Five Below to open esports gaming centers in stores

Trendy Philadelphia retailer Five Below expects to have a new attraction in some of its stores by this time next year: esports gaming centers.

The esports pilot will begin small — several stores in 2020 — but with the potential for Five Below to expand the number if the concept is popular. To do it, Five Below is partnering with Nerd Street Gamers, the Philadelphia-based developer of training and competition facilities for esports.

Five Below CEO Joel Anderson said Thursday that there are about 100 Five Below stores with excess space for the 3,000-square-foot centers with 30 to 50 personal computers for video gaming. A traditional Five Below store has 8,500 square feet.

The chain, with 750 stores and $1.6 billion in revenue in 2018, targets teen and tween shoppers, and even younger ones. One of the featured products on its website on Wednesday was the Toilet Time Golf Game for $5.

“Entertainment and making a store a place where you can have fun is what we are all about,” Anderson said, noting that the brick-and-mortar stores had to distinguish themselves from online retailers.

John Fazio, chief executive at Nerd Street Gamers, said that Five Below esports centers “will be open all the hours that the Five Below is open” and that it will charge “pay-as-you-go rates” to play video games that could range between $1.50 to $5 an hour.

Fazio said he envisions the Five Below centers as mostly places for esports competitions and practice that also sell drinks and snacks. He said that tournaments or leagues would cost $35 to $100. Five Below also could sell products within the centers.

Suburban “internet cafés” for gamers were popular a decade ago, though many closed as suburban kids gamed in their homes with faster internet speeds and more sophisticated computers. Five Below stores with potential for esports centers would be those near middle and high schools with a “density of young people,” company officials said.

Five Below’s Anderson said that many details had to be worked out because the “ink is still drying” on the deal.

As part of the pilot project, Five Below was the lead investor in a $12 million round of financing for Nerd Street. Anderson said the venture was the first investment for Five Below outside its core stores. Other Nerd Street Gamers investors include Comcast, SeventySix Capital, Elevate Capital, and investor George Miller. Nerd Street has raised a total of $13.9 million.

Comcast Spectacor recently broke ground on a $50 million esports arena in South Philadelphia for the Comcast-owned Fusion professional team. Esports — participating in video game competitions or watching the competitions — has soared in popularity.