Your startup idea can grab some very cool ideas from this astonishing, young enterprise. Here is what I gleaned for you:
- Ride Momentum: "the consumer appetite for value remains strong." Slow growing US economy. Unemployment remains historically high. Caution at home is the result. Thus the dark cloud has a silver lining for the entrepreneur. Sell value. From within that category ("consumer value") find a segment to dominate. Ride the wave, it's easier than paddling to shore.
- Narrow Ages: "for the teen and pre-teen crowd." The target is clear, the age range is tight. The company's focus is clearly narrower.
- Narrow Prices: "all for $1 to $5." That is even narrower. The target appears to be more of a slice than a market segment. A bit scary? That's how you drill down to identify your Ideal Customer.
- Emotional Understanding: "[that] the fickle teen crowd enjoys." The Five Below people are confident they understand the psychological behavior of its Ideal Customer. Others will shy away, seeking a more reliable customer segment. Now we see how specific the profile of their Ideal Customer has become.
- Merchandise Appeal.: "It 'aggregates' its assortment [of goods] under one roof and pulls a lot of on-trend items together that really appeal to [their Ideal Customer]." That makes it stand out amid a crowd of youth-oriented retailers, reported a retail analyst. Such an offering is not easy to find, select and bring into stores. That becomes an additional element used to construct the unfair advantage of Five Below, in fact, it may be the most important capability of the company.
- Special People Skills: "I really think the secret sauce is in the merchandising team," commented an analyst. They continually find interesting new merchandise." People with special talent are hard to find, recruit and retain. If you can do that for your new enterprise, you have a solid chance of achieving the best for your startup.
- Quick Acting: "Five Below jumps on fads early." Now that is a skill few adults have. This company has found those that do. That makes it tougher for competitors to say "me-too." This quick action calls for confidence and swift decisions, no time for deep analysis and many meetings. Swift action is one part of this skill set. The other is the ability to spot fads that are meaningful to teens. When you've got it, you've got it. And your competition will complain "That is unfair!"
- Branded: "Big Five has been a 'go-to' destination for seasonal merchandise and for spending on discretionary items like smartphone covers." That says that the Ideal Customer knows exactly what to expect when their friends say "Let's go to Five Below." The company is branded. That identity will never go away. "Fun, cool items at savory prices."
How long did it take: Founded in 2002 in Pennsylvania, the company went IPO in 2012. Yes, it takes about a decade to brand a business. It is not overnight. Don't expect yours to be an instant branding success.
And one more thing:
- Excellent Execution: "They've executed very well" said an analyst. It is one thing to have a great startup plan. It is another to do that plan very well. Five Below did it. And is off to a roaring success, growing faster every day.
BOTTOM LINE: Focusing your startup by narrowing your target market segment may seem like loosing out on a big market. But such focus is how winning startups succeed. It is in the DNA of serial entrepreneurs. When you grasp that and when you can do that, you'll add booster power to your competitive advantage. It will propell you to greatness, while your foes complain about your unfair advantage.
I wish you The Best on your Adventure!