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A teen retailer that sells everything for under $5 is becoming a huge threat to dollar stores
(Five Below on Facebook.) Five Below has a big expansion plan.
Five Below, a teen fashion chain in which everything costs less than $5, is becoming a huge threat to traditional dollar stores.
The chain has 366 locations, up from just 82 in 2008, according to a recent report by Morgan Stanley.
Sales have surpassed $500 million.
The brand sells everything from tech accessories and sporting goods to party supplies and bedroom decor.
The average store is 7,500 square feet, about the size of a Gap store.
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.
(Morgan Stanley)
Capturing young people's dollars is essential because those people can grow up to be loyal, lucrative customers.
While traditional dollar stores have a frumpy image, Five Below is seen as trendy and exciting.
A photo posted by Five Below (@fivebelow) on Mar 28, 2015 at 6:38pm PDT
CEO and cofounder Tom Vellios tells Sapna Maheshwari at BuzzFeed that his childhood love of five-and-dime stores inspired the chain, which was founded more than a decade ago.
While big-box chains are generally getting smaller, Five Below's price point is low enough to bring in customers.
Five Below focuses on quick imitations of popular teen trends, such as the Rainbow Loom craze last year.
"Our goal is not to be first to identify a trend — we have the ability to be a very fast second," Vellios told BuzzFeed.
Parents on social media say they like the chain because it keeps their children happy and is cheap.
The brand is also popular for selling smartphone cases, a booming market that Forever 21 is also trying to capitalize on.
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