Don’t Want to Go Bankrupt Like Payless? Do This!

Have you ever paid a visit to one (or all) of your competitor’s stores to evaluate what they’re doing wrong and what they’re getting right?

It’s one of the first things The Retail Doctor does when conducting a business makeover.

And with good reason. There’s much to be learned—both positive and negative—from the way others run their businesses. But make sure that when you pay a visit to a competitor, you do so with the goal to answer the 5 questions below:

  1. Why is their merchandise arranged the way it is?
  2. Is the store tidy, clean, and well-lit?
  3. How is the energy of the staff?
  4. Do you detect trained staff members ready to engage you?
  5. Does the staff act like they want to be there? How can you tell?

Approaching a competitor’s business this way gives you a baseline you can use to see how well your own store is measuring up.

If Payless had regularly used this practice, they might have avoided bankruptcy. As it is, their dated sales banners in blaring yellow and red, their rows and rows of shoes in boxes, and their single employee “attached” to the cash register did nothing to save them from bankruptcy.

Neither did their customer service, which received a fair amount of scathing complaints on Consumer Affairs. Check out some of the complaints we noticed on the site:

  1. Poor product quality
  2. Harsh return policy
  3. Restricted payment options
  4. False advertising
  5. Making customers pay for the company’s mistakes
  6. “There’s nothing I Can Do” customer service attitude

The list goes on, but you get the idea.

The sad part is, Payless didn’t care enough to do anything about it—they made zero efforts to change the customer experience.

Contrast that with its competitor, DSW, a company that was smart enough to improve the shopping experience with a customer-first focus. Take a look at what they’re doing:

  1. They’re expanding their rewards program across all channels to offer free shipping, in-store shoe repair, and other services.
  2. They’re adding a nail bar in select stores to provide nail art, gel manicures, and pedicures.
  3. Recognizing that many of their shoppers are moms, they’re adding a kid’s shoe department with creative play spaces.
  4. They’re providing in-store, shoe-donation drop-off points for their partner, Soles4Souls, putting their social cause front and center (important for attracting Millennial shoppers).

According to Yahoo, DSW’s stock earnings are expected to grow 16.5% for the current year—higher than the Retail – Apparel and Shoes industry’s expected growth of 11.4%.

As The Retail Doctor points out, too many retailers—large and small—are looking at retail as an “If your store has been working fine up until now, why make changes that could potentially mess it up” scenario.

They essentially choose to live with blinders on while their competitors are evolving with the retail industry.

The Takeaway

Payless forgot who they were in business for, failing to recognize that their customers had moved on.

To avoid this happening to you, grab your management team members and go take a look at a competitor and ask yourselves the five questions mentioned at the beginning of this article.

Then take what you’ve learned and set your sights on improving your own store and the customer experience you offer. It might mean having to retrain your employees, perform some store maintenance, and change how you merchandise your products. And it could require putting up some money to make those changes happen.

But customers will notice the improvements and they’ll appreciate your efforts to make their shopping experience better. That’s how you keep them loyal and prevent competitors from siphoning off your patrons.

Find out how retailers like you are saving time and making money with the Rain POS system. POS, E-commerce, and Marketing all in one.

Sherene Funk is the author of the contemporary romance Autumn in Your Arms and two small business e-books. She is a voracious reader who owns more books than she can ever read in this lifetime. A graduate of Brigham Young University, she worked in advertising for many years before moving to her current writing position at Rain Retail Software. She researches non-stop to see what successful retailers do and loves to share what she learns with small business owners.