As incomes stagnate or fall for the majority of Americans, a store where everything costs $5 or less is booming. Its promise? “A store that every kid in America could afford.”
Five Below likes a dramatic entrance. When the chain broke ground in Houston this June, it threw open eight stores in a single day, advertising 5-cent hot dogs and giving away multiple $100 shopping sprees and free T-shirts — a tradition of its opening days.
And there have been plenty of openings. CEO and co-founder Tom Vellios has been taking his colorful stores to dozens of new communities each year, offering a simple pitch: Everything costs less than $5. From iPhone covers to candy and indoor play sand, it’s all targeted to teens and tweens, and sales are booming.
The chain pulled in $535 million in sales last year, up from just $89.5 million five years earlier, and will end 2014 with 366 stores, compared with just 82 in 2008. It’s the fastest-growing teen retailer or value retailer in the U.S. by store count and revenue, according to eMarketer data, and there are no plans to slow down. Five Below envisions reaching more than 2,000 stores in the next 20 years, an estimate Credit Suisse analysts deemed “conservative,” hoping for as many as 3,000 instead. To get a sense of that number, Toys “R” Us has roughly 870 stores in the U.S.; Target has about 1,800.