Can a celeb endorsement fuel a Payless reboot?

Discussion
Photo: Getty Images/Sundry Photography; Source: Local 10 News, Miami
Mar 11, 2021
Matthew Stern

After declaring bankruptcy and closing its operations, Payless is returning to the world of brick-and-mortar retail and may be leveraging a celebrity endorsement as it tries to get the business off the ground again.

Former member of the Miami Heat and current basketball executive Alonzo Mourning is considering a partnership with the chain now that it is pursuing its new brick-and-mortar strategy, according to Local 10 News. The chain recently opened its flagship store in North Miami and intends to set up its headquarters nearby. The flagship launch marks a reentry into brick-and-mortar retail that the company has been discussing since last summer, when it announced plans to open 300 to 500 stores within a five year span. In 2019, Payless closed all of its 2,000 locations in North America after a Chapter 11 bankruptcy filing and, in early 2020, it opened an e-commerce website.

A fixture in shopping malls for decades, Payless fell on hard times as malls began to decline. The chain went private in 2011 as part of a leveraged buyout. Towards the end of the 2010s, the chain, which was facing competition from Target, Walmart and other value-oriented retailers providing higher-quality budget shoes, experienced significant management turnover. While a 2018 experiential marketing campaign built around a fake luxury store called “Palessi” drew accolades, the stunt failed to keep the chain afloat.

Payless plans to focus on affordable footwear, according to Local 10 News.

The retailer may find some of its direct competition weakened as it reenters the affordable shoe market.

Competing retailer DSW, hit hard by the pandemic throughout 2020, has been undergoing a reorganization and last year announced layoffs for more than 1,000 staff, according to Footwear News.

Other once prominent mall shoe retailers have pivoted to meet new audiences and face new competition. Foot Locker, for instance, doubled down on its status as a sneakerhead-focused retailer by opening a series of “Power Store” experiential concepts. Power Stores feature gaming areas, sneaker cleaning stations, sneaker customization services and event spaces for sneakerhead lifestyle-related events like DJ performances.

DISCUSSION QUESTIONS: What types of moves do you see Payless needing in order to reestablish itself in the marketplace? What do you see as the biggest challenges and opportunities facing the chain at this moment in time?

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Braintrust
"On-trend – but affordable – footwear is attractive to consumers. In its comeback, Payless should stick to what customers want and what it knows best."

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29 Comments on "Can a celeb endorsement fuel a Payless reboot?"


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Mark Ryski
BrainTrust

Payless is a significantly diminished brand and it will take more than an NBA star to change it. The shoe category has been hit hard during the pandemic and this won’t help Payless’ situation. The biggest problem it has is the same one it’s had for a long time – it’s not relevant. This has been exacerbated by bankruptcy, store closures and the pandemic on top. Payless has a huge hill to climb – I’m not hopeful they’ll make it.

Cathy Hotka
BrainTrust

Agree completely, Mark. I’m not at all sure that, when people want new shoes again, Payless will be their destination. Why didn’t they choose to rebrand during the hiatus?

DeAnn Campbell
BrainTrust

They should be thinking partnership instead of relaunch. They would make a great store-within-a-store shoe section inside of Walmart or Marshalls.

Craig Sundstrom
Guest

And what’s in that for Walmart or Marshalls? The premise of a partnership is that the subordinate partner brings something that the dominant one(s) can’t do on their own, but I don’t think Payless really has the brand equity for that … certainly not at this point.

Gene Detroyer
BrainTrust

How many times have we heard this resurrection story repeated with multiple retailers? How many times has it been successful?

Richard Hernandez
BrainTrust

So how do you make affordable footwear, sexy, hip and relevant? I am guessing that adding celebrities will help in doing that but that’s a steep hill to climb. It will be interesting to see how this plays out.

Dick Seesel
BrainTrust

Payless fell victim to its overexpansion into countless marginal sites, its bland shopping experience, and its low-end image compared to DSW. Even with DSW’s pandemic-triggered problems, it still has more “treasure hunt” appeal because its brand selection is much stronger than what you can find at the Payless website today.

I don’t give this relaunch much chance for success, given that DSW and the off-pricers already have a brick-and-mortar footprint as the basis for their 2021 recovery. And an endorsement deal with a retired NBA star — instead of an active player — says a lot about the absence of meaningful brands at Payless.

Phil Chang
BrainTrust

I’m sorry to say it – it won’t be enough. There’s a gap in the value equation that’s been filled by all sorts of retailers from more functional/cost-effective brands/retailers to brands/retailers leveling consumers up to expect more from their shoes.

Discount is a race to the bottom. It isn’t enough now to be compelling. If Payless wants to be around, it needs to figure out what need it is supposed to fill. Perhaps it’s targeting children between certain ages? Having a compelling reason why parents would come back? (Dare I say a shoe subscription model?) It needs to be something definitive – consumers have evolved to see past a generic value equation.

DeAnn Campbell
BrainTrust

Payless might succeed with a circular retail model. Allow parents with growing kids to swap out larger shoe sizes on a regular basis for a subscription fee. But then their best celebrity influencer would be an expert on frugal spending, like Clark Howard or Dave Ramsey, instead of a retired athlete.

Gary Sankary
BrainTrust

The fundamentals that brought about the end of Payless Shoe Source have not changed. Unless they think a strong defense in the paint is going drive demand for their brand, bringing in ‘Zo isn’t going do anything. In all seriousness Payless is not some iconic brand that customers can’t wait to visit again. On the contrary, the market is moving to direct-to-consumer and Nike and Adidas and others really do not need another channel to bring their products to market.

Bob Phibbs
BrainTrust

Did I miss the clamor for bringing Payless back? Anyone?

