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Payless re-energises shoe shoppers

Published:Wednesday | March 2, 2011 | 12:00 AM
Shoppers await the opening of the Payless ShoeSource store at the Boulevard Shopping Centre in Kingston, at the official launch of the chain in Jamaica on Thursday, February 17. - Ian Allen/Photographer

Rival retailers report uptick in business

Leder Mode wary of long-term impact

Avia Collinder, Business Reporter

The appetite of Jamaicans for shoes came to international notice after Vybz Kartel recorded his anthem, Clarks, which is reported to have created a volcanic demand, with the cost of a pair from the British shoemaker rising from £46 to £78 locally.

Now, the international shoe chain Payless ShoeSource has opened three new stores in the island with plans for seven more, tapping into what appears to be a robust market for footwear.

There is no shortage of shoe shops in Jamaica, but, since the days of Bata, there has been no one name associated with shoes on a national scale.

Payless ShoeSource has the potential to change that, and some local operators are cautious about how to react to a far richer rival with worldwide operations and the capacity to refresh its stock on a weekly basis.

In a poll of local stores done by Wednesday Business, many declined to comment, and among those that did, one manufacturer with upstream operations was less welcoming of a new market entrant - seeing the potential for a big rival to crowd out domestic sellers.

Retailers, however, see scope for business to increase, among them the owner of the Shoe Gallery in Springs Plaza, where one Payless store is located.

"It's good that they have come into the plaza. It means more crowds and someone will be there who wants our shoes," he said, asking that his name be withheld.

"Our shoes are completely different and much cheaper. It will get more business for me."

The Shoe Gallery also operates a store in Premier Plaza across the road.

No significant change

Rebecah Baboram, store manager at Sammy's For Feet, a shoe store on Constant Spring Road, says she will assess the market as conditions change.

"So far, we are seeing the same trend of higher month-end shopping with slow periods in between," she said of Sammy's business. The company has three outlets in Kingston.

But, Leder Mode Limited - a member of the Alkali Group of Companies with a factory outlet,which manufactures fine leather products using Jamaican hides, selling these and imported brands in their own retail outlets and other end users - has a different perspective.

Business Manager Gary Wallace said the American chain is likely to cut business for shoe stores large and small.

"Payless brings added competition directly to our market. Initially, the novelty of their arrival will adversely affect our sales and others in the shoe market," said Wallace.

The impact will be felt initially by "all types of players in the shoe market including variety stores and specialist shoe stores", he told Wednesday Business.

However, in the long run, the worst of it might be felt by "persons who specialise in synthetic footwear," he feels.

Leder Mode, he states, has a niche in leather footwear which is not the same as Payless.

He said Leder Mode has a 10 to 15 per cent share of an estimated annual market of seven million pairs sold in Jamaica.

The industry, Wallace states, has in the last two years been experiencing low sales "due to lower disposable income of the average shopper and a greater influx of cheaply made synthetic imports".

Leder Mode itself has ceased selling to local stores and exports 12 per cent of output.

Wallace expects another challenging year in 2011.

"We will be continuing the process of adapting the business to the changing times, primarily because of the added competition and the reduction in people's disposable income."

But Steve Khemlani, whose clothing store, Lord and Lady, includes a shoe section, says there has been a brief uptick in sales that has coincided in Payless' entry.

"Some consumers have been very happy with what they have seen, but a lot have not because the prices are not really that cheap and, moreover, the Jamaican consumer is accustomed to certain brand names which are not carried by Payless," he said.

Pulling out shoppers

Khemlani was welcoming of the new player saying its entry not only created new jobs, but served to shake shoppers out of their lethargy and back into the plazas to shop.

"It has raised curiosity and has caused the consumer to go visit the stores," he said.

Payless ShoeSource, a subsidiary of Collective Brands headquartered in Topeka, Kansas, has been closing stores even faster than it has opened them in the period since the global economic crisis struck in late 2008.

The retailer shuttered 104 stores in 2009, and 114 in 2010.

However, in October 2010, Payless announced two franchise deals to expand new international markets beginning in 2011 with plans to purchase Grupo Axo, a Mexico City-based chain, in late 2011 and to open 41 new stores there.

Payless' long-term corporate plan calls for 300 stores in the Mexican market with more in Indonesia, Malaysia, and Singapore.

In Jamaica, the company has plans to set up 10 stores, but says it could increase that over time.

Khemlani believes the chain will carve out its own niche in Jamaica, without hurting the existing business.

"Payless carries chiefly their own brands. Most if not all the shoes that are on display are made in China, while the other shoe stores in Jamaica carry a variety of shoes from China, Spain, Brazil, and Italy," he said.

"A lot of consumers, having gone to Payless, have suddenly wanted to buy a pair of shoes and have actually come to shop at Lord and Lady. This has caused our shoe sales to actually go up, albeit slightly. Obviously, we are thankful for the new energy that Payless has brought to the market."