Five Below in Downingtown, PA
Guest: Zach Minteer
Topics: Five Below, leasing
Transcript:
Chris Ressa 0:02
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris ReSSA. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management. First, I’d like to thank one of our sponsors credit Intel, knowing the financial health of retailers is crucial for the success of your retail related business. That’s what credit Intel is for credit Intel analyzes the financial health of hundreds of publicly and privately held retailers in different sectors. With a subscription to credit Intel, you have access to comprehensive analysis of retailers, financial condition, and their Expert Analytics team. Visit credit intel.com For more information
Welcome to retail retold everyone today I am with Zach min tear. Zach is the vice president real estate for five below one of the nation’s fastest growing retailers. Zach has been with five below for 16 years in a real estate capacity. He’s a friend. We’ve done a lot of business together, and I am excited for him to be on the show. Welcome, Zach.
Zach Minteer 1:21
Chris, thank you for having me. It’s an honor to be on here. And I’m looking forward to talking with you a little bit I haven’t seen in a little while. This is great.
Ressa 1:29
I know. It’s been since we had dinner in Philly. That’s right.
Minteer 1:33
That’s right before he told me about your diet that you’re on. Yes. Share that with the group here.
Ressa 1:38
I am not still doing it. So good move. Good move. Yeah. So Zach, tell the audience a little bit more about you who you are and what you do.
Minteer 1:50
Sure, sure. So. So I’m vice president real estate have five below, been in the real estate department the entire time that started off was a coordinator as a company was kind of in a startup mode. And you know, lo and behold, here we’re sitting in 1000 Plus stores. And my capacity, I oversee new store growth, portfolio management, and then also kind of our data analytics around real estate. I am a father to two boys, a six year old and an eight year old. And my wife is a teacher. So we’ve got the joy of 2020 of virtual learning, Virtual Teaching, virtual working all wrapped into one. And we survived it. And feeling like a lot of sunlight is ahead of us here looking forward to the rest of 2021. And hopefully normal environment.
Ressa 2:42
Have they made final decisions on schools for the fall? What’s going on your kids?
Minteer 2:47
Yeah, they haven’t made final decisions yet. They went back in person back in January, thankfully has gone fairly well. So our anticipation is we’ll be back in person in the fall. But they haven’t made any decisions that they’ve shared with the board with the teachers or the parents
Ressa 3:04
yet. Does your wife teach at the same school your kids go do
Minteer 3:08
know my wife comes from that background that there’s no way on earth that she wants to teach your own kids in school. So she teaches a school district Dover, and they have very comparable schedules, which is good, but not exactly the same, but no way that you want to be put in that position as to teach your own kids someday.
Ressa 3:28
Okay. Would you coach your kids and our kids do some sports? Would you coach your kids?
Minteer 3:32
That’s a great question. So my eight year old is really good in the soccer right now. I grew up with soccer background, so I didn’t think I’d have an interest the coach now starting to feel like okay, maybe an assistant coach. Maybe I get that toe in the water for that head coach. I don’t know, man with everything going on. I feel like it’d be hard to commit to an assistant coach. I think I could see that. Maybe so. Would your kids like it? That’s that’s a good question. I don’t know. I don’t know. To be honest with you. I think they would like the idea that and then once I was there, I think it’s a 5050
Ressa 4:11
I had enough coaching from my father at home at having him as a formal coach in any sport, I think would have been a lot for me. I don’t know if I would have I ended up loving sports. I don’t know that I would have enjoyed them as much personally but that was me. But I know it’s 5050 with kids like do they want their parents to coach or not?
Minteer 4:30
Yeah, yeah, absolutely. It Chris my allowed to share a story here real quick. Yeah, do it. Alright, so do you. Do you remember the first time you and I met?
Ressa 4:40
Oh, my God.
I’m usually pretty good. I go, I don’t go.
Minteer 4:49
All right. I was thinking about it before coming on here. So we met back in 2000. I think five. It was at the Philadelphia ICSC at Hard Rock Cafe. And you are at Sherwin Williams. I just getting started at Five Below. And I remember us talking there meeting there. And I’ve shared that story with others in the past admittedly to because I just find it fascinating our business like, you don’t know those type of opportunities when you meet somebody, particularly you’re young in the business where that individual might go where you might meet up with them later. And like, yeah, like yourself, hosting the podcast here, CEO over at the LLC. And I just remember meeting there when we were both trying to figure out what what are we doing? What is this industry? It seems great. We’re at a party people are talking it’s hard rock. I think we’re in the right spot. But what are we gonna do?
Ressa 5:43
That’s incredible. I appreciate you sharing it. And look, look at you. This is really cool story. And I really appreciate Shana. That’s awesome. I remember going there at that at that event. That’s really cool. Okay, I want to bring us to section we call clear the air get to know Zach a little bit. All right, I got three questions for you. Here we go. Question one. What is one skill you don’t possess? But wish you did?
