Payless ShoeSource is a large footwear retailer with over 4,000 stores. It was founded in 1956 and is now owned by Collective Brands. The summary identifies two main problems: 1) an inefficient sourcing process due to a single distribution center and 2) a broad portfolio of underperforming brands. Strategies to address these problems include modernizing the distribution center, giving employees incentives to improve efficiency, and consolidating underperforming brands to reduce costs. The objectives are to decrease unnecessary spending by 5% and strategically review the brand portfolio by the end of 2012.

1. GNS Consulting:
Payless ShoeSource
By:
Elizabeth George, Natalie Neal & Shirley Sanchez

2. Executive Summary
Founded in 1956 by Louis and Shaoi Pozes
Based in Topeka, Kansas
In October 1997, the first international Payless store
opened in the Toronto area.
By 2000 they expanded to a total of 236 international
stores
Payless Shoe Commercial

3. Executive Summary
Owned by Collective brands, which also owns Sperry,
Stride Rite, and Keds.
Currently Payless has over 4,000 stores
Payless has had to close over 400 stores to help cut
costs for their struggling business
Stock has dropped from $24 to $12 within the past year

4. SWOT
Strengths Weaknesses
•4,500 stores nationwide •Disorganized stores
•Use of designer collaborative •Hard to find merchandise
products •Limited product assortment
•Payless’s variety of products •Lack of motivation from their
•Inexpensive footwear employees
Opportunities
•Opportunity to dominate the
Threats
•Competitors such as, Wal-Mart,
value-priced shoe segment
Target, Kmart, Sears, Kohl’s and
•Collaborations give Payless an
J.C. Penney
edge
• Brand image has caused them to
•Improving their market share,
close 475 stores and report a loss,
brand image and positioning within
which mainly reflects the declining
the consumers’ mind.
of value in Payless stores

5. Competitor Analysis
Brown Shoe Company: In business for 130 years. Their
claim, “To inspire people to feel good and live better…
feet first”
DSW, Inc.: Began in 1991 and are a leading footwear brand
and accessories retailer that offers a wide selection of
brand name designer footwear and accessories for men,
women and children. Operates 319 stores in 39 states. The
company’s core focus, “is to create a distinctive shopping
experience that satisfies both the rational and emotional
shopping needs

6. Competitor Analysis
Target Corp.: Opened first store in 1962 . Their
mission is to, “make Target the preferred shopping
destination for our guests by delivering outstanding
value, continuous innovation and an exceptional
guest experience…”
J.C. Penney Inc.: one of the top retailers in America
and have over 1,100 stores throughout the United
States and Puerto Rico. Their vision is to be
“America’s shopping destination for discovering
great styles at compelling prices”

7. Problem #1: Inefficient Sourcing
The company runs mainly out of one central distribution center in
Topeka, Kansas, which has started to create a decline in the
company’s ability to stay on top of trends (Cullin, 2007).
Strategies: Modernize the Distribution Center: Equipment-based
& Modernize the Distribution Center: Process-based
Objective 1: To invest in distribution efficiency by the end of the
fiscal 2012 year with the goal of decreasing unnecessary spending
by five percent a year through 2017

8. Smart Cart

9. Designed Workstation

10. Electronic Scoreboard

11. Problem #1: Inefficient Sourcing
The company runs mainly out of one central distribution center in
Topeka, Kansas, which has started to create a decline in the
company’s ability to stay on top of trends (Cullin, 2007).
Strategies: Give distribution employees incentives to respond quickly
to regional store’s inventory needs.
To better understand employee happiness versus employee
motivation and implement a distribution environment that will
encourage efficiency.
Objective 2: To reallocate the five percent savings on spending in
the first objective by the end of 2013, and distribute the savings
among distribution center employees as an incentive program.

12. Problem #2: A broad,
underperforming brand portfolio
Currently, Payless needs to examine and consolidate their large
brand portfolio to decrease fixed distribution and factory costs
associated with owning this large number of brands, which will
eventually result in an increase in profits.
Strategies: To consolidate underperforming brands in the Payless
portfolio
Objective 2: As an attempt to decrease licensing costs and increase
efficiency, Payless will undergo a strategic portfolio review and
consolidate underperforming brands by the end of the 2012 fiscal
year.

13. Problem #2: A broad,
underperforming brand portfolio
Currently, Payless needs to examine and consolidate their large
brand portfolio to decrease fixed distribution and factory costs
associated with owning this large number of brands, which will
eventually result in an increase in profits.
Strategies: To define a position in the market for each brand to
create value in different categories amid the footwear industry.
Objective 2: Realign Payless’ portfolio based on the current
industry trends and analysts’ research to determine a market for
each brand.

14. Evaluation # 1
Goal is to decrease unnecessary spending by 5%
Payless should be able to increase their response to industry
trends
Payless should be able to distribute the savings among
distribution center employees as an incentive program
A way to measure the success of the employees’ incentive
program is by evaluating the performance of their employees

15. Evaluation # 2
The first objective is to tailor the list of brands
Second objective is to realign the portfolio based on Payless’
current market position and analysts’ research
To measure this strategy, profit levels will be compared from
previous years
The company will notice a decrease in fixed distribution and
factory costs
Payless will address and solve problems quicker and easier

16. Conclusion
Payless has over 4,000 stores with a presence in the United
States, South America, Canada and Central America
Payless has the opportunity to dominate the value-priced shoe
segment
They will have to attract and retain consumers by providing
faster distribution of fashionable shoes and building a
relationship with its consumer base

17. Conclusion
The idea is to rebuild the Payless name of, “democratizing
fashion and design in footwear and accessories to the
world and inspiring fun fashion possibilities for the
family” (Payless Shoesource, 2011)

18. Check this out!
Bush and Payless

19. Questions? Comments?
Thank You for your attention!

20. References
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