Five Below is poised to buck the mother of all retail trends

JON MARINO | June 5, 2019

article image
Discount clothing retailer Five Below ($NASDAQ:FIVE) is set to report earnings Wednesday June 5 after the market closes - and it could buck the mother of all 2019 earnings trends.The Pennsylvania-based retailer is seeing expectations from a group of analysts tracked by Zacks Investment Research of EPS $0.35. At a time when virtually every company dependent on a brick-and-mortar location for clothing sales disappointed on earnings and have been battered on public markets, Five Below's business model (of selling nearly everything in the store for $5 or less, and doing so at cheaper real estate price points) has guided the stock higher for years as other competitors have faltered, losing foot traffic and shuttering locations to offset poor performance. Here is how Five Below stays above the fray.

Spotlight

SPS Commerce

SPS Commerce perfects the power of trading partner relationships with the industry's most broadly adopted, retail cloud services platform. As a leader in cloud-based supply chain management solutions, we provide proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. SPS Commerce has achieved 68 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, please contact SPS Commerce at 866-245-8100 or visit www.spscommerce.com.

OTHER ARTICLES

We Have No Idea What We’re Doing

Article | December 15, 2020

Prior to the pandemic and quarantine, less than 8% of commerce was online. As of Q3FY20 eCommerce grew north of 14% of all commerce. So while the Retailpocalypse was in its last phase, physical retail still outsold eCommerce by at least 7:1. The failure rate of crowdfunding campaigns is 85%. The failure rate of eCommerce store owners ranges from 80 to 97%. What if there were a way to bridge the gap between these three failure rates? What if we could bridge what people consume online with what they purchase offline before waiting for brain-computer interfaces (BCI)? In short what if we could bridge social and commerce? (Example use case.) Mostly missing are the memorable, meaningful, measurable and monetizable responses from people interested in stories about beagles, princesses and pitbulls, pets, car repair, raspberry blueberry vinaigrette gyros, budget-saving techniques for holiday travel, getting stuck at airports in blizzards, rental cars and Cup o’ Noodles, My Fair Lady and @Instacart, dining out at the delicious Banana Leaves café, cooking kosher halal gelatin-free, blue #1 artificial dye-free egg nog flavored marshmallows, 50th anniversaries and chocolate ganache, adventures camping with youth groups, birdhouses built by kids, rainbow hair dye, artificial dye-free cakes DIY for your child’s birthday party, and Halloween gingerbread houses and Greek Mount Olympus costumes. Other than ad revenue Youtube collects which most of it’s video posters see little of, monetizing the DIY craze has proven quite tricky. Ditto for Christmas shopping, smartphone accessories, buying a new luxury Subaru online with no salesman, how to get hard to find contact lenses and vitamins for kids, how Amazon often has thrift store prices on inventory thrift stores rarely carry, the challenges of buying clothes on Amazon that don’t fit but you don’t realize that until the clothes arrive, DIY car repair, funny car repair, glorious victory of car repair, diaper cakes and muscle aches, drones and honey scones, Triple A baseball and blue-tailed skinks, favorite foods, fasting, and Boston, fused vertebrae and buried treasure, where to buy school supplies when most stores are sold out, creameries and charcuterie, Bridging social media with eCommerce has been the white rhino of many investors and start-ups for many years. Instead of working toward such solutions, we have VC’s and stockholders asking about vanity metrics: - How many people looked at your website? Instead of: How many people subscribed or how many purchased an item?- - How many downloads per month does your app have? Instead of: How many of the people who downloaded your app have note removed it less than 30 days later? - What’s your ad revenue? Instead of: How can your product capture or create more value? In reply entrepreneurs answer these questions, they often present their increased spend on marketing followed up with vanity milestones: “We’re using Google Analytics and similar providers to track every movement of the supply chain, to ensure when the purchaser’s journey is completed, there’s no delay in delivery. This will lead to more frequent purchases ideally of higher priced products, and… We are pitching to Chipotle on Friday!” This leads to concentrated research on Chipotle’s SWAT, followed up with an excellent pitch including a demo via Zoom. The result of this pitch is usually: 1. The person loved the pitch and accepts your invitation to meet again with his/her manager next week. 2. The person you pitched to is not the decision-maker 3. The person you pitched to doesn’t quite understand what you’re pitching 4. The person you pitched to had 3 other projects due by COB and wasn’t fully present and listening to your 10-minute pitch 5. You provided too many facts too quickly, trying to build rapport 6. You shared how you’re product can reduce shrink, increase ROI, decrease costs, increase retention, and cure cancer. The person you pitched to doesn’t believe all those promises. 7. The person you pitched to is afraid of advocating change; the risk from change that results in lesser results can lead to negative repercussions. The risk of “business as usual” is minimal. Forgotten by almost all eCommerce platforms and store owners are the facts that: - People behave differently when they are observed (best behavior vs. average behavior). Despite this, we are seeing an incredible number of start-ups that offer to help track everything your customers do. “We’re Palantir for eCommerce” is essentially the ethos of these companies. - The Paradox of Choice by Barry Schwarz – too many choices overwhelm the person making the choice, to the point that no decision is made. If you don’t train your mind to buy what you want even if you have to look on pages other than Amazon and Google Shopping, you might end up buying the product you almost wanted. - The concept of incentivized virality – when PayPal gave $20 to each person who referred another person who joined, and when DropBox offered free data storage to people who referred friends who joined – which Reid Hoffman and Chris Yeh brilliantly detailed in Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies. So now each eCommerce platform tries to copy Amazon who built their model on the opposite of physical retail. Consider your last experience renting a car at an airport vs. Amazon: - Do you want to refill the gas tank or would you like us to? - Would you like liability only or more comprehensive types of insurance coverage? - Would you like a GPS? - Would you like to join our exclusive members club? etc., etc. Adding to what @ElevateDemand said, “ B2B marketing is broken,” Raj De Datta, CEO and cofounder of @Bloomreach said, “The future of B2C marketing looks like B2B marketing,” Kevin Marasco, CMO of @Zenefits correctly said “marketing is going back in time from B2B to B2C” or person to person. Smart speakers in every phone, tablet, laptop PC, TV, and car succeeded by BCI, which @Facebook and @Neuralink are pioneering, hold great potential. Until those products arrive or after their R&D phase, @Homemaide’s object recognition and image recognition models can provide the sorely needed bridge between Social and Commerce.

