In February, Payless ShoeSource announced that it was seeking Chapter 11 bankruptcy protection, with plans to close its 2,500 locations across North America. Following bankruptcies of other retail stalwarts from a bygone era, like Sears, Toys "R" Us and Mattress Firm, Payless’ demise doesn’t come as a shock. Instead, it is another cautionary tale of a retailer that failed to evolve its brand.
Payless trafficked in commodity footwear with a low-price value proposition, but it committed many of the same sins as other victims of the so-called “retail apocalypse” by incurring too much debt, wielding too large a store footprint and struggling to keep pace with consumer trends.
These factors were exacerbated in recent years by the rise of formidable digital competitors that squeezed the retailer from both ends. And Payless could never quite get its footing to build a functional ecommerce destination that actually attracts customers. While other brands used digital channels to grow, Payless was increasingly reliant on in-store foot traffic, which became harder and harder for a retailer known for its presence in malls.
Meanwhile, Amazon and Zappos.com began to commandeer the online shoe market—at least for nonspecialty footwear. If you needed a basic pair of sneakers, boots or Oxfords, you might start your shopping journey there.
For those with more specialized tastes, but still looking for an attractive price point, a wave of direct-to-consumer (D2C) brands—Allbirds, Bucketfeet, Greats, M.Gemi, Rothy’s and Toms—has cropped up in recent years to carve out their respective niches of the footwear market. Made from recycled plastic or using limited edition artists’ designs, each brand possesses a modern and differentiated take on foot fashion, a compelling brand story and ethos—and reasonable price points “to boot.”
It’s no wonder that, according to a study by Feedvisor and Morning Consult, D2C brands rank as the most pressing ecommerce challenge for brands (27%), even outpacing shipping costs (21%) and the threat of Amazon (20%).