Executive Summary

Founded in 1956 Payless shoes was founded and later on sold to Matt Rubel in year 2005 to make changes within the company to regain its marketing leadership due to its loss of market shares from previous years. The company took a turn in establishing a new image of luxury meets low-end prices. Although Payless wants to continue to maintain its image of maintain low prices the change mainly within the company is to create fashion goods by colliding with fashion designers to hit that niche that was missing for all those years. The following examines the company analysis and marketing mix of year 2005.

Payless shoes have grown in becoming one of the largest shoe retailers in North America, with over 4500 stores. Payless shoes have been operating one of the lowest priced retailers in the market in producing inexpensive shoes to mass market. Founded in 1956, Payless was first established in Topeka, Kansas, it was based on being low cost provider of shoes for families, however, once it hit year 2005, Payless hired a new CEO to establish a new image for Payless. Business was slowing beginning to drop and stores were closing, therefore, new CEO, Matt Rubel needed to make changes to regain its market leadership (385). The changes within the company needed to be done to achieve fashionable footwear although still maintaining an affordable retail price. Payless evolved in the change of customer demand and increased retail competition by producing on-trend fashion cost conscience market.

External Analysis

When looking at Payless Shoes external analysis generally it includes all elements that influence the shoe industry. These elements that are influenced include the segment factors. The demographic of Payless is middle class 20-30 year old women with an income approximately $60,000. Women particularly at these ages normally care about fashion and want to purchase fashionable items. Payless target market is catered to those middle class families. During economic downfalls it is most difficult for Payless because families will not purchase shoes and will stick to only purchasing essentials for their everyday life due to their low income. Stores such as DSW, Target, Wal-Mart, Footlocker, Macy’s, Marshall’s Khol’s J.C.Penney are all competitors that are in the position of effecting Payless in the cost leadership strategy due to them all being companies that are lower-priced. Payless experienced its most difficulties when competitors such as Wal-Mart and Target entered the shoe market. The entry in the shoe market for these low cost one-stop-shop companies caused struggle for Payless to establish them on the leader, therefore forced Payless to create its new image and emphasis on fashionable products and repositioning. Since year 2005, Payless repositioning was to increase the fashion level of the products by forming partnership with designers to give the consumers what they want, fashionable products at an affordable cost. Rubel, strategy was to sell shoes under numerous brands, which included Airwalk, Champion, Spalding, Dexter, Shaquile, O’Neal, Dunkman and various others (385). Bringing in designers such as Christian Siriano, Lela Rose and Isabel Toledo as new designers for the store has given Payless a more upscale look at a cost effective price for the consumer. Though there are substitutions for their brands in each product category, Payless is less expensive then its overall competitors. There are always threats of new entries while establishing a company however seeing as payless caries a wide range of fashion products, from women, men, kids, athletic wear and so on it gives consumers an experience for the whole family. Payless expanded to achieving fashionable products at a low cost however, by still maintaining a quality product therefore, it does give new entries difficulties to compete against.

Internal Analysis

Payless experienced a downfall, which led to change in year 2005, these changes were to increase sales and correct the inventory problems, the company revised its mission statement, vision, and company strategies. The current mission “we have the ability to make shoes at the most affordable prices anywhere in the world and we want to marry that with the greatest creativity” Rubel (385), has driven the company to develop strategies, which have led the company to exhibit internal strengths and weaknesses. The name of the store defines the cost leadership of Payless in the market. Consumers when shopping at Payless stores know that they are buying shoes with fashion style at the low price that they went in for. Rubels main marketing strategy was to expand on their customer base to create more sales, offer the consumers “on-trend, differentiaed products” such as accessories and athletic footwear, repositioning Payless by introducing “house of brands” available at discounted prices, which gives consumers access to different brands within one roof which according to Rubel allows them to accomplish their focus on “democratizing fashion in footwear and accessory”(386).