Minteer 6:10
I’d say small talk. I am not skilled at small talk. So I wish I had that natural ability to do it. In business, or life. I wish I could say okay, terrible singer. Terrible.
Ressa 6:25
I have no I am not musically inclined at all. So I hear you there. Question too. When is the last time you tried something for the first time?
Minteer 6:34
I have not been too adventurous lately. I feel like the confines of home have tempered my adventure. I think the last thing I remember having new was an oat milk creamer. That was a big change for me about a month ago. It worked out great, Chris I’ve saving 10 calories each morning now. That’s been a big win.
Ressa 6:57
What does that taste like?
Minteer 6:59
actually does taste like normal creamer? They did a really good job. But I think I you know I went with the French vanilla. I think maybe that’s the key. I can’t stand behind all the other flavors but Frenchmen a little milk. Okay, you’re good.
Ressa 7:11
Off to give it a whirl. Last question. What is one thing most people agree with but you do not
Minteer 7:17
that Tom Brady’s the goat? Know that?
Ressa 7:23
I do agree with that. I do think Tom Brady’s the go, why not?
Minteer 7:27
How much time do we have? I don’t think we have enough time to cover it. But I don’t know. I’ll just start with Jerry Rice. Maybe as is my argument against it. But he’s a great player. But that would be the one that’d be the one that I don’t think I can quite agree with.
Ressa 7:43
Wow. Fascinating. I feel patriots Seder. Maybe Yeah, maybe. But I think this year, he kind of dispelled a lot. I mean, it for all those people who thought he was a system guy Belichick system, he changed it up anyway. But that’s a great answer. That is a great answer. Okay, I appreciate you doing that. I want to get a little bit of business. You guys are growing. But obviously we had a tough year last year, high level question. What’s your take on what’s going on in the marketplace today? What are you seeing?
Minteer 8:15
Yeah, it’s been it’s been an interesting beginning to 21. You know, I think we were feeling like the retail environment would be a little bit slower the rebounds. As we like entered the fall of 2020. I would say we’ve been a little bit impressed that the rebound that we’re seeing, not just with our stores, but just with some of our peers. It feels like it’s just coming back a little bit quicker than we would have anticipated which I think’s a positive for retail. And it’s those that emerge stronger feel like they’re now serving it back on the offense. Maybe a little bit quicker than certainly we would have thought as we were in late 2020.
Ressa 8:59
Yeah, it feels a lot of things are ripping right now. In a good way. I guess the consumer is so strong right now. It’s and they pent up demand. They want to get out of the house and spend money. It’s really, really interesting.
Minteer 9:11
Yeah, I think the stimulus checks I think, felt certainly were a value retailer. I think, you know, we saw that at the end of our q4 a lot of spending in January and it seems like it’s kind of carried momentum. How’s it been on the leasing activity side?
Ressa 9:26
So leasing activity, you know, a lot of the REITs in all asset classes just reported and a lot of them said record leasing. If you look back, I don’t know that it’s number of deals, record leasing, but it seems like in square footage, leased and NOI and other things and number of deals is equivalent to past years. It looks like in our portfolio, we had one of the highest occupancy gains in any quarter. This q1 comparatively. Leasing activity is really, really strong. I think the entrepreneurs taken a little bit time to come back. But those who are well capitalized are trying to, you know, one of the things that keep talking to retailers, they want stores open to capture this pent up demand. Right. And there’s a lot of people who want it now. Right You can you deliver to me in 30 days. And I’m like, you know that because they I think there’s pressure to get the doors open from the C suites at retailers, because they want to capture sales. And given the pent up demand, you know, don’t know how long it lasts. I think this is I think this is a long this is a tailwind for it’s going to roar for quite a bit of time. But leasing activity is strong. I would tell you, obviously, right now, construction costs are really concerning. And that could play a role in leasing activity soon, I think retailers and landlords are going to have to get partner and collaborate here to try to make things work, because it’s, it’s pretty wild. What’s going on in construction costs.
Minteer 11:00
Yeah, we’re certainly seeing that on our side as well. And a lot of conversations with some of the smaller, more independent landlords out there, I would say the last six months have turned very much into trying to problem solve together. I mean, we’re trying to be proactive with it, that navigating the construction costs increases is certainly becoming a little bit more of a headwind for both sides of the table.
Ressa 11:25
Yeah, I think it’s an acute problem, it will go away. But it, it’s not going away tomorrow, it’s going to be here for a little while. And you know, whether that’s trying to keep things, some things in existing places, you know, changing some, you know, where we would try to get brand standard, maybe, for going on a couple of things. Otherwise, it’s going to be a challenge to get deals done. So we’ll see how that goes. I think that there’s definitely concern on both ends on construction costs. And hopefully, that works itself out. It’s interesting, the reasons why you hear all these things, but construction, costs, rationalizing are going to be critical for everybody. And you know, the housing market clearly playing a huge part in this right housing market on fire. But if I were to tell you a headwind that I’m there’s a cute and I’m paying attention to like white on rice. It’s not necessarily demand for space. It’s you know, how do we get collaborative to make the deal because the construction costs are really, really concerning? Yeah. Interesting. Yeah. So anything else going on? You’re seeing in the retail world or real estate world that you think’s Interesting?
