Holler for a Dollar
At BEL, we like to experience the current state of retail for ourselves so that we better understand the landscape and see the obstacles brands are facing. Our reoccurring retail walkabouts involve an afternoon of field research scoping out the latest and greatest retail displays, paying special attention to new, tech-driven retail solutions. This hands-on delve into the current retail climate allows BEL to better assess and provide top-end retail solutions for different brands’ needs. Check-in on Retail Roundup every other Monday for updates and insights from our walkabouts!
Our latest walkabout took place in the 5th Avenue/Rockefeller Center area in New York. Smattered with high end brands and looming flagships such as Nike, Tiffany’s, Lego and more, 5th Avenue is the ultimate shopping destination. There was one flagship that stood out among the rest- Five Below. Considering the rent on 5th Ave costs a pretty penny, I was surprised to see a discount store, let alone a flagship discount store, gracing its streets.
The Experience
After entering the building, customers descend an escalator to reach the store floor. As I walked in, one of the women at the register yelled a welcome message (which I didn’t think much of at the time, but will circle back around to this later). The actual store floor was everything you would expect from a standard Five Below: shelves with every square inch covered with product ranging from electronics to makeup to clothes and much more, all $5 or below. Sitting at around 10,800 sq ft., the store has a massive amount of product.
Here are a couple of things I thought Five Below did really well:
Navigation
Five Below is generally one of those stores you walk into a breathe a “woah” simply at the quantity of product they’re able to fit onto their shelves. The flagship is just that, amplified even further with more space. Despite the overwhelming amount of things to discover, navigating the store was surprisingly easy. All sections were clearly labeled and the aisles were clean and easy to walk through.
Organization
When it comes to organization at a discount store, my expectations are never high. I anticipated fairly disorganized shelves, missing products, and planogram nonconformity at the very least. Especially given how much foot traffic passes through the stores on 5th Ave, I was pleasantly surprised by how clean and organized the store was. There was rarely a thing out of place and I saw several employees actively reorganizing throughout the store as I passed through. One of the areas I always check to really judge how organized a store really is, is the makeup aisle. Even large retailers can struggle with keeping this area clean and properly stocked. Again, quite shocked to see that the shelves were very neat, with most things in place and well stocked.
Checkout
It’s been awhile since I’ve been in a Five Below so I peeked around and ultimately walked away with an incredibly cute incense holder and some incense sticks. I will say that checkout was the one area where navigation wasn’t as clear. The main line for the checkout cashiers was easy enough to find. Also organized well with impulse buy bins lining the queueing area. However, it wasn’t until an employee that was restocking off to the side pointed out the self-checkout line, that I was even made aware it was there. While there’s generally impulse buy merchandise around any self-checkout machine, Five Below took it to the next level. Every inch was covered, and the products that surrounded each machine was different. I was immediately intrigued by the absence of standard checkout items such as candy, magazines, etc. At the time, all three self checkout machines were open so I selected my machine based on which surrounding merchandise I was most curious about/interested, which turned out to be luggage and metro card tags in this case!
As I checked out, one of the questions that popped onto the screen was “were you greeted upon entering the store?” Not having thought much about the greeting I received when entering, this question hit me with the realization that “oh, they’re REALLY making an effort to welcome everyone.” With checkout being one the final touchpoint between client and brand, this really imprinted in my mind, the extra effort Five Below was going through to create a welcoming shopping experience for their clients.
Overall, my visit at Five Below exceeded my expectations. While the merchandise was in-line with what a standard Five Below would sell, the quality of organization throughout the storefront left me thoroughly impressed. I also appreciated the conscious effort Five Below was making in creating a pleasant, welcoming shopper experience.
As I stepped away from the Five Below nestled amongst the other flagships of luxury retail giants, I began to question what the future position of the discount store looks like in the ever-changing retail industry.
The Rise of the Dollar Giant
One of the biggest shifts in spending habits during the pandemic revolved around food. With the shuttering of restaurants and other social spaces resulting in more time spent at home, dollars quickly moved from being spent on restaurants and entertainment towards groceries and home cooking. At the same time, grocery store prices increased over 3.5%, the most they have in a decade.
While labor and raw material sourcing create changes in cost, the price jump can also be attributed to consumer behavior. Sharp increases in grocery demands pressure the supply change, leading to pressure on retail pricing. In the restaurant industry, prices for produce increased dramatically as well, suggesting that food simply became more expensive overall, as industries suffered setbacks in supply chains due to coronavirus.
So what does food have to do with dollar/discount stores? Absolutely everything.
Economic consequences of the pandemic and rising inflation have exacerbated the widening disparities of economic inequality. While most brands saw brick and mortar locations close during the pandemic, dollar stores continue to report record-breaking sales. With grocery store prices skyrocketing, a growing number of Americans have become increasingly reliant upon dollar stores for everyday needs. Reality is, a dollar can buy you half an apple at Whole Foods, or it can buy you an entire meal at the dollar store.
But the low cost of food from the dollar store, comes with a high price via health. Dollar stores are a double edge sword. On one hand, they provide greater accessibility to food for low income households. On the other hand, dollar stores only provide processed foods, leading to community-wide health issues and lack of access to fresh produce as they edge out small grocery competitors.
But dollar stores are responding. Leading the charge is Dollar General who currently has 1100 locations that offer perishable groceries, with plans to add 700 more. While this certainly helps their bottom line, could Dollar General become a fresh-food solution for thousands of families across America?
As we look at the evolution of brands in this era of inclusivity, such as Victoria’s Secret, does that need for inclusivity apply to grocers as well? Five Below seemed out of place on 5th Ave at first glance, standing out as discount against luxury. Perhaps it isn’t. Perhaps its presence is a reminder of what economic inclusivity within retail looks like: welcoming, just like their associates.