Five Below plans to expand its higher-priced concept to approximately one-third of its stores by the end of the year.
In a strategic move to broaden its product offerings and attract a wider demographic, American value retailer Five Below introduced the "Five Beyond" concept in 2021. This innovative store-within-a-store format allows for the sale of items like electronics, lifestyle products, and higher-end goods, which might not typically fall within the retailer's under-$5 price promise.
The concept, which grew out of tests of Five Below's "Ten Below" concept, has been met with positive responses from customers, who appreciate the fresh, value-packed items and the introduction of new categories. In fact, the retailer posted a top-line sales increase of nearly 25% year over year and a record comparable sales increase of 13.8% in the fourth quarter of 2021.
In line with this growth, Five Below plans to extend the "Five Beyond" concept to 30% of its stores by the end of 2021. The company added permanent Five Beyond sections to 140 stores in 2020 and aims to double that number this year. Additionally, 170 to 180 Five Beyond prototype stores are slated for addition in 2021.
The expansion of Five Beyond is part of an effort to elevate the customer and crew experience. This includes offering exclusive online items, such as an expansion of Bugha gaming products and a partnership with illustrator and author Andrea Pippins.
Analysts have taken note of Five Below's strategic moves, citing the retailer's value-oriented assortment, treasure hunt experience, store growth, omnichannel and self-checkout capabilities, expansion into new areas such as gaming and digital, and the rollout of Five Beyond as factors contributing to their positive outlook. The Telsey Advisory Group, in particular, is encouraged by Five Below's strong business momentum and ability to execute at a high level.
Despite the success of the Five Beyond initiative, the pandemic did impact Five Below's performance for the full year 2021, with comp sales down 5.5% and operating income down nearly 29%. However, the retailer remains optimistic about its future, with the expansion of Five Beyond and other strategic moves set to drive growth in the coming years.
- The strategic expansion of Five Beyond, a store-within-a-store format that includes AI-powered research and development in electronics and lifestyle products, is a significant shift in American value retailer Five Below's business strategy.
- In the finance industry, analysts have recognized the potential of Five Below's entrepreneurship, praising their focus on value-oriented assortment, retail growth, and innovative concepts like Five Beyond.
- Despite the challenges posed by the pandemic, Five Below's retail sector remains optimistic, with the introduction of new industries like gaming and digital, and the growth of Five Beyond, being key drivers for future growth.
- As part of their commitment to business growth, Five Below is planning to integrate AI in their retail operations, aiming to enhance customer and crew experiences through personalized recommendations and efficient service.