Minteer 12:41
Yeah, you know, I think it’s interesting that, you know, a lot of things going into the pandemic, it felt like they were going to accelerate the demise of certain categories or certain retailers. And it did for some, but I’ve been encouraged. It’s just a fellow retail or the see some other brands seemingly emerged through this in a better position than they weren’t coming out of it. So I found that interesting that that’s, that’s kind of occurred. But it seems like those that rode the wave through it, I think, are just well positioned here to hopefully take advantage of the headwinds are 2021. And I’m kind of hopeful that 2022 2023 feels a little bit more natural for retail climate growth, maybe it’s back a little bit more with retailers development, gets the construction costs can get under control. I feel like 20 to 23 maybe redevelopment are more in line, but just curious to see your your kind of thoughts, you know, outward there to from some of the retailers that emerged through this. Yeah,
Ressa 13:46
I’ll give you one that I think was interesting, right, Joanne stores, right, Joanne stores, you know, for a while and by private equity. And I think people were wondering what they were going to do. And then if you look at their like when they went, they went to IPO sales soared, they pivoted to buy online pick up in store just as well as anybody, huge omni channel presence. And we learned some good facts like they sell more sewing machines than anyone in America and things like this. And, you know, that was a retailer that I think has been energized. And to your point there was some that it affected negatively, but there was some that the pandemic energized notwithstanding, we know the ones like grocers, and that the essential retailers that didn’t have to close right those sure, but I don’t think pre pandemic people saw an IPO at a Joanne you know, growth was there and then here we go. There’s there’s a lot of stories like that. And that was one specific one that I was like, really encouraged by
Minteer 14:50
Well, I would say at least from the from the fiber low lens and I think a lot of retailers by navigating through the shutdown And then the restrictions, it probably moved up our timeline on certain initiatives by, I don’t know, maybe two years, you know, buy online pick up in stores is something that’s we’re trying to make a reality. curbside pickup, we kind of had to do it overnight after our chain reopened. And it was in like the roadmap to test a year later. And we just had to do it across the chain quickly. I think it made a lot of retailers hopefully probably smarter and more well equipped, quicker to have navigated where the customer was already going, that they just got sped up to with the shutdown. So there is some silver lining, I certainly think for those that have navigated through. Yeah, for
Ressa 15:43
sure. One last thing I’m curious about, and I know not necessarily your expertise, but I know you’re very plugged into all aspects, a lot of talk about the supply chain of goods in America. And how are you seeing getting goods to the store? As I hear a lot of different things. And I have been in some stores where shelves felt light for certain retailers? And are you guys have you guys figured that out worked your way through or is just everyone going through growing pains with this.
Minteer 16:13
Everyone that is getting any of their imports coming in are really struggling. And with the amount of fuel if you were to go in the Los Angeles right now go down to the port Long Beach, it’s kind of fascinating what’s been playing out there with, with all the shipments getting backed up, backed up, backed up, and it just is impacting the entire I think retail industry and the supply chain. And it doesn’t seem like it will kind of quickly come back. So I think everyone has been pivoting trying to find alternative routes for those shipments they may be getting. And they’re also probably doubling down on finding other other suppliers that can kind of offset some of the shortfall. So I think every retailer is dealing with it, I think some probably have good ways to navigate it. But it’s still impacting to some degree, the cross. And hopefully, I think the feeling is as we navigate through the year, it will risk recede back to normal, but the demand is so high. The backup is what it is that it is a unique confluence of issues that I think is impacting, you know, retail that hopefully is getting offset a bit by again, the spending habits that are out there by consumers that want to get back in stores want to spend the may have been not doing that, obviously, in 2020.
Ressa 17:36
It’s a good perspective, it’s interesting, because I know, one of the punch lines, the retail industry was talking to Wall Street that one of the things that that was telling Wall Street all the time, that really they were focused on was this inventory control and not getting and making sure they manage their goods. So well. And they could have strong inventory turn. And then now you have to buy so far in advance to make sure you have the goods. It’s kind of, you know, going in reverse to what that that theory was pre pandemic. And I think that the inventory, discipline will come back. But right now it feels hard to be able to do that and get the goods in the store.
Minteer 18:22
Yeah, I think it will, I think a receipt back to normal. But you gotta you gotta be forward thinking out there with your orders the state and supply, which doesn’t run counter to that kind of run the Lean balance on the inventory. But I do think it will recede back to normal here. Yeah.
