Payless ShoeSource to tread on local producers

Top U.S. footwear chain Payless ShoeSource has unveiled aggressive plans to expand into Russia. But Russia's leading producer claims their shoes won't get a foothold on the market.

Payless will build 90 Russian stores in the next 5 years. In the US they trade on price, starting from $10, to just $50 for the most expensive pair.

But Andrey Berezhnoy, CEO of best-selling domestic brand, Ralf Ringer, says that won't work in the world's coldest country.

“They make their shoes in China, but Russian import tax adds 9 dollars to the cost of each pair. Also, in the Russian winter foreign-made shoes fall apart.”

The owner of the Start Rite brand will focus on Moscow. But experts such as Ekaterina Andreyanova, retail analyst at Rye, Man & Gor securities, warn Muscovites choose better quality.

“The Moscow market has been less hit by the crisis, and there has been no such switch to the lower-price segment.”

The firm's CEO says he's stepping into Russia because of her income growth rates, but they may need to change approach to get their foot in the door.

Payless plans a single range across the country, but Russia has a wildly diverse climate. Ralf Ringer makes different models for each city, and its market share is rising.