Five Below bets on esports firm Nerd Street Gamers to attract shoppers

Teen retailer Five Below will look to capitalize on the booming esports industry after leading an investment round in Nerd Street Gamers, a Philadelphia-based firm that builds pro-style venues for gamers.

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As part of the $12 million Series A financing round, Nerd Street will build its 3,000-square-foot specialized “Localhost” venues that connect to select Five Below stores, the companies announced Thursday. The project will kick off as a “multi-store pilot” program in 2020.

“Gaming is a trend our younger customers are actively enjoying, and working with Nerd Street Gamers will help us to provide an exciting gaming experience that appeals to our core customers and beyond, while also showcasing our extreme value technology-related products and accessories. We look forward to providing more experiences for our customers to ‘Let Go & Have Fun!’ while engaging with our communities at a deeper level,” Five Below CEO Joel Anderson said in a statement.

Prominent retailers have sought to add experiential features to their stores in a bid to lure customers amid the rise of e-commerce competitors like Amazon. By investing in esports, Five Below will attempt to attract shoppers interested “Fortnite,” “League of Legends” and other prominent video game franchises popular among professional players.

The esports marketplace is projected to generate $1.1 billion in 2019 alone, according to research from Newzoo. The global esports industry audience will surpass 450 million viewers this year.

Five Below said it could collaborate with Nerd Street Gamers on 70 or more eports-enabled locations depending on public reception for the pilot program. The stores will hold live gaming events, such as tournaments and training camps.

TickerSecurityLastChangeChange %
FIVEFIVE BELOW INC133.11+0.23+0.17%

Comcast and multiple private equity firms joined Five Below in the fundraising round.

Five Below shares closed 1.63 percent higher at $125.65 in trading Thursday.

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Nerd Street also plans to build 50 more gaming facilities separate from Five Below stores, with some linked to nearby colleges.