Ressa 18:39
Okay. Well, that
was a great little business segment there. Really appreciate your insights I think the audience did as well. You have a story for us. Downingtown. Pennsylvania,
Minteer 18:49
I do, I do have a story to share. And I kind of want to caveat that the actual deal, I feel like is not overly unique or overly interesting. But I felt like it was one to share, Chris because it actually is, in my mind, actually a real turning point and find below company history. And also I met as a special place in my kind of career development as well. So that’s why I wanted to share how five blow ended up in Downingtown, Pennsylvania. Let’s let’s hear. All right, so if I can give you a little background to help paint a perspective. So Five Below was founded and opened its first store in October of 2002. In 2005, at the beginning of the year, there was 23 stores in the chain at Five Below. The plan in 2005 was to open 23 more stores. So the double the store count in one year, which would have been three more than the previous two years alone. So big ambition. And I joined the company luckily from a career development and March of 2005. So I joined as they had already to kind of put pen to paper on the 23 locations, and we were gonna go about doubling the store chain in one year. And what ended up happening in 2005, and we were really still very much in startup mode. We opened the stores, but as we opened them at a clip that we had never handled before. We started to feel pain through the organization. We felt it in supply chain, we felt it in operations. We felt it in marketing, construction. It you name it, we stress the organization by that quick of growth. So we did get the 23 stores open. But we entered the holiday period in 2005. In a position of weakness with challenges and headwinds. We did something that I have found from others that have joined the organization and hearing some of the stories of that time haven’t seen other leaders do. Our co founders, David Slusher, and Tom Velious. They put a pause, we got to December of 2005. We had got the stores open. And we were feeling the pain and our co founders basically said, things are not working, we’ve got to slow down what our plans are in 2006. And we’ve got to just reevaluate the concept, the way we distributed the way we operate. I was just green at the time. So I was just kind of a little bit along for the ride at that point. And it was a real estate coordinator. I was one of like 15 or 16 employees, I was doing really entry level stuff. So I don’t think I understood what was going on, at Chris. Sure. But we took the time as an organization to just slow everything down. And we sped December, January and February, just reevaluating how Five Below operated, what we thought the size of the store should be what we thought, you know, the customer really wanted. And we even brought in a brand designer, her name was Adrian Weiss. And she had worked early on with our co founders with the initial concept of five below. And she’d done great work with like build a bear and a few other national brands. And at the time, we were operating units that were four to 5000 square feet. And we took this two or three month period where we just kind of shut everything down. Except for we had three stores that were already on the books that were planned open in 2006. Early, and they were all for the 5000 square feet. And we took this pause, evaluated the concept. And we decided to do a bunch of different things. One of them was to grow the store size and double we felt for the 5000 square feet. We’ve always scraped merchandise, hard for the customer to navigate claustrophobic. We felt we could get deeper with our product offerings. So we pause, we came up with a new design that would be much sharper, brighter new graphics, new lights, we go from four to 5000 to 9000 square feet and double the size kind of overnight of our footprint. Wow. So we went through that came out of that. And at that same time, I had been getting further responsibilities, and was kind of put in a position of I would call it a junior dealmaker, if you will we had a director that left, they decided not to backfill that position. And they gave me some additional responsibilities, including starting to take on like a little bit of a region and greater Philly. That was right around November, December, January, where we took this pausing effort. So we came out of it in January. With the new prototype 9000 square feet, it all these great conceptual renderings of how a store was going to look the Store of the Future. Now we have to go to the location. All right, so now the pressure was on. We got to find a location. We got to do this 9000 square foot store. It’s January of 2006. And we’re gonna get this thing open by, you know, October so we can get it in get it open and tested before the holiday in 2006. So that brings me to Downingtown so I was tasked and I had great mentorship and support from my boss who was Michael Levin, who was our EVP of almost everything we were, he was EVP of real estate operations HR I T, construction, legal, I’m probably forgetting a title that he had. But he was my first mentor. He’s the one that gave me confidence in the responsibilities. And he helped shape a lot of my career. But he also had to deliver this store. And he had to try to count on me to help deliver this store. So we were given parameters. by our founders, this look, first test location had to open before the holiday, it had to obviously be in that 9000 square foot range. It needed to be in greater Philly, where we had some brand recognition. Most of our stores at that time were within five states, but primarily around Philly. So it needed to be in that general facility. And we needed to find a deal where if it didn’t work, we could get out and two years of a year early termination the landlord would have to deliver it and a full vanilla box and do all do all the work. Oh boy, you would love to see so that those were our parameters. So I was working at the time and he still works with us with a great market broker Rick shuck. He was he was at Vanco at the time. And he was really given a lot of the lot of the direction to go. All right, here are the parameters. We know the markets, we want to be in Philly, we know the centers we like you get, you gotta go find a location. And a location was put in front of us in Downingtown, which is, you know, about 30 miles west of Philadelphia, suburb, high growth suburb, but the time, good, moderate to high fluency mixed in. And it was where we wanted to land, ultimately. But our challenge or my challenge began with a big project that was three miles east in Exton PA, where our co founders felt that really needed to be our landing spot, the service the entire kind of Exton Downingtown,
