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- A team of Bank of America analysts visited a shopping mall to see how it’s faring during the back-to-school season, an important timeframe for companies to engage shoppers before the holidays.
- Retailers have been hit hard by e-commerce competitors like Amazon.
- Here are the analysts’ top six takeaways from their store visits.
- Read more on Markets Insider.
Back-to-school season is a big opportunity for retailers looking to boost sales and engage with shoppers ahead of the holiday season.
The landscape has changed somewhat as online retailers such as Amazon have become increasingly popular choices for school supplies, clothing, and shoes. But traditional big-box retailers like Kohl’s, Target, and Walmart remain top choices for back-to-school purchases.
To assess the changing retail landscape and see how more traditional shopping malls are faring, analysts at Bank of America Merrill Lynch hosted a back-to-school mall tour at the Garden State Plaza in Paramus, New Jersey on Friday. They wrote in a Monday note that for specialty retail and department stores, "differentiation and value are key."
BAML’s research focused on three retailers in particular: Five Below, The Children’s Place, and Urban Outfitters. Here are two major takeaways the firm made about each store, making six observations in total:
Five Below “appears to be targeting a slightly older teen”
Five Below on Facebook.
Five Below, the value retailer, has more items geared towards consumers in middle school through college, according to BAML.
"This included more room and technology products in the front of the store, as well as many back to school items," the analysts wrote.
The unique products offered at Five Below, paired with their low prices, will continue to drive store traffic for the chain, according to the analysts. They have a price objective of $150 for Five Below, and expect consistent low-to-mid single digit comp growth and 20% square footage growth on average on the year.
The biggest risk to Five Below’s growth going forward is further China tariff increases, the analysts wrote. In addition, the chain could struggle if it has to raise its low prices or is unable to keep up with ever-shifting consumer trends.
Analysts also note that Five Below has very limited ecommerce potential, something that’s increasingly important for all retailers that compete with Amazon.
Five Below’s Ten Below or JustWow section also drives traffic
Business Insider/Jessica Tyler
The store the analysts visited included both a Ten Below or JustWow section. Only 25 Five Below locations have the section, which includes items that are more expensive than the rest of the store — meaning that they cost more than $5.
The JustWow section in The Garden Plaza Five Below was previously a storage area that was converted about a year ago, the analysts wrote. Now, the extra 750 square feet boasts extra technology and room items that drives increased traffic to the store.
The Children’s Place is now competing in a more "rational environment"
The analysts visited The Children’s Place, a clothing store for kids aged newborn to pre-teen. They noted that the store at the Garden Plaza used to be next door to a Gymboree, but since the store has closed traffic to The Children’s Place has been boosted.
Gymboree filed for bankruptcy in January, and shut more than 800 stores in the process, Business Insider’s Haley Peterson reported. Now, The Children’s Place is looking to fill any gap left by the Gymboree closures, and will even launch Gymboree branded products in stores in the first quarter of 2020.
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