Developing a Business Strategy to Sell to the New American Generations

In the United States, there is a rapidly expanding store where almost everything costs $5 or less, Five Below. Its promise? To be a store "within reach of all American kids".

Five Below's success is based on this strategy: offering trendy, low-cost products by tapping into the purchasing intentions of younger people. It is not a discount store in the traditional sense nor a necessity store. It's a store designed for those who shop for fun.

Let's analyze the reasons for Five Below's growth in the U.S. market and use the insights to improve our business strategy overseas.

A Sales Model in the American Market Tailored for Teens and Pre-Teens

Five Below operates with different logic than competitors to capture the purchasing intentions of a less focused-on demographic

Five Below targets a demographic between 5 and 19 years old, a segment worth about $250 billion annually in purchasing power and influence in family spending decisions. The chain leverages a simple principle: almost everything costs less than $5. This removes any purchase barriers and makes the store accessible even to those living on weekly allowances or gifts from parents.

Unlike other U.S. chains like Dollar Tree and Family Dollar that sell essential products to families and workers (not necessarily targeting teenagers), Five Below is built around impulse buying for a specific demographic: gadgets, toys, accessories, and items inspired by social media trends.

Stores also carry items that an adult consumer might purchase, however, most of the catalog is aimed at younger kids or even children, items like toys and stickers that teenagers no longer use.

How to Use Trends to Your Advantage to Position Your Company in the USA

In youth retail, the ability to anticipate and ride trends is everything. Five Below, in fact, does not create trends but follows them quickly. Its model involves a constant renewal of products that few competitors can match, eliminating the typical stagnation of discount stores.

“Our goal is not to be the first to spot a trend, but we can be very fast,” said the chain's co-founder Thomas Vellios. “We take discretionary products and through our editing process, with the right quality, trend, and color, we make customers want to come to our stores. It's a trend-right approach.”

The assortment within stores across the United States changes based on TikTok and Instagram trends. This means that a thirteen-year-old girl walking into a Five Below store can find all these items in one place:

• Friendship bracelets, like the ones exchanged at Taylor Swift concerts;
• Dupes of famous brands, from iPhone cases to UGGs;
• Accessories and backpacks related to the most popular franchises among Gen Z and Gen Alpha (Hello Kitty, Spongebob, Moana, Minecraft);
• Hair extensions;
• Make-up and skincare inspired by the most coveted premium brands (the packaging resembles Byoma, Drunk Elephant, Frudia, Sol de Janeiro, Estée Lauder, and other brands you can find at Sephora);
• Design and decor items;
• Candy;
• Stuffed animals;
• Home goods.

Imagine visiting such a place with your daughters and ask yourself:

1) how long would it take for them to beg you to buy at least one item before it's gone; and

2) how much time would pass between the first and second visit to the store.

The Secret to Successful Selling in the United States

4 Reasons Why Five Below Appeals to Generation Alpha

• Prices → With less than $20, a teenager can buy multiple items without needing to ask their parents' permission.
• Novelty → The continuous renewal of the assortment ensures each visit is different from the last.
• Social Effect → TikTok and Instagram set the trends, Five Below makes them available.
• Shopping Experience → Bright colors, well-thought shelf arrangements, and products designed to capture the target customer's attention.

The Lesson from Five Below for Businesses Wanting to Internationalize in the USA

Five Below competes on the ability to ignite the desire to buy by making shopping a light and fun experience.

Understandably, its target is not the average consumer comparing prices and evaluating alternatives, but a young audience, highly influenced by trends and with disposable income not tied to essential expenses.

With a constantly updated product line and a business strategy that maximizes impulse buying, Five Below shows that in retail, besides price, what matters is how the product is positioned and perceived.

While this model may not be applicable to all sectors, it is an interesting case study for those working with young targets and considering expansion in the United States.