Payless Enters Russian Market

Payless ShoeSource is expanding internationally. The retailer’s parent company, Topeka, Kan.-based Collective Brands Inc., announced on Tuesday it had signed an agreement with current franchisee partner M.H. Alshaya Co. to open two Payless stores in Russia beginning in 2010.

Alshaya is Payless’ franchisee partner in the Middle East and has opened stores in the United Arab Emirates, Saudi Arabia and Kuwait.

The two companies said that Russia, with a population of 140 million people who have rising household incomes and are attracted to affordable fashion, is a strong fit for Payless. About five stores will bow there late next year, with a minimum of 90 stores in about five years and at least 300 expected in the long term.

In a company release, Matt Rubel, CEO and chairman of Collective Brands, said, “Payless brings the know-how in footwear specialty retailing, and Alshaya brings its strong infrastructure and local experience in Russia. Like many people across the globe, Russian people love to shop and have a strong appetite for fashion, footwear and accessories.”

Through the agreement, Alshaya’s Russian subsidiary will purchase seasonal product assortments from Payless, with Payless providing expertise in retail operations, merchandising, marketing and brand strategy. Alshaya provides retail location strategy, construction, logistics and store training and staffing. The companies plan to use the new store format, called the “Hot Zone.”

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