Five Below Shakes Up Its Model

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Five Below Shakes Up Its Model

11/20/2019

Five Below is making a major change to its business strategy that is at odds with its core value proposition.

The discount retailer has built its massive physical footprint and brand image on the promise that everything it sells is priced $5 or less. That is all changing now as the retailer announced plans to begin selling items with price points as high as $10 in two sections in its stores.

For 17 years, Five Below has been providing customers with cool, trendy stuff for $1-$5,” the retailer said in a statement. “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.”

In addition, the retailer will also be selling select toys and games at price points of $6-$10. Just like the tech items, these new products will be separated from the rest of the retailer’s merchandise in a “Ten Below Gift Shop”.

While the retailer’s new pricing structure is at odds with its name, it will continue to operate as Five Below.

“We understand this change surprised [customers],” the statement said. “We’ve already received tons of feedback ― some positive, some negative, all passionate ― and we want [shoppers to] know that our commitment is always to offer the best possible value."