Five Below discovered that its shoppers were not keen on the pricier Five Beyond section, and eliminating it actually boosted sales. The discount retailer removed the dedicated area for higher-priced items, once marked in-store with a yellow banner, and instead integrated products such as $15 mirrors and Bluetooth speakers into their regular aisles, CEO Winnie Park told analysts on an earnings call Wednesday, as reported by Retail Dive.
Strong First Quarter Performance
This change accompanies a robust first quarter for the company. Net sales surged 32.5 percent to nearly $1.3 billion, according to a Wednesday release, while comparable sales rose 22.7 percent. Five Below also raised its full-year outlook, now projecting sales between $5.4 billion and $5.48 billion.
Growth Across Categories
Growth was observed across multiple categories, with particularly strong momentum in games and toys, fueled by the continued popularity of viral squishy products, executives noted. The company rounded prices to whole-dollar amounts while striving to make the value of items above $5 clearer for customers, according to Retail Touch Points. We have not seen resistance on prices above $5 if we can pack enough relative value, Park said. The customers have definitely voted for it.
The Squishy Dumpling Trend
While executives admitted that Five Below did not originate the viral squishy dumpling trend, it helped amplify it after the toy had already been in its assortment for years. The company said it leveraged social media buzz by detecting rising interest in the popular sensory fidget toy designed to resemble a smiling steamed bao bun, boosting online engagement and expanding its squishy product lineup to build on the momentum.
Executives also highlighted a mid-May in-store squishy dumpling event, which attracted attention as a cultural moment. However, they noted it had limited impact on quarterly results since it was a one-day promotion with constrained supply.
Impact on Customer Behavior
While the trend helped drive more customer traffic, it also resulted in smaller average purchases, with shoppers buying more frequently but spending less per visit compared to typical baskets.
