I have found serviceable shoes at Payless, actually! I have giant boats for feet (size 10) but my friend with much smaller feet (size 5) has had great luck in the kid's section (LUCKY). For example, she recently bought these:
http://www.payless.com/store/product/detail.jsp?catId=cat10090&subCatId=cat310006&skuId=093752040&productId=70706&lotId=093752&category=&catdisplayName=Girls
Buying shoes online can be a little daunting, however most asian retailers (like bodyline) sell their shoes sized by CM. That means you can take a measurement of a pair of dress shoes you already own (that fit) and see how many cm they are within, they use that measurement when you shop online. That way you don't have to worry about "well this brand I wear a size 7, but in this one I wear a size 9....".
Also, to be honest, I think almost all of my lolita shoes have come to me second-hand. (Although some were never worn by the person I bought them from.) This works out fine for me because 1)Someone else paid for the international shipping, and I'm generally getting them for less than they would have cost new and 2)The person who bought them can tell me "These fit like a US size 9.5" etc which helps me know more about the fit.
http://egl-comm-sales.livejournal.com is a great place to go looking for shoes. Since there's more people with a size 7.5-8 foot (especially since that is a size brands make) you shouldn't have too much trouble finding something!