Payless Moving Up (From Feet) in the Retail World
Payless ShoeSource, a chain selling moderately priced footwear,
is looking beyond its female shoppers’ feet to offer two exclusive new lines
of beauty and body care products in its stores.
The two new lines, Zoe & Zac
and Unforgettable Moment, are being created for the chain by Maesa Group, which
has manufactured beauty products for other retailers including Forever 21 and
Urban Outfitters.
The lines will be initially tested in 1,500 Payless locations
beginning in September and then rolled out to the chain’s other 3,000 stores
later. The line of 60 items will cover a wide range of body and beauty care
needs with prices starting as low as $2.99 and going up to $19.99.
The move
to fragrances is not the first time that Payless has explored categories outside
of footwear.
“Our shoppers have responded very positively to our initiatives
to go beyond footwear and democratize fashion and design in accessories as
well, and this is one step further to bring consumers beauty products,” said
LuAnn Via, CEO of Payless. “Our new beauty line will feature the latest ideas,
colors, shimmers, scents and formulas in the beauty and body care category
and give our customers additional items to complete their personal sense of
style, as well as offer great gifting options — all at a great price.”
Discussion
Questions: Is Payless properly positioned in the marketplace to succeed with
beauty care items? What particular challenges will Payless face with beauty
care items that may be unique to its style of selling shoes?
A broader and deeper assortment of accessories (handbags, jewelry, scarves and so on) would be a more logical extension of the Payless shoe franchise. Yes, Payless sells these categories online and in their bricks-and-mortar stores but it isn’t perceived as a “headquarters” business. So cosmetics might make a logical extension but it presents unique challenges:
1. Does Payless intend to handle cosmetics as a complete self-selection business or does it plan to provide service?
2. Does the company name (“Payless”) cause a brand disconnect with the type of imagery provided by successful cosmetic brands?
3. Is Payless well-positioned to execute a large-SKU and high-replenishment business like cosmetics?
I assume that Payless did the necessary testing before its ambitious rollout, so the results will be interesting to watch.
There’s no reason that Payless shouldn’t go into beauty care and doing so will be another step toward fulfilling its larger corporate strategy of morphing into an Iconix-like house of complimentary brands (when Payless corporate changed its name to “Collective Brands”).
They will, however, be facing unprecedented competition as other channels blur into beauty (Kroger’s just-launched premium beauty brand, Mirra) and as current players strengthen their beauty proposition (Walgreen’s acquiring Duane Reade whose Look Boutique concept brings a department store beauty experience into the drug environment; CVS’ stand-alone beauty 360 concept).
Beauty is definitely not fading!
There is no reason that this company, with its broad overseas operations, can’t move into an merchandise area such as cosmetics. Can the merchandising team can match product with customer profile? That’s a major question. Can a self-serve format successfully sell cosmetics? That’s another.
This is a sound strategy for Collective Brands’ Payless Shoesource. They have had reasonable success in bringing on accessories, not universally, but in regions. Payless’ key competitor on the Shoe front is Walmart, with the later having a slightly higher share of “Store shopped Most Often” preference by Consumers (based on the monthly Consumer Intentions & Actions (CIA)) Surveys.
When it comes to Health & Beauty related items, 39% of the U.S. Consumers point to the fact that they “Shop Most Often” in a Discount Store format. Of the Payless core shopper, fully 50% of those shoppers say they shop in a Discount Store most often–Walmart, Dollar General, Dollar Tree, Kmart, etc.
The strategy provides Payless with the opportunity to capture larger ticket while those consumers are in the stores, and, it offers the prospect of bringing those consumers back more often, provided that Payless has the product they are seeking.
Sharp move. Good upside for incremental revenue for a chain that has over 4,800 stores.
Is this a brand extension, a line extension, etc? What is this? This is not logical at all. Someone looking for low-priced shoes may or may not have brand affinity to their Walmart/Target/Aveda/Macy’s brand of HBC. Not sure this flies.
Payless has gone a bit upscale in their image and stores in the last few years but do they want to stray away from their core offering? Customers look to Payless for discount stylish footwear. If you have kids, their pricing is even more attractive. Expanding categories in a shoe store doesn’t make sense to me, especially in Payless’ situation. They should bring in more shoes and different styles instead of different products all together. After all, isn’t Payless actually called Payless Shoesource?
Merchants and their category managers should refocus their efforts from obtaining the best deal from suppliers to developing retail solutions for customers that may transcend categories. I think this is what Payless is doing by offering these new products that complement the current list of goods they provide and can offer a variety of product bundling packages. I believe it will be a successful campaign.
This is a great example of a retailer focusing on their core customer and not just their core products. The Payless customer will still come to Payless for shoes, but will also purchase products that enhances her life at a price point she expects. Good move Payless.
I don’t think much of the positioning issue. Just like the Canadian Tire discussion, this is all about human needs. In short, it is an excellent idea, all dependent on the execution. BTW, this is relevant also to the urgent need of bricks and mortar retailers to leverage opportunities with their capital investment.
Payless is smart to test private label cosmetics as there are at least three reasons why it could prove beneficial:
1. Cosmetics are a great price point for a value-oriented business like Payless. Saving on shoes goes well with value-priced cosmetics and is an easier cross-sell than another pair of (a relatively more expensive item like) shoes.
2. To the extent that Payless is successful cross-selling to shoe customers, cosmetics is a higher-frequency business than shoes and can bring shoe customers back sooner than if they were only returning for shoes. That is likely to grow total customer value even if the incremental sales only come from cosmetics.
3. Having 4,500 stores featuring these new brands will serve to build awareness–and of course trial–of those brands and make them more marketable elsewhere.
Interestingly mixed feedback from the BrainTrust here and it will be exciting to see how Payless does.