Read More

Factories shift operations in scramble to restock supermarket shelves

Article | December 15, 2020

With supermarkets stripped of food and many other essentials, consumer product companies halted factory runs of niche items such as scented bleach in order to speed up production of more basic merchandise that is in high demand. Brick-and-mortar retailers have warned that hoarding toilet paper, cleaning supplies and food staples was fueling shortages. Amazon.com (AMZN.O), the biggest online retailer, said it sold out of many household staples after orders spiked. As the fast-spreading coronavirus continues to alarm consumers across Europe and the United States, Trump held a phone call on Sunday with 30 executives from grocery stores including Amazon.com’s Whole Foods, Target Corp (TGT.N), Costco Wholesale Corp (COST.O) and Walmart Inc (WMT.N). Trump Administration official Larry Kudlow assured television news viewers that U.S. supply lines were “working pretty well.”

Read More

How Is Your Ecommerce Business Adjusting to Coronavirus? Let Us Know

Article | December 15, 2020

Reality as we know it has been interrupted. Our entire lives have been put on hold. And it’s not a great feeling. To fight the global coronavirus pandemic, we’re all stepping back from large gatherings even if it disrupts our business goals or denies us the ability to catch up with dear friends. Not only have we postponed Ecommerce Operations Summit 2020 but we are brainstorming other ways to do our part and contribute however we can. Our focus right now is on everyone whose lives have been turned upside down or even put at mortal risk by this invisible enemy. How has this impacted you? While you’re working from home, carve out a quick minute to answer this survey and share the effect COVID-19 has had on your business. Answers will be collected through this Thursday.

Read More

U.S. dairy farmers dump milk as pandemic upends food markets

Article | December 15, 2020

Despite strong demand for basic foods like dairy products amid the coronavirus pandemic, the milk supply chain has seen a host of disruptions that are preventing dairy farmers from getting their products to market. Mass closures of restaurants and schools have forced a sudden shift from those wholesale food-service markets to retail grocery stores, creating logistical and packaging nightmares for plants processing milk, butter and cheese. Trucking companies that haul dairy products are scrambling to get enough drivers as some who fear the virus have stopped working. And sales to major dairy export markets have dried up as the food-service sector largely shuts down globally.

Read More

Spotlight

SPS Commerce

SPS Commerce perfects the power of trading partner relationships with the industry's most broadly adopted, retail cloud services platform. As a leader in cloud-based supply chain management solutions, we provide proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. SPS Commerce has achieved 68 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, please contact SPS Commerce at 866-245-8100 or visit www.spscommerce.com.

Events