Payless took over a former Armani store, renamed it “Palessi,” and sold shoes, they normally price at $20-$40 in Payless stores, at $200 to $600 designer price tags.
If you don’t know what I’m talking about Google “Palessi” and then read on.
Surprise! Another example where you can charge a premium if you are not selling a commodity, stay focused on the experience, and tap into what motivates the consumer’s behavior.
By now, we all should know that clothes, shoes, and accessories come off the same manufacturing lines in China. That regardless of the quality of material, the cost to manufacture is pretty close to really, really cheap. And that the price you pay has more to do with the label, designer, or celebrity endorsing the product.
And that’s what Payless did here. They diverted their inventory to a new luxury brand, invited a bunch of “influencers” and their self-adoring friends, and told them they had exclusive VIP access (in fact some were even paid to attend).
What did they think was going to happen?
More importantly, what are they hoping to gain from all the publicity they are getting by pulling this stunt?
- Suddenly, all the “beautiful” fashion conscious people that love to spend $1000 on shoes are going to get a collective wake-up call and start shopping at Payless. I wouldn’t hold my breath. More likely they’ll find reasons why the shoes at the expensive stores are actually better and do some therapeutic shopping.
- Payless will invest in their remaining stores (they closed 700 before emerging from bankruptcy) and create the kind of brand experience that differentiates them from Amazon or Zappos. And in the process bring back the value conscious customers they’ve lost over the years. These are the people that want “nice stuff”, can’t afford $1000 shoes, but can’t be bothered to rummage through bargain bins.
- They will get a temporary increase in traffic and some sales to go with it. But other than temporarily embarrassing a few “influencers”, they aren’t going to change a thing about their brand or business. Eventually the excitement will pass and they will continue their inevitable decline.
They should do #2 but will probably end up with #3.
UPDATE – February, 15 2019: I hate it when I’m right…
Purchase decisions are based on emotions. And you don’t generally change peoples’ hearts by pointing out how stupid they are.