Rubel’s goal to democratize fashion was achieved when Payless collided with designers collections to give payless an upscale feel for the consumers. Democratizing fashion for examples are the increase in amount and accessibility for fashion goods globally, the decrease in exclusive specialty clothing such as haute couture with an increase of ready-to-wear, the greater mixing of class, gender and culture, codes with a decrease in barriers. Within this case it means to join forces with another success, keeping up with the changes in the fashion industry. For Payless high-end designers collaborating with a lower-end company achieved democratizing fashion. Payless joined forces with known designers however, still maintain a low price point to still maintain the same demographic. By Payless democratizing fashion and signing with designers it gives consumers a feel of fashion and it allows them to feel trendy, just because Payless consumers income may not permit them to shop high fashion goods it does not mean that they are not able to keep up with the trends year after year. Payless main incentive is to get those fashion trends out on their shelves for the consumers to buy.

As a fashion forward consumer, seeing Payless new strategy of luxury-meets-low price goods would not appeal in my mind set, because the name of the company “Payless” does not sound “luxury” as stated by a trend forecaster “there is nothing cool about shopping at Payless”(Salzman, M,. 386). The consumers that shop there have a limited income that does not permit them in shopping at high end shops, therefore consumers who have disposable income to shop are end shops will not shop at a store called “Payless” regardless if the goods in the store are fashionable. Therefore I do not believe that Rubels new strategy for achieving new customers will be successful with the new high fashion venture with the same name of the store being called Payless. However, payless will in fact attract those female aged 16-21 from middle class families who are vey fashion driven that are vey much inspired by celebrity style, these young adults will infatuated by Payless new concept of high fashion designers to get the thrive of imitating the celebrity persona of feeling with the trend of the season.

Payless first started as a company that solely maintained low cost goods, fashion was never a main goal set for the company, once company hired new CEO Rubel, the company drifted to a more upscale environment targeting more fashionable products which was lacking within the company. Payless originated the concept of putting the shoes on the shelves where customers could browse the styles and sizes. The products and self-selection store concept was popular with the targeted consumers Payless begun to grow quickly. Today, Payless is reenergizing by founder Rubels vision to make great design and fashion accessible to all customers. The renewal changed the way people would think about Payless. Payless redesigned a new logo, the merchandise is fresh and much more stylish, the marketing is more vibrant and engaging to consumers. Most of all, Payless is changing their attitude and there self-image. The logo was the first step of change since it was the first time in 20 years. Payless launched new “fashion labs” and “hot zones” store formats (385). The store changed as well by changing the layout and creating a more open environment, more lighting, having this new store design makes an inexpensive shoe add value. The company carries a wide range of products such as shoes for women, men, infants, toddlers, children, hair accessories, purses, athletic wear, shoe care products, sunglasses, socks, umbrellas and school bags. The prices range for these products mentioned can vary anywhere between $25.00- 60.00, depending on the product, also a lot of sale items can range anywhere below $25.00. The website is a great tool for shopping online you can purchase any goods online and receive a promotional discount on the complete purchase which is a great feature for those consumers who are more time sensitive and may not have the time to browse the malls. Payless is very much involved in the social media; after Payless signed with designers they did a runway show in New York’s fashion week. Payless is also on facebook, Twitter and Pinterest which are today’s most used social tools and a good way to promote through advertisements and to allow consumers to always stay in touch with the latest updates and collections.

Payless does carry a wide range in products for all family members, I do not believe that Payless shoes is any cheaper then other trend shops such as Just Call it Spring which is a company that is part of the Aldo group this company caters to trend women and male consumers who are more fashion driven therefore for Payless to have changed into creating this image of “High end fashion” I don’t believe it will give them much success seeing as the other competitors within the malls that are more trendy. Although Just Call It Spring is priced a little bit higher anywhere near $35.00-$100.00, trendy consumers will still shop there to purchase trendy items. However, there are not many children stores therefore I believe that if Payless were to expand there children shoes it would be much more beneficial for them in sales, because parents do not want to spend a lot of money on their infant/ or child especially if in a few months they will grow out of them or ruin them while playing, consequently parents will purchase children wear at payless for there children and especially if they carried a much more wider selection of styles it would draw in much more parents as consumers if Payless were to begin to promote more for children.

Rubel did take a risk and making changes within the company to change the image after the company was experiencing a hardship, the company definitely is looking much better then it did in prior years, however, the most suggest look at would be if Rubel wants to give consumers a luxury feel it definitely would be essential to make changes to the name “Payless” because with keeping that name “payless” it definitely does not give the impression of luxury.

Reference List

Payless ShoesSource: Paying less for fashion, pages 385-87 Kotler et al. Text book Principles of Marketing, 8th Canadian Edition