Ressa 27:27
is that the whole foods,
the whole foods pre project over there around there,
Minteer 27:32
it’s it was a it’s a Watson was Watson to wrenchy at the time life so Sarah Barnes and Noble grocery store their Old Navy, forgetting a couple other retail, a really nice looking shopping center. It was really when lifestyle centers of that size in a market like that were were generally perceived as like the, you know, the class shopping center, the be it and we were still trying to figure out who our CO tenants were, that we felt like the best synergy. And we actually felt Barnes and Noble at the time was one of our best co tenants. And they were in that Main Street at extreme project that we wanted to be in. So the first part was trying to one convince myself that I could stand behind Downingtown in the shopping center we were looking at was called Brandywine square, owned by Ally properties out of Wilmington, Delaware, located just off of Route 30 on Business Route 30 Lancaster Avenue. Really good reasonable access is a 600,000 square foot L shaped power center with Wegmans which was at the time the only wakemans within the Greater Philadelphia market. So that was a unique component. And it had Dick’s Sporting Goods DSW, PetSmart, BJs wholesale Regal Cinemas, and the trifecta of Stein Mart, AC Moore, and linens and things. Okay, okay. So it was it was really well coached, edited, chopping center, but our founders really felt we want to be three miles east the next day. But we had this opportunity. It was 14,000 square feet. It was sitting too small shops off from the door of Wegmans. And then one small shop door off from linens and things. So it was a pretty good location within the project. But it was 14,000 which was was a challenge. And ultimately, it was again, it wasn’t the center we wanted to be in. But when you’re given a deadline, you’re in January and the stores gotta open in September, October.
Ressa 29:56
You don’t have a lot of time, right? Yeah, totally. You really
Minteer 30:00
don’t. So we spent a, I don’t know how many visits we made out there and myself included, just made visit after visit out there at different times of the day, you know, Monday, Tuesday, Wednesday, Thursday, Friday, seen on a Saturday to feel, how the activity how the traffic is, you know, try to come up to a point that we felt like, okay, we can land here and do the same business as if we landed in this other project, you know, three miles to the east. Yeah. And we ultimately did get our co founders on board with that, with the idea of landing there. And it really was Wegmans, Wegmans was the key that we felt that is going to draw the customer, whether they’re in Downingtown, or x, and they’re going to they’re going to come to the shopping center, the shop, Wegmans, we’re going to be in close vicinity. To them
Ressa 30:56
totally makes a lot of sense. Yeah, we
Minteer 30:58
can make this work. Well, now we had to get a deal though. Ally properties who we have stores with today, we actually had done a deal with them in 2005. So we had a pre existing deal. But you know, they’re tough negotiators. They’re good group. They’re fair. But you know, they drive a hard bargain. So one of the biggest challenges we had and Youth Pride faces over and over. But from the retailer side, Hey, give us 9000 feet, we don’t want 14,000 square feet, just chop that box up. Give us 9000 square feet, can we move forward? And they at first did not did not think that that’s the direction they wanted to go. It was was operated by Chester County bookstore. They wanted to terminate, but they didn’t have a right to. So that was another obstacle.
Ressa 31:58
Oh, my God, did you have a timing issue? Oh, my God, we have a timing issue there
Minteer 32:03
as well. So we had to try to convince allied properties to go about doing a termination, recapture and then split? Well, the biggest issue for them, they didn’t have another tenant lined up to take the I think 4700 square feet, you know, left? Yep, that was a challenge. So ultimately, we met with them multiple times, numerous calls, we got them to see conceptual renderings, we tried to get them to buy into what this concept was going to look like. Because they had our existing store we opened a year ago and Christianna, Delaware. So we tried to just get them on board with selling, here’s what we’re gonna do, we’re gonna you’re gonna have the very first, you know, new prototype Five Below double the size, more merchandise offerings, better quality, better look, this thing is going to be a home run that does what we’re trying to sell. But we that two year kick out. That was that was the biggest challenge we had to try to sell. Yeah, it’s a tough one, it was a very tough one. We were able to show them, what we were going to invest in the store, what we were going to do with the store, you know what we were going to, as a company take risk in ourselves to put in. And I think I learned something in that that deal. Ultimately, that helped me later is sometimes there’s gonna be risk on both sides. But you got to do a good enough job, I think to try to paint the picture to the other partner that we’re taking on just as much risk as you like this can be a win win scenario. And if we lose, we’re, perhaps we’re kind of losing together.
Ressa 33:58
Totally. So great lesson. Yeah. And
Minteer 34:02
that’s what we tried to try to get them on board that we ultimately did. We were sharing kind of what the costs are going to be, how quickly we’re gonna move on the store than they would be a little bit minimize them their downtime from terminating the Chester County bookstore. We got them on board with doing 9300 square feet. We finalized an LOI and we’re ready to bring it to our real estate committee. And I think it was April 2006. That was one big hurdle to climb. We did bring it into our committee, we got approval. Our next big challenge with Allied properties was we’ve got to get at least done in 30 days. You’ve got to deliver the space in August. All the way we you know opened and operated in October. It was a it was a big challenge. We also learned at that time, we needed to meet in person on leases sometimes to get stuff done. Yeah. So we did an old school kind of playbook and had we met with them in person. We did a bunch of call some things that we really weren’t doing at that time to facilitate getting leases done. And they moved as fast as we did. We got the lease done in 30 days. We got everything ready. And what it really turned into then was just a race to how do we get this delivered within 75 days? And then get the store? Oh, wow.
