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NEW YORK — Payless ShoeSource is putting a fresh foot forward with a new store design concept that is part of a push to strengthen its positioning as a fashion-forward authority in accessories.

The $2.6 billion purveyor of affordable flats, pumps, sandals and sneakers for women, men and children has eliminated the high shopping racks divided by shoe size in the women’s area and will now merchandise based on product stories — including an area at the front dedicated to handbags, belts, fashion jewelry, watches and sunglasses.

The new design premiered July 19 in the chain’s unit in Oak Park Mall in Overland Park, Kan., and five more overhauled stores, including the Payless at 437 Fifth Avenue here, are to debut this week.

By the end of 2006, Payless anticipates remodeling another 244 of its 4,602 doors — four with the new design concept. The rest will feature only the opened-up front-of-store design leveraged from the new format. Twenty to 30 more stores are targeted for a complete overhaul in 2007.

“We are taking the largest platform in the footwear category in America and raising the tent pole on it,” said Matthew Rubel, who was chief executive officer of high-end shoe firm Cole Haan for six years before joining Payless almost a year ago as its president and ceo. “We are not just about shoes anymore.”

For the first time in its 50-year history, the Topeka, Kan.-based firm is hiring its own design team and is searching for a space for them to be housed here.

“In the past, we would work with agents to pick out items for the store,” Rubel said. “We will continue to do that, but now we will create original designs around trends. We see this as a tool to democratize accessories, creating great design at a compelling price point.”

In addition to Payless, the firm also retails items under labels such as Champion, Spalding, Airwalk and the Shaquille O’Neal-endorsed Dunkman brand, as well as the recently acquired American Eagle brand for footwear and accessories, with product due in 2007. It also has entered into a cobranding agreement with the American Ballet Theatre for a line of dance shoes and accessories available exclusively at Payless.

This story first appeared in the July 24, 2006 issue of WWD. Subscribe Today.

Rubel said that with the new store design concept, the accessories assortment is expected to jump from 9 percent to 15 percent of the overall mix. Items like handbags will take on a more important role in the assortment, occupying a dominant position on each store’s front walls. They also will be cross-merchandised with footwear throughout the store. Items such as fashion jewelry will be merchandised on new fixtures, as well.

“Our goal is to create a store experience that will elevate the product, even though it’s at a mass price point,” Rubel said. “By taking out the shoe racks, we can show shoes off by style and create a product story around them with other items like handbags.”

Redefining Payless as an accessories resource was central to the project, said Paula Stafford, a principal at Callison, a Seattle architecture firm that worked on the new store concept.

“Part of this whole thing is the evolution of the business to being more of an accessories business,” she said. “For women, accessorization has become so important, and they often shop for footwear and handbags in tandem.”

Andrew Jassin, managing director of the Jassin O’Rourke Group, a retail consulting firm here, said Payless is known as a destination footwear company, although it has always sold accessories such as handbags and small leather goods. He added, however, that he could see that evolving.

“Payless attracts three kinds of customers,” Jassin said. “There is that affluent customer who is looking for a bargain. There is the middle-class customer who is looking for value. Then there is the lower-income customer who shops at Payless out of necessity. To attract a trendier, hipper customer, Payless has to do a better merchandising job. When we look at the stores now, they are looking a little antiquated. So they need to change the general overview.”

Jassin said that Payless, like H&M and Target, might want to consider celebrity designer partnerships to raise its profile.

Payless has made its first step in that direction by enlisting Laura Poretzky, designer of contemporary sportswear brand Abaeté, to create a line of footwear based on styles Abaeté presented on its fall runway. The styles, including a fake suede and satin tall boot, satin flats and a patent pump, will retail for $25 to $45 beginning in September. Poretzky is expected to create a holiday collection for Payless, as well.

“The new store allows us to create a separate fixture for Abaeté that has more of a designer atmosphere,” said Rubel, adding that the firm is looking into other similar partnerships. “We hope this will get us in front of a new customer. We want to signal that there is change, while at the same time not abdicating our core spot.”

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