More than 700 workers are facing job losses just days away from Christmas after Payless Shoes administrator Ferrier Hodgson announced the chain would close by February.
Payless will immediately kick off a fire sale of its inventory across its network of 132 stores and online outlets.
The business was tipped into administration last month but Ferrier Hodgson failed to secure a sale of the chain as a going concern.
"While we received a number of expressions of interest from various parties there were no acceptable offers for the business as a whole," administrator Jim Sarantinos said.
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Sources close to Payless suggest its US parent company, Payless ShoeSource, is the biggest creditor after funding the chain's losses for the past couple of years.
Founded in 1980, Payless Shoes went into administration in 2013 before it was bought by Blum Capital and Golden Gate Capital through US discount shoe retailer Payless ShoeSource.
The job losses at Payless cap what has been a terrible year for retail workers with more than 10,000 employees ensnared in the closures of Dick Smith, Masters, Pumpkin Patch and now Payless Shoes.
Ferrier Hodgson said about 730 workers would be affected when the Payless stores close in February next year.
Payless is one of the biggest independent shoe retailers in Australia, with 132 outlets and annual sales of more than $75 million, however it lost more than $10 million in 2014 and 2015.
Mr Sarantinos said it was a disappointing outcome for the retail chain's employees, who had given loyal service to the business over its 36-year history.
Retail insiders are forecasting more business collapses in 2017 as established chains like Payless battle to adapt to online competition as well as pressure from international apparel giants like H&M.;
Wittner chief executive Peter Wittner has a unique insight into shoe retail as part of a family that has been selling shoes for more than 100 years.
Mr Wittner said the market was "very challenging" and due to the internet the brand was competing globally for sales.
"For us it's about being unique and innovative as well as reinventing our brand all the time," Mr Wittner said.
He said the international brands had increased competition in Australia but he questioned whether they would still be as influential five years down the track.
"There's no question there's a lot of interest in Australia from the international players but it will be interesting to look at that in five years' time," Mr Wittner said.
"Because the cost of doing business in Australia is dramatically higher and those international players have to compete on our playing field."
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