American discount footwear retailer

Payless ShoeSource

is bringing cheap shoes to

Israel

ahead of

Passover

:

The Sakal Group, the brand's franchiser in Israel, is opening the chain's first two stores this week and promises to "change the shoe market in Israel and the way Israelis buy shoes."

The first store opened on Tuesday in Petah Tikva's Avnat Mall, and the second is opening on Thursday in Beersheba's Seventh Avenue shopping center. Some NIS 2 million (about $580,000) have been invested in the two stores.

The chain, owned by Collective Brands, offers more than 40 different brands, including American Eagle, Alice + Olivia and Airwalk, and is known for its discounted prices.

Shoe prices range between NIS 60-230 (about $17-67), and the average price for women's shoes is NIS 100 ($29). The most expensive product in the store (NIS 230) will be designer shoes by Christian Siriano or Lela Rose, for example.

Same prices as in US

The common problem with discount chains making aliyah is the price differences: Products considered cheap abroad aren't always as cheap in Israel. But the local franchiser promises this won't happen with Payless.

Soli Sakal, one of the Sakal Group's owners, said in a press conference Sunday that "the brand's prices in Israel will be identical to the prices in the US, with VAT. We'll also bring the sales from the US. Six times a year we'll offer 50% off the second product each customer buys, and at the same time the prices will keep on dropping to a level of 60%."

The price hike expected in the shoe market this year won't have a significant effect on Payless' customers, according to Sakal. "There will be an 8% rise in consumer prices, but since our prices are cheap as it is, our customers will only have to add a few shekels."

The chain's stores are designed in a simple manner: The shoes are arranged on shelves in open boxes, according to sizes, so there will be no need to ask a salesperson to bring you the right shoe size. Therefore the store, which stretches over 250 square meters (2,690 square feet), will have only seven salespeople on its opening month and just three later on.

Another advantage is the availability of "half sizes" and special sizes for children and babies.





Photo: Shay Velich

Payless sells 250 million shoes a year at an estimated $3 billion. "This is good news which will change the Israeli shoe market," said Sakal. "We'll change the way the Israeli consumer buys shoes.

"We expect to turn Payless into a key player in the Israeli shoe market. We'll bring America to Israel, and the stores here look much better than in America. It will be hard to compete against us."

The Israeli shoe market generates NIS 8 billion ($2.3 billion), and Sakal plans to take over 10% of it – NIS 800 million ($232 million).

"I estimate that some 10,000 people will visit the two new stores every month," he said. "The average purchase will stand at NIS 100 ($29), and Payless' annual turnover in Israel is expected to reach NIS 100 million ($29 million) by the second year of activity.

"By the end of 2011 we'll open about 15 stores across the country, by the end of 2012 we'll open 15 more stores, and within five years we'll open a total of 60 stores all across Israel."

According to Sakal, six additional Payless ShoeSource stores will open in Haifa, the Krayot area, Ashdod, Nazareth and Jerusalem between April and June. Nine additional stores will open between July and December in Rishon Lezion, Rehovot and other cities. Sakal is still in talks for opening the chain's stores in Tel Aviv.

All stores will measure about 250-300 square meters (2,690-3,230 square feet) in size and will include more than 15,000 items, including 10,000 pairs of shoes for the entire family, socks, bags and accessories.