Five Below’s Rapid Expansion Should Give Dollar Store Execs Fits
Although Five Below has been billed as a teen retailer selling stuff kids can actually afford, it’s quickly turning into the go-to place for wrapping paper, gift bags, cosmetics, candy, and even smartphone cases. And Business Insider argues that it’s becoming a big threat to traditional dollar stores.
The numbers don’t lie: Fourth-quarter profits rose 34 percent, and it expects to add 70 stores this year for a total of 436 nationwide, according to MarketWatch. The company founded by Encore Books and Zany Brainy founder David Schlessinger now has $500 million in sales.
Business Insider offers some analysis:
According to Morgan Stanley, the trendy brand is far more popular with teens than chains like Dollar General and Family Dollar.
While Five Below is much smaller than these chains, analysts at Credit Suisse believe it could eventually have 3,000 stores.
Capturing young people’s dollars is essential because those people can grow up to be loyal, lucrative customers.
For the record, tradition dollar stores have done a good job in recent years of adding wider ranges of products and price ranges.(Yes, it’s ok to walk into a dollar store and spend $5 on an item.) What was once filled with super-cheap knock-offs, now has name-brands like Maxwell House coffee, Cottonelle toilet paper and Purex laundry detergent. They even sell Nutella.
But there’s little debate that Five Below has the excitement factor on its side. Ask a teen which store they want to go to — the one with the cool phone cases or the one with the well-priced dish soap?