What will happen now that Five Below has gone above $5?
Five Below has started selling some products for more than $5 following a test of higher price points. The higher prices address rising costs and offer the opportunity to stock costlier items at “extreme value” in the home and tech categories.
The expansion was marked by the introduction of a new “Cool Stuff. $1-to-$5-to-$10” logo and a “We owe you an explanation” note posted on its website and social media pages.
The note read: “For 17 years, Five Below has been providing our customers with cool, trendy stuff for $1-$5. We’ve always done everything possible to absorb cost increases. Recently, we had to raise prices above $5 on tech items to keep providing the products you love. We’re calling this ‘Ten Below Tech.’”
The retailer added: “We also discovered a handful of $6-$10 toys and games we thought you wouldn’t want to miss. We’ve separated these items in a special ‘Ten Below Gift Shop.’ Once you’ve had a look, we hope you’ll agree that these high-value gifts are priced as low as only Five Below can.”
Five Below said the company has no plans to change its name because most prices are at $5 and below.
On its second-quarter conference call on Aug 28, Joel Anderson, Five Below’s CEO, said the “Ten Below!” in-store section tests were enabling the retailer to offer higher-end products like Xbox and Wii video games, Nerf toys, remote-control robots and spa items, like neck and foot massagers. “We continue to be pleased with the customer response,” said Mr. Anderson.
The 10 Below! tests were also “very valuable,” he said, in guiding pricing and communication with tariff-mitigation strategies.
Comments on the price change on Five Below’s Facebook page skewed negative, with some blaming tariffs and higher wages. Comments included:
- “So you have pretty much equalized yourself with Walmart. We might as well just go there … I can get my groceries while I am there spending the $10 on something. Disappointing.”
- “That’s terrible. The entire reason we went was because it was $5 and below. I didn’t have to budget or think.”
- “I foresee no issue! There’s always going to be negative Nancies! I will continue to shop at your store!”
- We owe you an explanation – Five Below
- We owe you an explanation – Facebook
- Five Below starts selling products for more than $5 – CNN
- Five Below Is Finally Testing Its Ten Below Store Concept – Philly Magazine
- Five Below Inc (FIVE) Q1 2019 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: Is Five Below damaging its value proposition and shopping experience by selling products above $5.00? Does management need to be more transparent with its tactics or would the best move be to abandon the pricing shift?