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Why Did Shoes.com Lose Its Footing?

0ashoescomCanadian e-Commerce retailer Shoes.com abruptly shut down all three of its online brands — SHOES.com, OnlineShoes.com and ShoeME.ca — as well as its Toronto-based brick-and-mortar store on Jan. 27. The company has been vague about the circumstances of the closings, providing no prior warning.

A limited group of employees will stay on through the next few weeks as the company winds down all operations, according to a company statement. The company notified the remaining employees of the decision on the morning of Jan. 27, and they have been compensated through the end of the month.

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The retailer is working with its secured lenders at parent company Hardy Capital to determine the process to liquidate assets, and Shoes.com currently intends to assign some or all of the group companies into bankruptcy protection.

Shoes.com’s sudden ending certainly comes as a shock since the company appeared to be in expansion mode. The retailer opened its first brick-and-mortar store in Toronto in 2016, aiming to introduce new customers to purchasing shoes online. At order stations within the store, brand ambassadors helped shoppers find shoes (located in the store or online) at the ShoeME.ca web site.

The Toronto store had three separate rooms dedicated to three parts of the omnichannel shopping experience:

  • The “Home Room,” reflecting the products and messaging on the SHOEme.ca web site, with mirrored walls designed to simulate an endless aisle;

  • The “Dressing Room,” hosting between five and six new shoe brands every two months; and

  • The “Editor’s Room,” a community space for workshops, speaking sessions, and counters with seating for guests to spend time in the store, check out products online and even have a coffee.

But while these ideas appear to showcase exactly what a store of the future should be providing consumers, plans to open a second store in Vancouver in 2016 remained in limbo. Shoes.com planned to open the store in September, but the company’s President, Brad Wilson, attributed the delay to permitting problems.

On the e-Commerce side, consumer interest just hasn’t been as enthusiastic as it was in 2015, when the company generated a reported $223 million in sales, according to Internet Retailer. Online traffic to Shoes.com during the November-December holiday period dropped 27.1% year-over-year, from 3.76 million visits in 2015 to 2.74 million visits in 2016, according to data from web traffic measurement firm SimilarWeb. December had a more significant 32.9% dropoff, from 1.87 million visits in 2015 to 1.25 million in 2016.

So while the expansion from e-Commerce to brick-and-mortar may have seemed like an appropriate action to take in 2016, shrinking interest in the brand shows that Shoes.com may have scaled up too quickly.

Declining web traffic and sales weren’t the only thorn in the company’s side. Two parties filed lawsuits against the company in British Columbia Supreme Court in 2016, alleging more than $100,000 in unpaid provincial sales tax and six months of overdue invoices for an independent contractor.

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