Payless ShoeSource to enter Russia next year

02 Sep '09

5 min read

Collective Brands Inc. and its Payless ShoeSource unit announced plans for additional international expansion for the Payless retail chain.

Russia will be the next country in Payless' strategic global growth initiative and through a new agreement with franchisee partner M.H. Alshaya Company, the two companies will franchise Payless stores in the country beginning next year.

Alshaya is currently Payless' franchisee partner in the Middle East region with whom the retailer has successfully opened the market with stores in the United Arab Emirates, Saudi Arabia, Kuwait with stores also planned in other countries in the region including Oman, Bahrain, Qatar, Egypt, Jordan and Lebanon.

Alshaya's Russian subsidiary has been operating as a retail franchisee in Russia for nearly a decade with more than 100 stores representing international brands.

The two companies said they expect to start opening new Payless stores in 2010 and that Russia -- the largest land-mass country in the world with 140 million people with rising household incomes and families attracted to affordable fashion -- appears to be a strong fit for the Payless offering and brand promise. About five stores will open in Russia late next year; Payless and Alshaya said that they expect a minimum of 90 stores in the country in about five years and at least 300 stores in the long term. This is a multi-year transaction; additional terms were not disclosed.

"The franchise model is proving to be the most efficient way to reach more international markets with the Payless brand and all it has to offer -- great fashion, well-recognized brands and quality all at a great price," said Matthew Rubel, chief executive officer and chairman of Collective Brands,Inc. "Payless brings the know how in footwear specialty retailing, and Alshaya brings its strong infrastructure and local experience in Russia. Like many people across the globe, Russian people love to shop and have a strong appetite for fashion and footwear and accessories. Together we are truly excited to bring the Payless brand to Russia and to affordably serve the footwear and accessory needs of families in the country."

Through the franchise arrangement, Payless provides Alshaya with seasonal product assortments, as well as expertise in retail operations, merchandising, marketing and brand strategy. Alshaya provides retail location strategy, construction, logistics, and store training and staffing. Alshaya will utilize Payless' newest store format, referred to as the "Hot Zone" layout, and will purchases Payless product directly from Payless' seasonal assortment.

Like the Payless stores in the U.S., the stores in the Russia will feature a wide assortment of shoes and accessories for the family including branded products for women, men and children covering a range of wearing occasions. Payless is well known as a "House of Brands" retailer with an expanded portfolio of well-recognized brands including designer labels alice + olivia for Payless, Lela Rose for Payless and the much-anticipated designer line Christian Siriano for Payless, as well as the newest brands to hit Payless stores such as STPLxAirwalk and Zoe & Zac, the first-ever affordable green shoes that offer "Fresh Green Fashion" for the eco-fashionista.

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