Discount Retailer Five Below Plans To Open 200 More Stores In 2023

Five Below, a discount retailer known for selling items for $5 or less, plans to open 200 new stores and remodel another 400 to offer "Five Beyond" items priced at $6 or more.

Five Below has altered its real estate strategy and expanded its view of “the type of centers in which we can locate a Five Below store” as it prepares to roll out a record 200 stores this year, President and CEO Joel Anderson said during a Q4 2022 earnings call last week. The brand opened 150 new stores in 2022, bringing its total to 1,340.

The discount chain also plans to remodel 400 stores in 2023 to accommodate its Five Beyond section, with plans to eventually expand that model to all of its locations, Anderson said. Almost 20% of the Five Below store fleet has already been converted to include Five Beyond, Chain Store Age reported.

“Customers who buy a Five Beyond item, defined as $6 and above, continue to spend over twice as much as those who buy only Five Below items, illustrating how powerful a driver these store conversions and Five Beyond products are to maximizing the productivity of our stores,” he said during the Wednesday call.

The stores are also offering more services, like ear piercing and helium balloons, he said. 

Overhauling its real estate review process led Five Below to expand its traditional focus on suburban power centers to accelerate store openings in urban and semi-rural areas, Anderson said.

“We've got many more urban in the mix, more rural. We're starting to do more grocery-anchored centers. We opened some of our first outlet stores last year, and we'll continue to test new venues,” he said in response to a question during the call.

Trendy products were important to gains in Q4 more than closeouts, Anderson said, noting Squishmallows and Kendall + Kylie-branded bags that sold for $5.

“But honestly … they weren't a big piece of penetration for the quarter from that perspective. I think our share gains more came from the conversions and marketing,” Anderson said. “Those really were where we saw the two biggest drivers for the quarter.”

Five Below is not the only discount chain expanding its presence and offerings in the retail market. 

Ross Dress for Less plans to open 100 new stores in 2023, 25 of which will be under its dd’s Discounts brand. Dollar General announced it would open another 1,000 pOpshelf stores, its slightly higher-priced concept that targets suburban women in households with annual incomes of between $50K and $120K, within three years. 

Dollar Tree, which used to price all items at $1, raised its price point to $1.25 in 2021 and began offering “premium goods” for $3 and $5.