Ressa 35:44
When did they get the Chester books out? Out?
Minteer 35:47
I believe they got them out. I want to say it was around probably Meg. Mays timeframe. But they’re like get them out. It was it thankfully, they were able to secure a pretty quick recapture. Wow,
Ressa 36:01
did they get them out before the lease was signed with you? I believe
Minteer 36:03
they did. I believe they ended up taking it. You know, we were conforming our lease offer prior one, which also helped to make that lease process go quickly. Which made a difference.
Ressa 36:14
Yeah. Wow. That’s an incredible story. The store still there today?
Minteer 36:19
Yeah. So why why it holds a special place is we got the store open on time, after numerous numerous iterations internally, like we were there with the entire executive leadership team, multiple visits, changing fixtures, change graphics, change lights. I mean, we wanted to get everything right. We got it open, October 2 2006. And we had the majority of our corporate offices there, which was not big at the time. mitad Lee. And for Five Below, we used to do at our grand openings. five cent hotdog cart, which was a big draw lunchtime. So Friday, and Saturday, we had that there. We had gotten the word out, you know, with the newspapers and a little bit of radio that this is going to be the newest, biggest and you know, best Five Below you’ve ever seen come out and see it because there was customers within the general Philly area that certainly knew us. And I remember pulling up that morning, and we had a line of people, you know, waiting to get into the store good for you, which is always a great sign. Yeah. And we also had to help drive traffic. Remember, we always had like a door buster item. And we had the fog commander, which was a smoke fog party, you know, yeah, five bucks, which I think at that time was probably like $30 or more anywhere else to get in. And we had that there open hugely successful customers or their big crowd. The feedback was tremendous. A lot of customers given comments of wow, I can’t believe this is the same five below and I’m used to shopping. Yeah, within there. And we ultimately opened two more stores in that same prototype in November of that year. And it was very successful in that holiday. And it changed the direction of five below. We decided this is the prototype, we got to be bigger, we got to be at this footprint, we’ve got to have the look. And it really became the foundation that we had to move forward with, you know there but at the time, it felt felt like a big risk just doubling an occupancy with nothing to base that we would do the sales to have it make sense to do.
Ressa 38:50
Wow, that is incredible, incredible story. One of the best ones I’ve heard on the show that was that was amazing. Now a message from one of our sponsors. Our friends at E send group offer true National Facility Services, their professional staff and elite service partners are in place and currently serve all areas of the United States. Additionally, East End group’s current coverage extends to rural communities, areas that other service companies often overlook. With a multi service platform that includes all of the basic property maintenance services, such as landscaping, snow removal and janitorial East End group also includes more than 25 additional services such as plumbing, electrical and mechanical. East End group takes pride in its work and uses state of the art technologies to report conditions with pictures and timestamps in real time, giving you peace of mind that the work is being performed as requested. Visit East End group.net to learn more.
I got a million questions that I’ll ask if you So I didn’t realize you were you were at Five Below I didn’t fully 16
Minteer 40:05
was 16 or 18. I’ve never had got it defined. So I’m somewhere in that range.
Ressa 40:10
How many employees is five below have now? corporate office? I
Minteer 40:13
think we’re like 450 or so. Wow.
Ressa 40:17
Wow. So what was it? Like?
What’s it like? Now, you guys are a public company.
You were a startup,
you hear about all these stories of these tech companies, these door dashes of the world that were 14 employees, and now the, you know, public entities and from startup and you, you hear it all being a Tech Tech Tech Tech, you were in the startup phase of five below in the early 2000s. And here, you guys are still a very successful retailer and still growing. What was that? What’s it been like the changes at Five Below?
