Lessons from the Liquidation of Payless Shoe Store

Payless Shoe Company has filed for bankruptcy and plans to liquidate its North American operations. While it’s easy to blame the failure of Payless on the emergence of e-commerce, and its effect on traditional retailer, that factor is only part of the equation. Many historic brands like recent Canada Post E-commerce Innovation Winner, Best Buy Canada, have proven that the internet is a land of opportunity rather than threats. A driving factor behind the downfall of Payless, is its refusal to adapt its business model when its point of difference, being the primary retailer for low cost shoes, was voided by this becoming common place in large retailers like Walmart, Winners, and Costco.

Another major factor that is easy to overlook was the hundreds of millions of dollars’ worth of debt Payless took on to keep itself running and continue serving over 2000 stores around North America. This led to a massive increase in expenses due to the servicing of this debt (the principal + interest costs). The best way to avoid the added cost of servicing debt it to avoid taking on debt in the first place. While the temptation to gain a great deal of immediate capital is tempting, this capital needs to be invested wisely and cannot be used to merely keep a brand afloat or continuing with the same business plans of the past. This failure of Payless, shows the importance of streamlining operations and finding innovative ways of reducing capital costs before getting into financial trouble.

Crownhill Packaging understands this importance of preventing debt in the first place. There will always be a cost of protecting your products while ensuring they keep their appeal shown, but by working with a company who works with you as partner, and makes cost savings a high priority, you can ensure that your packaging needs are working efficiently. Crownhill achieves these cost savings by providing design solutions, reducing goods lost to damage, lowering material costs, improving inventory control, and streamlining processes.

There are many costs associated with transporting products that are of concern to retailers, the largest being dimensional (DIM) weight charges. These are minimum shipping costs that are calculated both by a package’s weight and the dimensions of the package itself. Crownhill helps reduce these DIM weight charges by finding the perfect balance of keeping a product protected and keeping the shipping package to a minimal size. By using lightweight materials and utilizing alternate packaging solutions such as bubble mailers, Crownhill ensures your packaging and shipping costs stay as low as possible.

As retailing continues to grow, ensure that your brand learns lessons from the failure of previous brands, and trusts the right suppliers for its supply chain needs.