Wal-Mart gains on Payless turf

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Wal-Mart stores turns up the heat in the $40 billion shoe category as it gains share and catches up to leader Payless ShoeSource.

Payless, in an effort to hold on to its slim lead over the retail behemoth, will break its first major back-to-school effort focusing on children's shoes, which comprise about 25% of the store's sales, according to John Haugh, chief marketing officer and senior VP-business development.

"Our belief is that when moms are looking to put kids in the best-made shoes, we are the clear choice," Mr. Haugh said. "If they are looking only for cheap covering, they can find lots of spots."

According to a new BIGResearch study, in July 2002, Payless was the nation's No. 1 preferred shoe retailer, with a 19.5% of consumers listing Payless over any other retailer, while Wal-Mart had a 15.5% share. In figures about to be released for July 2003, Payless dropped to 16.4%, barely surpassing Wal-Mart's 16.3% share. According to BIGResearch, consumer preferences usually correspond closely to market share.

close race

"We are neck-and-neck overall," Mr. Haugh said. "It's certainly something we pay attention to. We are a specialty retailer. We can provide more selection, quality and value," he said. He also believes Payless as well as Wal-Mart will be able to garner market share from other shoe sellers, including department stores, boutiques and independents.

Payless last year began a repositioning focused on fashion featuring talk-show host and shoe diva Star Jones, who shows up at the end of the TV spot noting that a child who is fashion conscious is being properly reared. Payless also has trained its sales personnel to offer parents the opportunity to use a fitting device to ascertain a child's correct fit. Barkeley Evergreen & Partners, Kansas City, is the agency.

Gary Drenik, president, BIGResearch, said Wal-Mart's biggest problem is the image of its customer as representative of a lower-income demographic, an image he said is outdated.

Wal-Mart, usually publicity shy, also is starting to make over its fashion image, with a public relations effort forecasting fall fashion trends. Wal-Mart public relations executives recently released information about back-to-school trends. For shoes, it predicted this fall's most popular shoe style as the Euro-sport look with leather slip-ons, contrasting colors and chunky soles.

Wal-Mart shoes will be featured in its circulars and will be shown as part of outfits presented in its fall TV campaign, a company spokeswoman said. Wal-Mart last October rolled out Footstar's Thom McAn brand, and is expanding its trendy apparel brand, George, into footwear.

outperforming

Wal-Mart has outperformed the retail category, according to NPD Fashionworld data. In 2001, the overall dollar sales of footwear declined by 8%, while Wal-Mart sales dropped only 4%, according to Footwear News.

"These two are battling it out and Wal-Mart will eventually win," said Mr. Drenik.

Payless' Mr. Haugh said he nevertheless will focus not on the competition, but on his customer, rolling out a men's effort next. "In the end, Wal-Mart doesn't buy any shoes from us," he said.

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