Retailer Payless Shoesource is expected to file for bankruptcy in the near future, according to Bloomberg News. Although not yet publicly acknowledged, the company is rumored to be planning to close around 500 of its stores as a method of reorganization, according to unidentified sources. This would add Payless to the long list of retailers who have filed for protection in the last year – one that will likely keep growing due to the recent shift in shopping patterns and customer expectations.
What’s clear: Payless is dealing with debt
In January, Reuters shared that Payless Inc. was exploring its options and working with debt-reconstruction attorneys to address a reported $665 million in debt – an amount that was collected due to less foot traffic in its stores. They’ve also dealt with the backlash of succeeding competitors, including show warehouse DSW Inc. and TJX Companies Inc., the parent company of retailer T.J. Maxx.
Payless Inc. understands the popularity of online shopping is on the rise. Last year, division senior vice president of store development at Payless Neil Hansen told Footwear News that the company is aware of the shift in shopping patterns and plans to take action to keep them out of the red.
“I recognize that we have to deliver omnichannel capabilities with a sense of urgency,” he said. “Almost every IT capital project underway at Payless relates to some sort of capability that the project will unlock for us.”
Payless Inc. plans to boost and maintain its online presence and develop a feature that allows users to shop for items online, but pick them up in the store. Not only does this ensure foot traffic throughout their locations, but it keeps shoppers happy: there’s no waiting for shoes to show up in the mail and zero shipping fees to pay.
“We’re not there yet,” he told Footwear News September 2016. “but we continue to grow handsomely with regard to [omnichannel], and it continues to be a major strategic initiative.
The downfall of retail shopping
Retailers such as Macy’s, Sears and J.C. Penney are closing many of their locations, which may be a sign that department stores have passed their prime. Online shopping hasn’t taken over completely, however – brick-and-mortar stores like T.J. Maxx, Nike and Ulta are thriving for various reasons. They offer specialized service, ample bargain opportunities and “experiences that can’t be found on screen,” according to USA Today. Farla Efros, president of HRC Retail Advisory, told the source that department store retailers need to think outside of the box to succeed.
“People still want to feel, touch and look to make a decision,” she said. “It’s just the role of the store is different. It needs to be more experimental than it’s been.”
If Payless makes an effort to attract customers in a revolutionized way, they may be able to stay afloat as old-fashioned, by-the-book retailers continue to sink.