Payless Shoes Shutting Shop in Israel

Cut-priced U.S. chain failed to take off here; to close after four years.

Bloomberg

Four years after its well-publicized launch in Israel, United States chain Payless Shoes is shutting its doors here.

Solly Sakal, the Israeli franchise owner of the discount shoe chain, announced when Payless launched in August 2010 that there would be 15 branches by 2011, and 60 stores within the next five years. At the time, he declared his intent to control 15% of the Israeli footwear market within five years.

At first it seemed like Israelis were excited about the new chain, which aspired to sell fashion shoes for 19 to 199 shekels. People swarmed the chain’s first store after it opened in Petah Tikva. Yet the chain didn’t take off – perhaps because the styles did not appeal to the Israeli market, or because Israelis were not accustomed to pulling boxes of shoes off the shelves and trying them on without assistance.

Over the past year, the chain began closing branches. Now it will be shutting its final three stores in Israel.

The chain, founded in 1956, operates 4,500 stores, most of them in the U.S. Some 84% of sales are in the U.S.

Meir Najibi, owner of the Israeli discount shoe chain To Go, Payless’s closest competitor, told TheMarker on Sunday that Payless didn’t suit the Israeli markets. “Their prices weren’t really that low,” he said. Plus, customers didn’t enjoy entering a store and being surrounded by high shelves filled with shoe boxes, he added.

Solly Sakal declined to respond.