Minteer 40:50
Yeah, it’s like a blur, which sounds weird, because it’s been 16 years, but we’ve been moving at such a fast pace, really, since 2008, we kind of ironed it out the prototype with with Downingtown is the beginning. And we applied and opened, I think about 12 stores the following year, they were very successful. So we got more investors that came on board, which is interesting as a startup when you have those rounds to get additional investors in. And those are like lifeblood, you know, to get that to keep propelling growth. And we just kept moving so fast that I felt like I woke up Chris, in 2012, we were saying, hey, guess what, we’re gonna work to go public. And it’s interesting to be in a startup, where, obviously, you’re very lean and mean, and everyone’s wearing like, a 10 hats you have, you kind of have to, I would say, if you’re in a successful startup, and you go through the experience, it’s amazing to do, because you have to be you have to multi task, you have to be accepting of just wearing whatever hat and jumping into it. And it was unique. Because you get to learn everything, no matter what role, I think you are, as a startup, you probably get good visibility to like everything going on within the organization, which is great for your career. And that’s one of the things that’s interesting when you go public then is you’re going bigger, obviously, the information, you can only provide it to certain groups and your public, obviously a lot more. You know, guardrails and SOX compliance, and so forth. So it’s kind of interesting to have all this visibility, everything going on, in your hands or in everything. And then when you go, you know, public, your larger company, you do have to start working on a little bit more specialization, visibility, certain things become a little bit more limited. So you go through that experience of seeing everything to maybe then visibility’s less. And then it’s interesting, then you go from one office, to the next office is larger. And all of a sudden, I don’t know, you wake up, and you’ve got four times the workforce. And used to know everybody to everybody in the office, everything’s there. So you kind of get used to wiring to yourself to realize that you’re only going to get the probably know a lot of your most frequent collaborators, which maybe doesn’t sound that big to those that are used to a larger company, but it is for if you’ve been just with a small company, the startup to see that transpire where you know, you just don’t get to know everyone and intimate level. So that’s an interesting change. But you know, on the other side of the table, though, I think cult culture, at least from the Five Below LEDs would be one thing that I would say, if your company can kind of keep your culture in place and some foundational manner through a startup to be in, you know, public chain, I think that means you’re probably going to turn into the success stories that that is a company that can kind of continue to grow, stay what they really are. We’ve thankfully been able to do that that’s part of the reason I’ve been here so long, but it’s not easy. I think the leadership is the key I have found that if you have your right leaders that can kind of keep keep that culture intact, keep it at the forefront. Boy, I think it makes a difference keeping a company operating in a similar manner, even if they’re now a public company with 1000 more stores than they had you know, in the early days.
Ressa 44:48
That is truly insightful
are the some of these people there that were there are still at Five Below that were there when you were in the beginning.
Minteer 44:56
There’s there’s a small group of us there, you know, I noted earlier two co founders were David Slusher and Tom bellows, and Tom is still our executive chairman on the board. So, you know, Tom is still there in that capacity. And we probably have about five or six individuals that are still still around from that time, including our CFO who’s been there for just a couple of months who joined after I did with it. So it’s a pretty small group, you know, out of 450 or so,
Ressa 45:28
do you still have like, this undocumented knowledge from the startup days that helps you today, and people rely on you as a resource internally? Because you’ve just been through it all?
Minteer 45:41
Yeah, it’s weird, that institutional knowledge can like be helpful in situations where it’s like, well, why did we do this? Or how did we end up here? Those types of things? I generally do have some answers for that from being through that time. And it helps help me quite a bit like I’ll use Downingtown for one second to go back. So David, slash ninja, smartest guy ever No, really good. Also, probably the most detail worried individual you’re ever going to meet. And he was involved in real estate, right? So he would put you through the grinder? Not in a bad way. But every box, hey, is there a tree that’s blocking facade? Are we on every single pylon? Can we get that tree in front of the facade removed? Can we move it? You know, have we checked into that, to that, to that, to that, you know, every deal had to go through this, you know, real granular approach, which I think set us up for success with those early stores we open. But I take a lot from like that experience where when you’re in a startup, you can’t really afford to misfire if you do, you got to have a minor misfire, if it’s, if it’s major, you have 20 stores with you, all of a sudden you swing and miss on three or four, hard absorbs, I take a lot of those early learnings of just how diligent you should be attention to detail those things that really matter. And I think I learned a lot just being in that environment at that time.
Ressa 47:21
It’s a great point that
the misfires can hurt you really bad. And you got to be, you know, really diligent on the due diligence. And that’s what can end up leading to the unbelievable growth that you guys have had on the Downingtown. I’m gonna go back there for one second, before we wrap up. What was the I don’t know if you remember, but can you go back? And tell me in like, what was the key point that got the founders over the hump that you could do? Downingtown, you didn’t have to be an excellent if you want it this way, I need you guys to be okay with Downingtown.
Minteer 47:59
I actually would think, Oh, it was one of the weekend visits we did. It was it was just a little like getting out there. I don’t know how many times we’ve been there. But it was getting them out there on a weekend together. And just seeing how busy and how active the not necessarily the entire center. But just the section of the center that we were proposing to go into. That kind of just just did it because you know, we’re a kids retailer. And we’re in a parking lot like I’m sure had them on a Saturday or Sunday, obviously. And you just would see the families particularly the mothers with the kids at the time. And the mother is by is their number one customers Five Below, either with kids or without I mean, the parents are generally couldn’t be their grandparents shoppers, but that the mother is absolutely our number one. So I probably would say it was just hitting their boots in the ground on a weekend and just having them see the activity and seeing our customers in such close proximity to where we were going. That just kind of I think that was probably the last thing to say, All right, we we shouldn’t be able to lose here. We’ve got our customers here. We can get them into the door. They’re here, we can do it. And I think that Ollie was in my mind would probably got them over the hump. It’s just buying into by seeing it in person that boots on the ground sometimes can’t. Can’t replace that.
