Most Avvo lawyers, and probably other lawyers as well, would advise not to pay any CIVIL demand, no matter how progressively nasty and threatening the letters get, because it's not self-enforcing, and the belief is that no one would file a lawsuit for $263.
This is not a CRIMINAL charge that means you need a criminal defense lawyer, and the CIVIL demand doesn't affect whether any store reports this crime to a cop who in turn reports it to a DA who presses criminal charges.
Since lawyers aren't even allowed to appear in Small Claims court, so the chances of a client willing to do it are even less.
Stop shoplifting, since you're obviously no good at it and next time you may not be so lucky.
Avvo doesn't pay us for these responses, and I'm not your lawyer just because I answer this question or respond to any follow-up comments. If you want to hire me, please contact me. Otherwise, please don't expect a further response. We need an actual written agreement to form an attorney-client relationship. I'm only licensed in CA and you shouldn't rely on this answer, since each state has different laws, each situation is fact specific, and it's impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue.
I have attached a link to the statute. Just because the store manager didn't press charges doesn't mean that a criminal action could not be filed at a later date, this is true even if you pay the civil restitution pursuant to the statute. On the other hand, if you don't pay the civil restitution, you may be subject to a lawsuit, judgement, and costs and reasonable attorneys fees, which will far exceed the demand of $263. I recommend you consult with a local criminal attorney to discuss your rights before doing anything else.
In WA, a shoplifter "is liable in addition to actual damages, for a penalty to the owner or seller in the amount of the retail value thereof not to exceed two thousand eight hundred fifty dollars, plus an additional penalty of not less than one hundred dollars nor more than six hundred fifty dollars, plus all reasonable attorney's fees and court costs expended by the owner or seller."
So, you would not be sued for only $263 but for $2,850 plus $650 plus attorney's fees plus court costs. Reasonable attorney's fees can be several thousand dollars.
If you appear judgment-proof, perhaps the store would not run the risk of suing you to end up not being able to collect. On another hand, if you have real property or a steady job, the chances of the store collecting from you is very high.
Only you can decide whether you should pay the civil demand.