How do you make the popular tween-oriented retailer Five Below even more crowd-pleasing, successful, and profitable? On September 22nd, some intrepid Penn students tried their hand at it, competing for a total of $30,000 in prize money at the third annual Baker Retailing Center Ideathon.
A Candy-Fueled Pressure Cooker
The students were determined to come up with brilliant ideas even if they had to stay up all night…because they did have to stay up all night! The Ideathon ran from 12:30 pm on Friday to 12:30 pm on Saturday, giving an exciting edge to the competition.
This year’s sponsor Five Below graciously played host in their corporate offices, located in a 20th-century retail landmark: the Lit Brothers building in Philadelphia. Inside, the students were treated to a tour of Five Below’s fun, creative work environment: bins of Squishmallows plush toys, towers of candy, eye-popping wall graphics, hanging basket chairs, pet beds, and glimpses of the spooky decorations the company was rolling out for Halloween. Adorning one wall was a giant Plinko inspired board filled with game pieces to celebrate employees who had achieved five years with the company.
The student teams were randomly assigned one of two challenges. Challenge #1 was to design a loyalty program
to attract new customers and increase customer retention, customer spend over time, and engagement. Challenge #2 was to define “The Next Big Thing”: a new concept to further differentiate Five Below, with goals of boosting customer affinity with the brand and increasing both visits and average purchase size.
The two first-place teams for the two challenges would each take away $10,000; the two second-place teams, $5,000 each. The student groups would have to wow the judges with a presentation lasting only three minutes.
Five Below mentors helped guide and inspire the students as they worked. Also keeping them going were meals, snacks, candy treats, a splatter paint room, a game room, conference areas, and—to make their feet happy before those stressful presentations—complementary pairs of customizable Chuck Taylors for everyone.
An Invitation to WowTown
“Welcome to WowTown!”
With those words, Five Below COO Ken Bull opened his talk at the Ideathon. Who has gone into a Five Below store, and how did it make you feel? he asked the students. After gathering responses including “excited,” “playful,” “overwhelmed,” “energized,” “happy,” “curious,” and “nostalgic,” he focused on the word “fun” above all. Fun, he said, is the essential word in Five Below’s purpose statement “Five Below knows life is better when you’re free to let go and have fun!”
Of course, the “fun” needs to be accompanied by low prices. Bull spoke about ways the store has had to innovate to keep prices at $5 and lower on most items. He showed the students a deflated brand-name basketball. One of Five Below’s early challenges, he said, was “you can’t be a kids’ store unless you can offer a basketball. A good basketball.” But how could they offer one for $5 or less? Solution: They got rid of the outer box and put electric pumps in the stores to inflate the basketballs on-site. Their packaging and freight costs dropped significantly—and presto, a quality basketball for $5. Plus, because it’s unboxed, it’s something kids can play with and enjoy when they visit the store.
Bull elaborated on Five Below’s winning appeal. He explained that it is organized and stocked like a “mini department store for kids” containing eight “worlds.” The worlds are Play (games), Tech (electronics), Create (art supplies), Party (party goods), Candy (candy!), Style (t-shirts, beauty items), Room (room decorations), and New & Now (trendy and seasonal items).
Capitalizing on Crazes
Five Below must reflect the latest trends, Bull said—it’s very important to their market. “Kids are all about trends at the end of the day.” Behind the scenes, the store categorizes the trends into three buckets: first, “crazes and fads” like the one-chip challenge and fidget spinners; second, licensed brands like Hello Kitty and Disney; and finally, the “on-trend assortment” including items like yoga mats, fleece blankets, and headphones.
Five Below’s differentiated store experience—which Bull described as “like a treasure hunt”—is a key factor in making it irresistible to tweens, he said. There are vibrant signs, upbeat music, a friendly crew, low sightlines across the store, and fixtures that encourage interaction with the products. And since most items everything only costs $1-$5, it’s hard for parents to say no.
What’s more, the stores are kept small enough (about 9,000 square feet) so that parents can let their kids roam and explore while keeping an eye on them. “You probably wouldn’t want to do that in a big box store—you’re holding on for dear life,” Bull pointed out. He added that Five Below needs to be parent-approved as well as kid-approved, since its target customers—tweens—aren’t old enough to drive themselves to the store.
Founded in 2002 in Philadelphia, where it is still based, Five Below now boasts over 1,400 stores in 43 states, according to Bull. He noted that the business now employs 25,000 people, a count that doubles during the holiday season. “We even have a store on Fifth Avenue, believe it or not—right down the street from Gucci,” he chuckled.
And the Winners Are…
The student presentations featured exciting, innovative concepts, backed up with financial projections. The judges heard about ideas involving curated bundles, interactive AR experiences, scavenger hunts, Fun Fridays, mystery boxes, and brand partnerships, not to mention ways to monetize overstock items and to nurture customer loyalty as tweens grow up.
Challenge #1, Loyalty Program, was awarded to team “Funtastic Five,” which included Delaney Sheetz, Michelle Yan, Rajlaxmi Adwant, Trisha Nagpal, and Luca Bisi. Coming in second was Team “6 Above” with Liam Shi, Cindy Zheng, Harrison Chong, Saige Park, Christine Yan, and Sophie Shao.
Challenge #2, The Big Idea, was won by team “High Five,” featuring Ashna Patel, Hannah Zhang, Shailesh Senthil Kumar, Tej Patel, Aravind Krishnan, and Shaurya Khanna. Second place went to team “Five Mind” with Anoushka Ambavanekar, Diya Amlani, Julia van Lare, Adhwaith Neralla, and Zach Koung.
The excited winners held presentation checks and posed for photos against an eye-popping Ideathon/Five Below backdrop.
The High Five team’s Tej Patel said his Ideathon experience was “great,” if something of a nail-biter: “We didn’t actually have an idea until roughly 1 or 2 am. The slides weren’t finished until like 6:00 am today. It was very last minute, but I think it all worked out for the better.”
Anoushka Ambavanekar of the Five Mind team felt that the secret to her group’s success was “we really spent a lot of time fully fleshing out our idea. We tried to come up with an idea very early on so we could spend the time developing it.”
PENNtreprenurs team member Sebastian Startz called the event “incredible… Five Below and Baker Retail pulled out all the stops for us so we felt really engaged. Got to meet some new friends, talk about some big ideas, and really see the culture firsthand.”
After the competition, Ken Bull told the participants how impressed he was. “You guys energized us! Give yourselves a lot of credit for getting us all fired up.”
As for the students, Ideathon 2023 was a unique opportunity to think on their feet, collaborate under pressure, and learn more about real-world retail while having a great time doing it. It was an experience they would no doubt long remember from their years at Penn.
Our 2023 Ideathon Winners