Australian fashion startup and former industry trailblazer Shoes of Prey has collapsed into liquidation, ending months of uncertainty surrounding the startup after it was put on “pause” in August last year.
Liquidators from FTI Consulting Kelly Trenfield and John Park were appointed to manage the winding down of the startup, which was founded in 2009 by Michael and Jodie Fox, and Mike Knapp.
Shoes of Prey offered shoppers ways to customise and design their own footwear, and was a golden child in Australia’s nascent startup scene, attracting investment from Blue Sky Capital and a number of high-profile individuals, such as Mike Cannon-Brookes and Bill Tai.
However, the startup was mired with controversy and uncertainty last year, with the founders putting the business on “pause” after faltering sales, leading to Jodie Fox stating the team would be looking to either sell the business or reboot it with “substantial changes”.
Today, with the business entering liquidation, it appears efforts to find ways to reboot the company were futile. In a pre-emptive blog post before the liquidators were appointed, Michael Fox explained the startup ran into troubles when trying to crack mass-market adoption.
Fox explained the startup undertook market research with partners such as David Jones and Nordstrom to see if there was an appetite for mass-market fashion customers wanting to customise their shoes.
The startup found there was an appetite, Fox says, but only if they could reduce their lead time, simplify the design experience, expand their distribution and not charge a premium for customisation.
“It was hard work, our business was operationally complex and there were many challenges, but to the credit of our amazing team we executed successfully in all these areas,” he wrote.
“With our amazing team in place, our factory ready to scale, distribution deals with the best possible partners and the needs of the mass market consumer met, the business was prepped to scale into the $100M’s revenue.”
However, despite the research and “all the right trends”, the startup failed to crack the mass-market, with customers not responding as the startup expected.
“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,” Fox said.
Recognising this, the startup attempted to pivot to focus on customers with small, large, wide and narrow feet, and doing short manufacturing runs for other brands. However, the high operational costs and ethical and legal benchmarks the company was committed to meant these avenues were also unfeasible, resulting in the business’ collapse, Fox explained.
The company was also unable to raise any further capital, having had already raised $35 million from investors over its 10 years in operation. Fox says if the company had been able to recognise the issues with mass-market adoption earlier on, it never would have raised capital in the first place and built a “strong but smaller business” instead.
Trenfield from FTI Consulting told The Australian the liquidators were currently in the process of assessing the company’s creditors and assets available for sale, saying “we believe that all the creditors will all be paid in full”.
“Thanks to everyone who has either been on or who has followed the Shoes of Prey story over the last 10 years, from our customers to our amazing employees, our wonderful investors, friends and family,” he said.
“While the destination isn’t what we wished, the journey has been incredible.”
Co-founder Jodie Fox is currently penning a book about the startup’s rollercoaster journey, set to be released later this year.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.