Ah, Payless ShoeSource—a brand that for decades was synonymous with affordable footwear for families.
It’s a name that brings back memories of scouring aisles for back-to-school shoes and snagging deals.
But somewhere along the way, the story took a detour, leading to bankruptcy, store closures, and questions like, “What went wrong with Payless?” and “Is Payless still in the US?”
Let’s dig into what happened, what led to its downfall, and whether this iconic name is truly making a comeback.
A Glimpse Into Payless’s Glory Days
Founded in 1956 and headquartered in Kansas, Payless ShoeSource had one goal: to become “the largest specialty family footwear retailer in the Western Hemisphere.” And for a while, they crushed it.
With self-service stores, in-house private-label designs, and unbeatable prices, they grew from $700 million in sales in 1985 to $1.5 billion by 1991.
Their business model was innovative for its time—cut costs by staffing fewer employees and keep customers coming back with a broad selection of affordable, quality footwear.
Their slogan, “Payless. Expect More, Pay Less,” perfectly summed it up.
But, as with many success stories, the cracks eventually started to show.
The Competition Tightened
By the late 2000s, the retail landscape had changed. Discount chains like Walmart and Target started ramping up their shoe game, offering competitive prices with equally stylish options.
And then there were specialty retailers like DSW and Famous Footwear that leaned into tech and customer experience.
Instead of staying ahead, Payless fell behind.
Competitors embraced online shopping, introduced tech-driven in-store experiences like mobile checkouts and interactive displays, and used data to personalize recommendations.
Payless? They stuck to their brick-and-mortar roots, which, in a world increasingly shifting online, felt outdated.
When Online Became the New Playground
Payless’s resistance to digital transformation was one of its biggest downfalls.
Retail analysts often point to their sluggish e-commerce adoption as a critical mistake. By the time they realized how important an online presence was, competitors like Zappos (which is owned by Amazon, by the way) and DSW had already cornered the digital market.
During the early 2010s, e-commerce sales were climbing year over year.
According to Statista, U.S. e-commerce sales increased by 13.6% annually from 2010 to 2019. Yet Payless, a brand that catered to budget-conscious shoppers (a huge demographic for online shopping), wasn’t capitalizing on the trend.
The result? By 2017, they filed for bankruptcy the first time.
Related Read: Digital Innovation in Business: Your Quick Guide
Here’s a key takeaway for businesses: staying stagnant in a rapidly evolving market is risky.
Brands need a way to capture new ideas, innovate quickly, and adapt to change.
Payless’s reluctance to embrace technology—like incorporating digital shopping or using customer insights for personalization—left them behind. If you’re wondering how modern businesses stay ahead of trends, leveraging innovation management tools like Idea Assist can be a game-changer. These solutions help teams collaborate on ideas, address challenges, and stay ahead of market shifts.
Poor Management and Leadership Woes
A brand is only as good as its leadership. And Payless had issues.
From frequent leadership turnovers to a lack of future-oriented strategy, the company was stuck in a cycle of reactive, not proactive, decision-making.
One former employee summed it up perfectly:
“It felt like the leadership team didn’t have the bandwidth to handle everything—stores, online, strategy. Decisions were rushed, goals were unclear, and pivots happened too fast to be effective.”
No wonder they couldn’t compete with brands that had clear visions and strong execution plans.
Want to avoid pitfalls? Understanding how to manage innovation effectively could prevent similar missteps. For example, leaders that consistently gather ideas from employees or customers—through structured approaches like innovation challenges—are better prepared to adapt.
The Bankruptcy Spiral
Payless first filed for bankruptcy in 2017 but emerged after restructuring some of its debts. Unfortunately, the revival didn’t last. In 2019, they filed for bankruptcy again—this time shutting down all 2,500 North American stores.
When asked about the closures, Stephen Marotta, Payless’s Chief Restructuring Officer, admitted:
“Despite our best efforts, we now must wind down our North American retail operations under Chapter 11.”
Is Payless ShoeSource Back in Business?
Here’s the twist. In 2020, Payless announced a comeback. They rebranded, dropping the “ShoeSource” from their name, and declared plans to open 300–500 stores across North America within five years.
Their first new store opened in Miami, Florida, which also became their new headquarters. CEO Jared Margolis described the relaunch as a chance to offer “value-driven products across multiple categories, at a time when value couldn’t be more critical.”
So yes, Payless is technically still in business. But as of now, they are in rebuilding mode, focusing on smaller physical stores and a much-needed e-commerce push.
Is Payless Still in the US?
Yes, but not on the scale it used to be. You won’t find them in every strip mall or shopping plaza anymore. Instead, they’re operating selectively while leaning into digital-first strategies.
Lessons From Payless’s Fall
If there’s a takeaway from Payless’s story, it’s this: failing to adapt is a death sentence in retail. Payless had a beloved brand and a loyal customer base, but they underestimated how quickly technology would reshape shopping behaviors.
Could things have been different if Payless embraced online shopping earlier? If they invested in interactive tech like their competitors? Probably.
What’s Next for Payless?
Time will tell if Payless’s revival efforts will work. But one thing’s for sure: the retail game is unforgiving. Brands that don’t innovate or listen to customers risk ending up as cautionary tales.
For a brand like Payless that once dominated its niche, it’s a reminder that no one is too big—or too popular—to fail.
