Five Below, the US-based discount store chain, has inaugurated an office in India, fortifying its presence with a network of 50 sourcing factories in the region. This strategic move is aimed at optimising inventory management, fostering enhanced predictive capabilities for demand, and establishing comprehensive tracking mechanisms throughout its supply chain.
In the third quarter, the company witnessed an 8.8 per cent year-over-year increase in inventories. However, on a per-store basis, inventory levels experienced a 5.1 per cent year-over-year decline, as confirmed by CFO Kristy Chipman. She highlighted Five Below’s initiative of early inventory ordering, ensuring a robust holiday season with well-stocked merchandise, expressing contentment with the caliber and quantity of inventory for the upcoming festivities.
CEO and President Joel Anderson articulated the company’s concerted focus on inventory to stimulate both sales and profits. This endeavour revolves around bolstering inventory productivity through the implementation of advanced methodologies, technology, and comprehensive analytics.
Kenneth Bull, transitioning from CFO to COO this year, disclosed the company’s ongoing development of a novel merchandise financial planning system and replenishment forecasting tool back in August. Emphasising the strategic utilisation of technology and data analytics, Bull underscored their commitment to augment inventory forecasting, ordering, replenishment processes, and end-to-end visibility, with a primary objective of elevating in-stock levels, turnover rates, and operational efficiency.
Recognising the pivotal role of agility within the supply chain, Five Below’s establishment of an office in India seeks to amplify its efficiency in sourcing products swiftly. Anderson highlighted the benefits of having a team in Asia, foreseeing amplified speed, heightened quality, and fortified partnerships with key suppliers in the region.
In 2022, Five Below engaged with approximately 1,000 vendors, with 60 per cent of its procurement from domestic sources. Notably, no single vendor accounted for more than 5 per cent of the company’s expenditure, underscoring the diversified sourcing strategy facilitating its ability to maintain the US $ 5 price point for products through a streamlined, cost-effective operational model.