DeAnn Campbell
BrainTrust

Payless didn’t go under because mall traffic declined, but rather because they lost relevance to consumers. Relaunching will be difficult because the conditions that drove them under in the first place have only accelerated. With the prevalence of affordable and fashionable footwear available from an incredibly vast range of online and offline retailers, including second hand sources for expensive brands, it is going to be very difficult for Payless to regain a foothold (no pun intended). Unless they choose to stay small and localized to serve specific communities, Payless might have an easier time of it if they threw out the old name and business model and built new from scratch.

Georganne Bender
BrainTrust

I know (some) influencers are important but does anyone really believe that a famous celebrity shops at Payless?

Payless was all over the place with marketing before it closed, so much of it was far from the in-store retail reality. On-trend – but affordable – footwear is attractive to consumers. In its comeback, Payless should stick to what customers want and what it knows best.

Phil Chang
BrainTrust

This is a potential contest Georganne.
“What celebrity would make Payless compelling?” Could Payless become an Oprah pick?

Georganne Bender
BrainTrust

Oprah is in Louboutin air space so I don’t see her as a Payless influencer. Although when Payless was creating designer-inspired shoes for a while, I could see a style or two included in Oprah’s Favorite Things. I am thinking Kardashian influencer level here. They did a line of clothing for Sears, so who knows?

Raj B. Shroff
BrainTrust

I would think there has to be an underserved segment in this space.

Perhaps they could look to partner with a retailer like Dollar General or Big Lots and do mini stores-within-stores there. Payless is a known brand and they should use that to their advantage.

They would be smart to elevate omnichannel with a strong digital presence.

And like others, they could build out a private label offer with nice enough design at a good price point to be attractive to their audience. Think what Kia/Hyundai has done in cars.

Will it be an uphill battle, yes.

Dick Seesel
BrainTrust

Payless did operate the shoe department within Shopko for awhile, and both retailers are gone now. Does a strong national retailer want to operate its shoe department under the umbrella of a weakened sub-brand? That’s the Catch-22 here.

Ryan Rosche
BrainTrust

I agree that Payless isn’t a relevant brand and hasn’t been for some time. But with significant corporate restructuring, there’s sure to be some new blood within the organization that can think more creatively than the previous leadership.

David Adelman
BrainTrust

Payless established itself long ago as the “dollar store” of shoes. It will definitely take a lot more than a celebrity to bring it back from bankruptcy. However introducing a totally new revamped brand with a new marketing strategy focusing on their target demographic might give them a chance.

They will need to make a lot of noise and fanfare coming back to the crowded footwear marketplace. A much smaller rollout to test their new concept would make sense before expanding with hundreds of stores. Combining a new e-commerce platform that aligns with their new campaign would be another key entry point to success. However any new strategy requires a lot of creativity, work, time and money, which I’m not sure Payless has.

Cynthia Holcomb
BrainTrust

Interesting. Payless storefronts still sit empty around my city and in our suburbs. A quick check of the “new” Payless website reveals not ready for prime-time blurred photos of a relatively small display of shoes for men, women, and children. I don’t get it as a consumer and as someone in retail. How and why would Payless announce a revitalization of Payless, prior to the pre-opening of “new” Payless stores yet fail to offer up the enticement of a new and exciting website displaying the “new” Payless? There is a lot of talent in retail merchandising and the sky is the limit in web presentations of products. Actions speak louder than words.

Dick Seesel
BrainTrust

Yes, see my comment above about contrast with DSW. Payless didn’t have the brands that shoe buyers want (especially in athletic) when it ran brick-and-mortar stores, and it still doesn’t have those brands online.

Shep Hyken
BrainTrust

While it looks like Payless was headed toward the sunset, they are not trying to come back. Location and value play a part in their strategy. Closing all their stores and reorganizing has given them an opportunity to start anew with physical locations. Partnering with celebrities adds some credibility and will help them get noticed, but is it enough. It will take a savvy leader who understands their customer base (their needs, expectations, desire for online versus in-store, etc.) to deliver a successful reboot of their in-store experience.

Ryan Mathews
BrainTrust

With all due respect to Alonzo Mourning, Payless is a bit beyond the celebrity endorsement phase. With the real money flowing to the “sneaker head” end of the financial pool, and competition becoming more ferocious in the low price arena, it’s hard to see how Payless is going to open 30 – 50 sustainably profitable stores, let alone 300 – 500. Payless needs to realistically rethink their value proposition and — only then — start opening stores.

Doug Garnett
BrainTrust

It is interesting to think about how Payless might be able to get out of malls with this approach. As a destination store, they make more sense. Unfortunately, discount shoes require more than a good celebrity endorsement — the stores can only succeed if customers find them uniquely valuable.

Going back to brick and mortar seems wise — although they face an uphill battle. The celebrity endorsement? All depends on whether they execute well. It’s very easy to waste a lot of money that way.

Craig Sundstrom
Guest

Hands folded in prayer? Payless is a good example of a retailer whose MO was almost entirely price-driven — given its name, we might call it THE perfect example — that and saturation coverage, which of course in the end proved unsustainable.

It’s also an example of what happens with that strategy: when someone comes along with just a little better proposition, just a trace of “merchanting,” your ‘raison d’etre’ disappears.

So while I wish them well, I see little hope for the idea: they’re not really bringing anything to the table … amidst an army of competitors who are.

Brian Numainville
BrainTrust

Simply put, Payless is a brand that is going to have a difficult time becoming relevant. I don’t see an influencer being the solution to this situation, especially after the crash this brand had previously.

Rachelle King
BrainTrust

Consumers shopped at Payless because they could get decent shoes at an affordable price. If Payless wants to bring consumers back, they should offer decent shoes at an affordable price. Anything more — or less — is not really going to help their value proposition.