Placer Spotlight: How Five Below Turned Pandemic Lemons into Lemonade

Balloons against purple background

Foot traffic to Five Below has been increasing steadily for the past several years, but the pandemic catalyzed a major growth spurt. We dove into this rising retail giant to understand what contributed to its astronomical rise. 

Leveraging the Lockdown  

In mid-March, 2020, Five Below announced that it would close all of its stores in response to the emerging Coronavirus. But even at the height of the COVID closures, Five Below CEO and President Joel Anderson (formerly the CEO of Walmart) could already see the potential opportunity. In an interview given April 6th 2020, Anderson noted that the economic situation would likely open up retail vacancies in key cities and states that could help Five Below’s expansion plans. 

Indeed, brick and mortar expansion has been key to Five Below’s success. Before the pandemic, the retailer had plans to open 180 new stores in 2020 on top of the 750 stores it operated in January 2019. While the brand didn’t quite hit its pre-pandemic target, the company still managed to open an impressive 120 net new stores in fiscal 2020, and another 170 new stores in fiscal 2021 – increasing its store fleet by over a third in just two years. This large-scale expansion has helped the retailer pull ahead of the wider discount and dollar store category ever since the company fully reopened its stores in June 2020. 

Bigger Store Fleet with More Customers in Each Store

But while some of Five Below’s massive foot traffic growth is due to its larger store count, the real testament to the retailer’s strength lies in its visits-per-venue metrics. Since 2008, the brand’s stores have gone through multiple redesigns, with the prototypical store getting larger and larger with every redesign – and attracting an increasing number of customers per store.

For the past year, average monthly visits per store have been up every single month, with foot traffic per store this past January and February up by 12.2% and 12.0%, respectively, when compared to January and February 2020. So, not only does Five Below now have many more stores than it did before the pandemic, the number of consumers visiting each store has also risen significantly. 

The substantial growth in foot traffic per venue can explain the company’s recent announcement that it intends to reach 3500+ stores nationwide or triple its current store count by 2025. 

Impervious to Inflation and Rising Gas Prices 

While inflation is pushing prices up, Five Below has found a creative way to go beyond its usual $5 price ceiling while staying true to its commitment to low prices. Following successful pilots, Five Below is now expanding its “Five Beyond” shop-in-shops – a section in the back of the store with value-priced products that cost more than $5. This allows the retailer to sell a wider assortment of products without losing customers only interested in the $5 or less items. 

So far, this strategy is paying off. The rise in gas prices and inflation has not hampered the brand’s growth, and comparing overall visits and visits per venue over the past six weeks to 2019 levels shows that both metrics are considerably and consistently up. 

Five Below stores do not carry fresh groceries, medicine, or other basics for which customers visit stores during times of economic uncertainty; instead, the company’s motto of “let go and have fun” seems to evoke fundamentally unessential products. The continued success of the brand shows that even in a downturn, consumers will still spend money on products that bring them joy – so long as they can do so without breaking the bank. 

What’s Next for Five Below? 

Aside from more stores and more Five Beyond shop-in-shops, the brand is also planning a new flagship store in New York’s Times Square. And despite the latest economic challenges, there is no reason to think that the brand’s growth will slow down anytime soon. Five Below has proved that it can thrive even under the most difficult circumstances. 

Compared to 2019, overall visits, visits per venue, and the share of returning visitors have all grown – an indication of how the brand successfully turned the pandemic lemons into lemonade. In the 20 years since its founding, Five Below has built itself up into a household name, and the brand’s future looks rosy.  

For more data-driven retail insights, visit our blog

Get 3 brand & industry
breakdowns every week

Subscribe to the newsletter

Subscribe to the newsletter

Where Do We Go From Here?

Try Placer Free

Gain hands on experience with the data

Schedule a Demo

Meet our advisors to learn more about Placer

Schedule a Demo

Stay on top of the world of retail.

Join 100’s of CRE professionals getting their regular dose of foot traffic analysis.

Sign up for the newsletter:

Weekly & Monthly Views Available in Chains

Reveal the performance of over 600 brands – instantly