Five Below is Way Above

Five Below, Inc., which sells everything from basketballs to yoga mats for $5 or less, might be the most successful retail chain you’ve never heard of.

Five Below’s store count has quadrupled to 750 since its 2012 IPO, with its first NYC location opening Friday. Sales have tripled to $1.3 billion and profits are up. Preteens and teens are Five Below’s core customers. They are encouraged to bounce balls, test-drive RC cars and participate in slime-making—anything that will help them spend their allowance money.

Five Below has items for grown-ups, including cucumber face-masks, storage bins and vintage candy. The company focuses on the treasure-hunt for unique items, not essentials.

As with Costco Wholesale, Walmart, Dollar General and The TJX Companies, Inc. the culture at Five Below keeps costs, and prices, low. The company ships basketballs deflated, without boxes, lowering freight costs, and then inflating once they arrive at the store.

Most products are created from scratch & at these prices ecommerce sales are negligible; shipping costs more than the entire purchase. Similar items are considerably more expensive at Amazon.

Suzanne Kapner, The Wall Street Journal