Payless Steps into the Russian Market  

One of largest footwear discounters promises to open 150 stores in Russia.

An American footwear company Collective Brands Inc. (footwear stores Payless and The Stride Rite) has announced the oncoming opening of Payless stores in Russia. The chain of inexpensive designer footwear stores Payless was established in 1956 in Kansas, the USA. According to Hoover’s, last financial year Collective Brands’ sales amounted to $3.442 billion (with 4.5 thousand outlets in more than 10 countries of the world).

A co-owner of Alba footwear stores Alexander Bayer says that Payless is a classic example of a footwear discounter. “They are our direct competitors”, - admits Sergey Lomakin, a co-owner of another footwear chain in Russia - CentrObuv. The main part of Payless assortment is footwear, but the stores also sell clothes and accessories. An average price for a pair of shoes is $30-40. The most expensive ones are sold for $49.99, as Payless official web site has it. Taking into ac count the customs expenditures the same footwear in Russian stores can turn out to be 25-30% more expensive, believes Alexander Bayer. This price range is comparable to that of CentrObuv stores where a pair of shoes costs $30-70, according to the company’s on-line catalogue. 

A holding from Kuwait - The Alshaya Group - now possesses the exclusive rights to franchise the Payless brand in the Russian market. The first stores are expected to open their doors at the beginning of 2010. According to Collective Brands’ CEO Matthew Rubel, by 2015 the company plans to increase the number of stores up to 150 outlets. The Russian stores will be managed and operated by The Alshaya Group, while Collective Brands Inc. will have an option to purchase the whole chain in future.

The Alshaya Group runs business in Kuwait, Saudi Arabia, Turkey, Cyprus, Egypt, Poland, the Czech Republic, Slovakia and Russia. In Russia it already develops a number of Western franchise concepts such as The Body Shop, Mothercare, Next, Claire’s and others. According to the company’s web site, it has more than 80 stores in different Russian cities. Furthermore, the holding develops the Starbucks chain in Russia. The first Starbucks coffee shop opened in Moscow in September, 2007. The second one followed in December, 2007. Now there are already 19 locations in the Russian capital where one can chat over a mug of coffee in a globally known atmosphere of a Starbucks café. And obviously the chain will grow further beyond the borders of the capital city.

Although the Moscow office of The Alshaya Group doesn’t comment on their new franchise and the details of the agreement with Collective Brands Inc., it’s evident that foreign franchisors from quite different spheres trust the Kuwaiti holding, and not without reasonable ground.

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