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Five Below is a wonderland of things no one needs. It’s also one of the most successful retailers in America.

The Washington Post logo The Washington Post 12/29/2018 Taylor Telford
WASHINGTON, DC - DECEMBER 20: Shoppers at Five Below in Washington, D.C. explore the store ahead of the chain's planned expansion© Amanda Andrade-Rhoades/For The Washington Post WASHINGTON, DC - DECEMBER 20: Shoppers at Five Below in Washington, D.C. explore the store ahead of the chain's planned expansion

Stepping into Five Below feels like being sucked into an arcade game.

For kids, succeeding at this game means handling as much merchandise as humanly possible, accruing points for every fingerprint left on a Hatchimal (a big-eyed plush creature that hatches from a speckled egg) or sparkly slime. For adults, the game means navigating the labyrinth of glitter, neon and Instagrammable products to find something fun and surprisingly worthwhile. Everyone must avoid collision with squealing children that hurtle like missiles through the aisles. The final task is the serpentine checkout line.

One recent evening before Christmas, at the Five Below on Market Street NE in the District, Angel Mckevie was on a mission for gift ideas, so she let loose her 5-year-old daughter in the store. Every time Kennidi clutched something to her chest, Mckevie, 30, made a note. She planned to come back and get everything later, while Kennidi was with her father.

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“Oooh, can I get this?” Kennidi asked as she held up a Shopkin (a tiny, shiny plastic doll enclosed in an orb).

“We’ll see,” she said, in the tone that’s parent code for “Yes, if you’re good.”

Kennidi started jumping up and down. “Please! I really, really want it!"

With its menagerie of shiny, nonessential items that cost $5 or less, Five Below has been shaping a new category of retailer, one that harnesses fun in a consumer landscape often dominated by necessity. Nobody needs hedgehog headphones or lava lamps or unicorns full of iridescent ooze. But for many, there’s something thrilling about being swept up in a shopping experience that hinges on surprise as much as affordability.

“If you spend time in a dollar store or mass merchant like Target or Walmart, it’s not really about letting go because you’re there to meet your needs.” said David Makuen, executive vice president of marketing and strategy. “Our purpose is really simple: We want customers to be able to let go and have fun.”

In the decade since the Great Recession, consumer habits have shifted, with more shoppers looking both for bargains and experiences more than luxury. That’s been a boon to inexpensive stores such as Walmart, Dollar Star and Dollar. But as malls and their anchor stores have begun to fade, it hasn’t been clear what might fill that hole. Five Below could be part of the answer.

A 16-year-old company, Five Below added 125 new locations in 2018. In 2017, it reported revenue exceeding $1 billion. according to its earnings reports. This year, it has already surpassed that figure. Eventually, Five Below aims to have 2,500 U.S. locations and go international. The company is also toying with a move to a slightly higher price point, currently operating six Ten Below stores at cities on the East Coast.

Founded in Philadelphia, Five Below benefited from shifts in spending habits without being in direct competition with other discount-heavy stores. Even if their marquee products capitalize on fads and quirky buys, the stores still carry a wide variety of merchandise and practical items, including electronics and fitness equipment. The chain’s website touts an “amazing experience with unlimited possibilities,” and its stores are lined with slogans such as “$1 stuff: As close to free as it can be!"

The question it faces is whether it will continue to thrive in a hypercompetitive environment. Myriad online competitors, including Amazon and subscription boxes, are targeting Five Below’s customer base, while Target and Walmart are always looking for the next big idea in retail. Meanwhile, a downturn in the economy could make consumers think twice about buying a DIY crystal bath-fizzies kit, even if it is only $5.

Many of Five Below’s items are a cocktail of functionality and kitsch — such as light-up Bluetooth speakers, cute makeup pouches and quirky cellphone accessories. It’s a shrewd approach, given that consumers don’t like to spend money unnecessarily but still want to indulge, said Ran Kivetz, a professor of marketing at Columbia Business School who has studied how emotions shape consumer behavior for more than 25 years.

“Guilt is not necessarily something that people are conscious of, but it still drives their behavior,” Kivetz said. “So the ability to match in the same item a sense of luxury and necessity, it helps alleviate the guilt and helps make the purchase much easier,” he said. “And when the cost is already low . . . it’s very clever merchandising on Five Below’s part.”

While it targets a wide variety of buyers, it’s clear that Five Below’s primary customer base is Gen Z, the generation starting with children born around the turn of the century. As digital natives, Gen Z is made up of savvy online shoppers who are conscious of trends and desirable brands, according to research from the National Retail Federation. Five Below’s lack of specialization allows it to track all manner of fads and crazes. It was one of the first stores to pick up on crazes such as Silly Bandz, slime and fidget spinners.

“We give a sense of discovery throughout the whole store,” said chief executive Joel Anderson, a former Walmart executive. “It’s like T.J. Maxx for kids.”

A few days before Christmas at the Market Street store, J’Nelle Stewart, a precocious 7-year-old, pinballed past towers of toys and things that sparkle. She declared her love for at least a dozen items, including DIY nail kits, face masks and a foam version of a bloody, severed finger.

“I haven’t seen one of these in years!” she cried as she plunked down on a whoopee cushion. She weighed the cuteness of puppies vs. kittens in the notebook section and swooned over a poster of YouTuber Jake Paul.

“This place is everything I dream about,” J’Nelle said.

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