Ressa 49:29
Yeah. can’t
replace that. Looking forward when we’re all out in the field. More and more. Can’t wait. Yes, the story is just incredible. Your story’s incredible working at a startup how your careers grown. It’s truly tremendous and we love working with you. Excited to see the continued success of Five Below. One last thing you made it you made a good point that maybe some of the listeners need to hear you mentioned your kids retail and some people might equate it to $1 store but it’s really about that you guys are kids retailer, correct?
Minteer 50:05
Yeah. So we we enter new markets. You know, we’re even when we’re startup, you know, our name is five below. We’re evaluating retail or so yeah. And a lot of times we will face the question of I know exactly what you are you’re like, you know, like $1 tree or Family Dollar might be? And the answer really is no, we’re rear kids favorite store, they just don’t know it yet. We’re really just a superstore for kids. And they can afford anything in the store, you give them five bucks, they’re gonna walk away with what they want, you give them 10 bucks, they’re gonna be kings 20 bucks, you’ve probably made their entire week to do it. So we really are preteen and teen oriented retailer that just offers amazing value with the trendiest stuff we’ve got in the store. And like I said, our number one customers is the mother coming in and shopping is doing the shopping target, and TJ Maxx and Ross and Ulta all great first class retailers that we share the same customer with them.
Ressa 51:10
And something I never thought of, did you
guys see a big lift when Toys R Us went out of business?
Minteer 51:16
There was some benefit, I think, you know, obviously other retailers benefited as well. But yeah, cuz, you know, people knew we had toys, but when they lose the Toys R Us Absolutely, we got some benefit there with becoming more of a destination for that category. We already had, we already had the value. We benefited we had vendor relationships that we were already getting, you know, branded supplies in and when they lost that key vendor, or purchaser in Toys R Us. It did strengthen our vendor relationships as well to bring it even, you know, stuff that I was amazed that we’re selling in the store, you know, $5 or less though it certainly you know, helped when I hate to see them go through and love that store. But definitely it I think it introduced some customers to understand more will we offer? Yeah,
Ressa 52:11
I agree. I love going in and getting the big bags of candy that you can’t find anywhere else. It’s one of my favorites. Not afterwards, not on that plant based diet that we talked about, but the candies good. All right, Zack, this has been great. I really appreciate it. I want to take us to the last part. We call it retail wisdom. I got three questions. You ready?
Minteer 52:34
I’m ready for him. Shoot one.
Ressa 52:37
What extinct retailer? Do you wish you’d come back from the dead? Oh, this
Minteer 52:40
is easy. zany. brainy. A zany. brainy. I
Ressa 52:43
love it. That’s a good one.
Minteer 52:45
Yeah, I gotta admit i our co founders stick David Slusher founded zany, brainy. So I met that’s an ode to him. Tom Bell is another co founder was CEO for a period of time, but I have a six year old an eight year old. It was a kid’s store selling educational toys between like for the 15 games and toys and stuff like that. I’d be in there shopping out with my kids. It was still around.
Ressa 53:10
Totally a great question to
what is the last item you purchased in the store over $20 and not a case of beer and not a case of beer? Yeah.
Minteer 53:22
I think it I’m looking at it right now. Actually, it was This is mini sittin stand laptop computer desk that I got to Costco. I think that was the last thing I got there was probably like 60 days ago.
Ressa 53:37
Okay. Okay. All right. Last question. If Chris and Zack are shopping at Target, and I lost you what I would I find you in
Minteer 53:47
outdoor furniture and grilling.
Ressa 53:50
Okay,
are you are you an expert? griller
Minteer 53:53
I wouldn’t say I’m an expert. I’m good. I’m good at certain things but I don’t know whenever I’m there I just tend to win with my wife or kids I just somehow the lose me. Just go into that section. And look around so griller in the works got good skills, winsome and expert. Don’t
Ressa 54:11
you familiar with the green egg?
Minteer 54:14
I am. I’ve not used it. Yet. what’s your what’s your take here?
Ressa 54:18
You need to check it out. You need. You need to check it out. I’m gonna leave it at that. You need to check it out. Do some homework on a green egg.
Minteer 54:24
All right. All right. I’ll trust your opinion.
Ressa 54:26
Yeah. All right, Zach, this is great, man. I really appreciate it. And Chris
Minteer 54:30
ever shamed me Amazon. This is a great show. The retail podcasts out there.
Ressa 54:36
Alright, well, I’ll be in touch soon. This was great, man. Thanks for doing it. And thanks, Chris. Take care.
I’ll catch up with you man. Thank you for listening to retail retold. If you want to share a story about a retail real estate deals that you were a part of on our show. Please reach out to us at retail retold DLC mgmt.com This show highlights the store Rhys behind the deals from all perspectives so it doesn’t matter if you are a retailer broker entrepreneur architect or an attorney Also don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode