).

Five Below delivers on its customers’ wants, not their needs, and fulfills them in a fun atmosphere fostered by a strong corporate culture. Stores hire personable associates, and encourage them to wear jeans to go along with their branded T-shirt. The stores have bright, interactive fixtures (like candy towers) to create a visibly fun environment, and are clean and well-lit. They hold demos on weekends, and music is always playing and candy is always available, so all the senses are engaged.

The online platform supports the brick-and-mortar stores, not the other way around. It’s designed mostly for those who don’t live near a store, and allows them to create shopping lists of things they want when they do visit a store. So Five Below zealously creates and maintains a physical shopping environment with extreme value, a fun shopping experience, and “can’t miss” deals and demos. 

Five Below’s success demonstrates the importance of three key strategies to teen marketers:

* Ongoing research is key. Five Below’s ability to spot and act quickly on trends is instrumental to its success; witness its ability to get spinners on its shelves in six weeks after seeing their initial popularity. Consider insight communities and organized trend spotting programs to continually monitor for these trends, and a “skunk works” to quickly act upon them. 

* Price is table stakes, not the whole value proposition. For any mass retailer, low price has to be a given, and you have to be competitive with online retailers. Just offering low prices isn’t enough, though, since the Internet will almost always offer even better pricing, and some desperate competitor will always undercut you. And a low price paired with a bad store environment won’t win anybody over; look at the continued struggles of Sears and Kmart.

* Brick and mortar must offer something unavailable online. To get customers into a store, it needs to provide an experience not available from ordering online on Amazon. It needs to be fun, an outing in and of itself, and a social experience that a group of friends can share. Look for creative ways to drive traffic into your stores with demos, music, food, social mixers, charitable events and other promotions.

Brick and mortar isn’t going away; it’s just changing, and retailers must change with it or die. Follow Five Below’s lead to stay relevant with your customers of today and tomorrow.

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