How Five Below Can Use Retail Location Data to Spot New Emerging Areas

How Five Below Can Use Retail Location Data to Spot New Emerging Areas

Five Below is a growing brand -- Retail location data can help them, or any retailer, penetrate new markets, grow distribution, and expand assortment.

The US is slowly opening again with several states lifting local stay-at-home orders. As such, retail chains such as Five Below, which has announced plans for aggressive expansion in 2021, are re-evaluating the locations of their stores based on migration and foot traffic patterns in a post-COVID marketplace. But how do modern retailers actually go about that? With retail location data and mobile location data fused with advanced retail analytics

In this post and the associated webinar, we’ll use the good news of Five Below’s expansion to demonstrate how our products can help retailers grow. To do that, we’ll play the role of a real estate group within Five Below seeking to do three things:

  1. Identify areas with depleting population or growing population;
  2. Benchmark competitors’ visitation and foot traffic and identify unknown competitors; and
  3. Find out which areas have opportunistic gaps in the local marketplace.

Through this exercise, we’ll explore population indicators, migration and income patterns and neighborhood recovery indicators, all of which have a lot to do with creating stores in new locations. 

Full disclosure: Five Below, which specializes in items costing $5 and Below, is not our client. But via our retail location data analytics. we do note their expansion in a tricky market with appreciation and we think theirs makes a great use case to talk about how location data can help retail real estate groups succeed.

With that said, let’s dive right into the retail data analytics-- If you’d like to do one of these yourself, just try our free 7 day trial.

Context

Five Below effectively has a three-pronged expansion strategy in-play, which addresses penetration of new markets, distribution and new concepts.

To penetrate new markets, Five Below plans to open 170 to 180 new stores in 2021; that’s up from 120 in 2020. The brand will also enter 2 new state markets: Utah and New Mexico.

To expand distribution, Five Below is adding an additional facility in Arizona. To be an effective part of their network that facility must be optimally located to support future growth

To expand assortment, Five Below is committing 30% of the store fleet to in-store concepts by the end of 2021, and introducing assortments above the brands’ signature $5 threshold. 

Ok, those are the essential facts -- Let’s get into checking our first box: finding areas of growth based on mobile data analytics.

Identify areas of growth

Our migration patterns dataset measures census tract growth by month, letting you measure gains or losses in both population and income down to a pretty fine area. Since we know Five Below is interested in expansion in Utah, let’s look for growing areas there. Zooming in around Salt Lake City, we get nice indicators right away, with Census Tract 1020 in Salt Lake County jumping out as a representative example. Both population (+200 annually) and income are trending positive here, with each new person coming-in averaging about $14,000 more than the local median income -- that is useful information for Five Below to have when considering assortment for a store in this area. But how is the local competition doing?

Benchmark competitor’s visitation and foot traffic

Five Below has a number of competitors, including Family Dollar and Dollar Tree. Using retail data analytics and mobile location data to study the peak visitation and foot traffic patterns around their stores will help inform our decision-making around where we locate and how we position ours. So, let’s have a look. Again, we are working from mobile location data and retail data analytics in Unacast’s data portal to do this.

In the image below, the little green dots are locations in our target area operated by Five Below’s competitors. You can easily see the concentration of stores in urban areas and known retail corridors, and the gaps in coverage in more suburban and rural areas. 

Let’s focus on the State Street corridor and examine the relative performance of three nearest competitive locations, which include two Family Dollar stores and one Dollar Tree location, all within about 10 miles of one another.

What we observe in the data analytics is that the location farthest to the south, captures the highest number of visitors. Is it because it’s the only location around, is this an example of an under-served community? Fusing mobile location data with retail data analytics can tell us. Why?

With this analysis, you can expand outwards to look at adjacent brands and venues and see if their performance is consistent with your competitor’s. In short, there’s all kinds of opportunities to explore the actual populations and communities that those stores are serving.

Benchmark competitor’s foot traffic

Visitation is one thing but how have competitive store locations in our target area fared in terms of their foot traffic recovery lost in 2020 and throughout the pandemic? Resilience is the key attribute we are seeking in the data analytics, particularly among Locals who visit store locations and Workers who are employed there.

Turning to the mobile location data captured by our neighborhood insights dataset in the free portal, we observe over-arching foot traffic patterns in the Salt Lake City area. Green means recovered or close to it. Darker colors indicate lower levels of foot traffic recovery versus 2020. The further away you get from SLC’s core, the greater the propensity for higher recovery. But where, exactly, are the gaps in the marketplace?

Identify gaps in the marketplace

So, according to the retail data and mobile location data analytics, where is the ideal location for expansion around SLC for Five Below, and how can that inform their in-store concepts and assortment? Below, we look at the distance traveled from by visitors to the Family Dollar store we previously identified as having the highest rate of visitation among Five Below’s local competitors. 

The image on the left shows that Family Dollar store, in a little dark circle, in the middle of the map. All those other colored areas are the census blocks that people have traveled from to visit the store. While almost two-thirds of the visitors came from within 6 miles of the store, we also see about one-third travel greater than 6 miles. This could present an opportunity for a company like Five Below to locate a store a little closer to the visitors coming from more than 6 miles away. 

Digging a little deeper, Five Below could augment their knowledge of the current market-leading Family’ Dollar store’s concepts and assortment, and create an optimally-suited in-store experience for the new location’s local shoppers. That’s one way retailers can use mobile location data and retail data analytics together.

How other retailers use location data

Retailers typically use mobile location data in order to determine ideal sites for new locations, for geo-marketing, and to help determine staffing levels for various locations and shifts.

Data analytics tell us that retailers are highly sensitive to changes in local consumer population and mobility. So, when COVID started, it was not a surprise to see the industry suffer a spate of closures and bankruptcies.

That said, there is a ripple effect happening where People with Money are moving from one place to another. This is creating new economic power in traditionally less wealthy counties.

In fact, the movements of People with Money in 2020 and 2021 ignited boomtowns all over the US. That’s an opportunity smart retailers can capitalize on. To learn more, talktous@unacast.com

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