Shoes of Prey in liquidation; founder shares what went wrong
Six months after Shoes of Prey said it was “pausing” to consider the future of the business, the mass customisation pioneer has collapsed into liquidation.
Kelly Trenfield and John Park of FTI Consulting were appointed as liquidators on Wednesday, March 6, 2019.
Shoes of Prey’s directors had been pursuing options to relaunch the business under a revamped operating model since it ceased trading in August 2018, according to Trenfield, senior managing director of FTI Consulting.
“Unfortunately, […] a way forward to recapitalise the business and reach agreement with the stakeholders was not found,” she said.
The business will go through an orderly liquidation process, which will entail a members’ voluntary liquidation of the company’s Australian operations on a solvent basis and ensure the maximum return of funds to the US head entity as its sole shareholder.
It will also involve a process to dispose of any remaining assets of the company including any available IP.
“At this stage, we do not expect any creditors of the Australian entity to be out of pocket. This
includes holders of unredeemed gift certificates, who are expected to receive a full refund and will be contacted within the coming week,” she said.
What went wrong?
The liquidation announcement is the final chapter in a story that Shoes of Prey co-founder Michael Fox summed up in a blog post titled, “The Shoes of Prey Journey Ends”, which he published on Medium on Sunday.
Fox, who co-founded the business with Michael Knapp and Jodie Fox in 2009, said the company’s downfall was caused by a fatal misunderstanding of consumer psychology.
While the founders’ research suggested there was a market for mass customisation – so long as lead times could be kept to two weeks or less, cost did not go up and the design experience was simple – in reality, Fox said, most customers didn’t want to design their own shoes.
“We learnt the hard way that mass market customers don’t want to create, they want to be inspired and shown what to wear. They want to see the latest trends, what celebrities and Instagram influencers are wearing and they want to wear exactly that — both the style and the brand,” he wrote.
“They don’t want to invest time in creating a product themselves, and attempts to have them do this, even in small ways, leads to the paradox of choice kicking in causing decision paralysis, in turn lowering conversion rates.”
While Shoes of Prey attempted to pivot away from its design-your-own offering in 2018 to serve the so-called “Cinderella” market – customers who wear shoe sizes and widths outside the normal range – its high fixed costs around manufacturing couldn’t work for the smaller market.
“If I ever find myself in a position where I’m attempting to change consumer behaviour, I will ensure I’ve peeled back the layers to truly understand the psychology of my target customer,” Fox wrote.
“[A]n alternate learning I will take away is to pick a business that doesn’t require changing consumer behaviour.”
Fox thanked Shoes of Prey’s customers, employees, investors and others who he said had helped the business along the way.
“While the destination isn’t what we wished, the journey has been incredible,” he wrote.
According to his Medium post, Fox is now exploring the plant-based meat space, while his ex-business partner Jodie is working on a book about her experience at Shoes of Prey.