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Sears, Macy’s, The Limited, Wet Seal, BCBG, and American Apparel know all too well that when you’re struggling with debt, you close stores — to steal the latest Geico tagline, it’s what you do. Payless, facing a similar predicament, is considering closing about 1,000 locations — more than a fifth of of its 4,400 stores worldwide — in an attempt to get out of debt, according to Bloomberg. If it can’t work out a restructuring plan with lenders, it may file for bankruptcy.
The brand’s woes hit some of the familiar notes: People are shopping less in stores. People are especially shopping less at malls. Payless, however, is at a particular disadvantage because while its shoes are cheap, they aren’t necessarily the kind of products shoppers want.
Payless is aware of the mall problem. It was already in the process of getting out of the mall before this recent news, announcing in September it was set to close up to 500 smaller mall-based locations in favor of new “Super Stores,” with larger locations and a wider assortment of products available.
But an analyst told Footwear News at the time that the new super stores would help Payless compete with stores like DSW — an effort that may be in vain. The stores that are thriving these days offer name-brand products at a discount, from T.J. Maxx and Marshalls to DSW, which sells brands like Steve Madden, Sam Edelman, and Michael Kors for less. The shopping experience is like a treasure hunt for shoppers, with one customer telling Bloomberg recently, “I kid you not, I could spend hours in there.”
Meanwhile, Payless offers off-brand products that are cheap, but don’t offer the thrill of finding a deal on a luxury label. While it does carry shoes from outside brands — Champion and American Eagle currently offer styles on the site — they don’t have the same name cachet as a Kors. Even Christian Siriano, who has collaborated on a line for Payless for years, says that his hope is for shoppers buying his Payless collaboration to one day become customers of his main line.
Getting out of malls is a good first step for Payless, as recent studies have shown today’s consumer isn’t all that excited about them. But finding a way to make its products desirable — beyond a decent price tag — will be essential if the brand is going to climb out of its reported $600 million debt.