The ultra-discount store trend is gaining traction, with new concepts in this category continuing to sprout up in the U.S. The audience for these $10-and-under stores consists of trend-seeking Gen Z and millennial shoppers looking to do some guilt-free impulse purchases. Products range from trendy toys, stationary supplies, room décor, electronics and brand-name beauty and household cleaning products, which all appeal to young teens and 20-somethings as well as moms looking for pick-me-up purchases. These discount brands differ from the dollar-type stores, such as Dollar Tree and 99 Cents Only Stores, by offering more fun, disposable-income products and gifts, rather than solely essential household and food items. Look for Five Below, pOpshelf and Miniso to expand and target neighborhood power centers, strip malls and indoor regional malls in all territories.
Five Below has strong expansion goals, expecting to open between 150 and 170 new stores per year over the next eight to 10 years. Growth will continue in new states that the brand penetrated this year, including Utah and New Mexico, assisted by a new distribution center that recently opened in Buckeye, Ariz. Five Below will also continue to expand into new, highly populated markets in Florida, New York, Texas, California and Pennsylvania. By mid- to late 2022, expect more Midwest markets to be targeted aided by a new distribution center set to open in Indiana next summer. All markets are considered, from urban, suburban and semi-rural, in sites that attract a large concentration of teenagers. Areas in college towns are also sought after. Five Below seeks inline space in the 8,500-s.f. range in retail strip centers and power centers with multiple first class anchor tenants, such as DICK’s Sporting Goods. Other preferred co-tenants include discount brands, such as Old Navy and T.J. Maxx. Five Below specializes in selling teen-oriented items that are generally priced $5 or less, such as sports products, seasonal party supplies and teen room décor.
pOpshelf, the $5-and-under offshoot store concept from the Dollar General team, anticipates continuing to open up at least 50 new stores per year over the next three to four years. Immediate growth will continue in MSAs in the Southeast, with Alabama, South Carolina and northern and central Florida expecting a massive amount of new units, in addition to increased growth in Tennessee, Georgia and North Carolina. Middle-income suburban neighborhoods in which the average annual family income is between $50K and $125K will be sought after. Preferred spaces are in the 9,000-s.f. range, either end cap, inline or standalone units in high-traffic strip malls and neighborhood power centers. pOpshelf has taken advantage of ample vacant retail space due to COVID related closures, such as its opening multiple units in former Pier 1 Imports sites. Preferred co-tenants include other well-known power center staples popular with women shoppers, including Ross, Kohl’s and Bed Bath & Beyond. pOpshelf differentiates itself from its Dollar General banner by primarily targeting suburban women with disposable income for its rapidly rotating merchandise that includes well-known brands in the health and beauty, seasonal home décor and party supply categories.
Miniso, a Chinese-based retailer that sells Japanese-inspired affordable household and gift items, plans to open approximately 20 to 25 new stores per year over the next two years in the U.S., with that number likely increasing in 2024 and beyond. The retailer especially seeks vacant shopping center spaces, including within indoor malls, that average 3,000-s.f. The brand will be especially focused on expanding its reach beyond the West Coast and towards the East Coast, with MSAs in Texas, Florida, New Jersey, Maryland, New York, Massachusetts, Delaware, Pennsylvania and Virginia all expected to get new units. All territories are considered, especially mid- to upscale suburban malls that attract a large number of Gen Z shoppers. A large percentage of Asians in the vicinity is also a plus. Preferred co-tenants include popular youth-oriented brands, such as H&M and Aerie. As of October, Miniso has concentrated on opening its new “$10 N’ Under” stores that only feature items in that price range, selling products such as cosmetics, toys, fashion accessories and even electronics.
