Why Payless is going out of business and what you stand to learn from it

Payless just filed for bankruptcy. Here’s how you can avoid their mistakes!

Why Payless is going out of business and what you can learn from it


Payless filed for bankruptcy for the second time in 2 years on Feb 14, 2019. It decided to close all of its 2,100 stores in the U.S. and plastered huge ‘GOING OUT OF BUSINESS’ posters on its windows.

Bargain hunters had a field time with the last minute 20% off on shoes that were already super affordable while tall boots had a 40% discount.

So, what went wrong?

The concept in itself isn’t alien. Wish, Shein and Romwe are all online budget clothing stores that sell items for prices cheaper than other retail or online stores. The conspiracy that Shein and Romwe might be the same company keeps finding a way to surface every time some influencer puts out a video on their shopping haul but I’m digressing.

People, and by people I mean consumers, aren’t opposed to the idea of buying items for reasonable prices. They are dubious of the quality as most believe that lower price tags equals low quality but Payless isn’t like that.


Last November in 2018, Payless pulled off a remarkable stunt by having dozens of influencers and fashionistas believe that they were invited for a sneak peek to a luxury brand’s opening named Palessi. Lo and behold, these influencers forked over hundreds of thousands of dollars for Payless shoes that they believed to be a luxury store.

It was eventually revealed to them that they had bought Payless shoes and the difference was returned. It served as a great marketing tactic and faith in the brand was renewed. Affordable doesn’t mean low quality.

But, human psyche cannot be changed with one prank. ‘You get what you pay for’ is deeply ingrained in most people’s minds. To top that, in a social media-obsessed world like ours, branding is everything. And if you own Payless shoes, you’re not living the whole FOMO life. Let’s not forget, AirPods users don’t speak broke.

Terrible offline and online experience

Psychology aside, Payless didn’t do itself any favours by having consumers suffer through a terrible online experience. Even companies that are strongly rooted in the physical retail landscape know that having a strong online presence is vital to compete with the eCommerce industry.

If that weren’t enough, they didn’t focus on the most important thing that customers crave in a brick-and-mortar store: Experiential Shopping. Nike has done a darned good job of setting those expectations with its flagship store.

How To Avoid Payless’s Mistakes

To avoid going belly up like Payless, focus on the in-store customer experience and develop and maintain a strong online presence particularly on social media (especially if your target audience includes millennials).

  1. Personalized recommendations: Shoppers love product recommendations that have been tailored to suit their needs.
  2. Curated shopping experience: From a tailored Spotify playlist to a beacon scavenger hunt, consumers love a good experience. And, they value an improved experience far more than they care about product quality.
  3. Product information: Millennials like the idea of ‘invisible payments’. While millennials want instant gratification and prefer to shop in-stores and buy products immediately rather than wait for their online orders to ship, they still like the idea of minimal human interaction that comes with online shopping. Having NFC enabled products or dynamic QR codes on packaging allows millennials to quickly get all the data they need about the product to make an informed decision.
  4. Instant Checkout: Amazon Go, Zippin and other big-box retailers have made Scan and Go a must-have when it comes to improving customer experience. Creating such Instant Checkout booths is a piece of cake with QR codes and NFC that supports cardless payments.
  5. Social media presence: Customers trust social media reviews and make snap decisions to buy a product based on how well the product is marketed. Almost every social media platform allows shoppers to buy directly from the business’s page. Instagram even lets users buy products directly from Instagram Stories. Having a strong presence allows businesses to connect and engage with their loyal customers while drawing in new customers.

Get this FREE eBook: How businesses can use NFC, QR codes and beacons to improve their ROI

What do you think is the most important part of a consumer’s journey? Sound off in the comments below!

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