Instructor: David Schuff, Section 003

Will Payless Survive?

bankruptcy photo

Recently emerged from bankruptcy, shoe retailer Payless ShoeSource announced the realignment of its organizational structure a week ago with goals of becoming a more customer-focused company. The company has made the decision to reduce hierarchical levels between its corporate headquarters and retail stores. As a result, Payless is increasing the number of North American associates working closely to the store level, with company goals to develop a team of strong leaders to guide the store teams. This intended result of this effort is to have a flatter organizational structure will enable the company to reach its customers more directly. However, it remains to be seen whether this reorganization will lead Payless in the right direction. While reducing layers in an organization can lead some companies to certain benefits, including an increase in communication between all levels of associates, other companies may struggle to adapt to the new structure. It will certainly be interesting to see the outcome of this restructure, specifically if it keeps the company from going bankrupt again. Do you think Payless customers will feel the effects of this reorganization? What are reasons that this reorganization could cause Payless to fail?



4 Responses to Will Payless Survive?

  • Hi Tessa – I think Payless’s move to reorganize and develop stronger leaders through a flat organizational structure is a good strategic move given the new reality of retail. According to a recent Forbes article “The best retailers will see sales associates not as costs to be reduced, but assets to help move a brand from boring to remarkable and intensely relevant”. I believe that if Payless succeeds in enabling leaders to have a more active role in the store experience and developing a more customer centric focus, customers will notice the difference. However, Payless shouldn’t stop at just improving the in-store experience, rather it should apply a systems thinking approach to it’s in store and e-commerce performance metrics. If Payless has siloed performance metrics in its separate channels, they may be inadvertently hurting the performance of other channels. If Payless develops performance metrics that take an omni-channel approach, it will likely reduce the chance of falling back into bankruptcy.


  • I do not think Payless’s move to reorganize is a good strategic move for Payless. Payless is focusing on the wrong issue. With brick and mortar stores continuing to fail due to the rise of organizations like Amazon, I think Payless must focus on e-commerce instead of moving more towards a flat organizational structure. All in all, this reorganization probably will not hurt Payless, but if this is the only strategic move it makes, it is unlikely to save them from failure. Payless should build on this move and use its new strengths to develop a stronger e-commerce presence. One concern that I do have with this reorganization is that it may increase costs of in-store shopping, thus leading to more store closings. I do not necessarily think that store closings are bad, as long as they focus on e-commerce. However, if Payless does not want to push e-commerce, this reorganization may not be too bad.

  • I do think Payless’ reorganization, towards a more flat organization, will help their company’s performance. Having worked in retail for over 5 years, your end goal is always about the customer. Yet, a customer won’t likely return if they don’t have a positive experience and, thus, companies spend a lot of time and money motivating their employees. Most of this motivation comes top-down in retail companies, from CEO to Corporate Employees to Managers to Employees and finally to Customers. Thus, when there aren’t as many levels, motivation comes quick and is better communicated. By empowering your employees, customers are more likely to return in the future. Yet, Payless also needs to take into consideration they aren’t just brick-and-mortar, there is also an online store. Combined with the growing popularity of online shopping, Payless should identify what ways they can also better their online experience too and see if removing hierarchies is necessary on that front, as there are many different roles that go into an online website. I do believe that a flat organization will help Payless focus more on their store experience, but is that Payless’ core problem?

  • I think that Payless’s move to a more flat structure brings forward some interesting considerations. I was originally going to suggest that Payless should move towards the high associate model that Apple has created, but I do not think that they offer products in similar categories. In fact, they are almost opposite. Payless is a very help-yourself type of store where the only true associate-customer interaction should be done at the cash register. There is not necessarily an extensive storage room because almost all of their product is displayed and organized by size. I do, however, agree with Anthony’s point about e-commerce, and I believe that they should realign and focus more on their online presence.

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