Walmart Beefs Up Layaway Program

Discussion
Aug 21, 2012

Wal-Mart Stores announced it was upgrading its holiday layaway program by starting it earlier, including more products, and stretching the payback period.

The discount giant brought back the program last year after a five-year hiatus. The service allows a customer to keep a product on hold at the store and pay for it over time.

Among the details of this year’s layaway program:

  • The service will be available from Sept. 16 through Dec. 14. Last year, it began on Oct. 17. (Shoppers who ‘like’ their local Walmart store on Facebook can start their layaway two days early on Sept. 14.)
  • Buyers under the program will have 90 days to pay the balance instead of last year’s 60-day time frame.
  • A full refund of the layaway open fee ($15) is recouped on a Walmart gift card for customers who make their final payment. The open fee under last year’s program was less, $5.00, but was not refundable.
  • If the order is cancelled or not paid in full, no additional cancellation fee will be charged this year. Last year’s program charged a cancellation fee of $10.00. In such cases this year, the full $15 open fee is not recouped.
  • The list of eligible categories available under the program has been expanded to include small home appliances and select sporting goods such as basketball goals, trampolines and large exercise equipment. As in 2011, customers can also use layaway for a broad selection of electronics, toys and jewelry.

To use the program, buyers must put down a $10 down payment or 10 percent of the item price. Individual items laid away must cost at least $15; the full purchase must come out to at least $50.

Layaway programs are designed to help shoppers with limited access to credit. The longer layaway plan comes after Walmart indicated on its second-quarter conference call that it saw more incidents of consumers living paycheck-to-paycheck during the latest quarter. In the past, Walmart has said about 85 percent of transactions in its stores are paid for with cash.

Only a few stores offer layaway programs. Sears and Toys "R" Us brought back layaway in recent years. Sears Holding’s Kmart division has had layaway programs for decades. Best Buy, Gamestop and Marshalls are among some other chains with such programs.

Discussion questions: How much of a competitive advantage will Wal-Mart gain from its revamped layaway program? What do you think of the changes under the program? Should other retailers consider layaway options?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

10 Comments on "Walmart Beefs Up Layaway Program"


Sort by:   newest | oldest | most voted
Max Goldberg
Guest
9 years 9 months ago

With many people still reeling from the economic downturn, it makes sense for WM to offer layaway, and for expanding the available items, as well as the window of availability. WM knows their customers, and this could help the retailers capture a larger share of its customers’ holiday budgets.

Layaway plans fit retailers that have a large percentage of customers with limited access to credit. If the numbers make sense, a layaway plan could provide a holiday shopping boost for those retailers.

Ben Ball
Guest
9 years 9 months ago

This falls in the category of “can’t hurt — might help.”

The early signup to lock away prime selection and the longer payback period are nice enhancements — but none of this comes under the heading of “sustainable competitive advantage.”

Liz Crawford
Guest
9 years 9 months ago

Layaway generally appeals to a lower income demographic, including those who have low credit card limits, or those who are unbanked/underbanked. That said, the new $15 fee may generate grumbling or cause some shoppers to defect to Kmart where the fee is $5. Sure, shoppers get the fee back, but the increased initial hurdle may cause some resentment.

The institution of layaway makes sense if the retailer is competing for that particular shopper segment. Kmart, Sears, Toys “R” Us — these retailers are smart in their appeals to this group. The new Walmart program hands these retailers an opportunity to gain switchers this holiday season.

Zel Bianco
Guest
9 years 9 months ago

Layaway plans will be a big draw for consumers due to the current economic state. The revamping of Walmart’s program shows that they are paying attention to consumer needs and reacting to the economy; they will use this program to their advantage for the upcoming Christmas season. Kmart has had a layaway plan for years, but the revamped Walmart plan will draw more consumers in because it is more financially beneficial to them.

Retailers that currently offer layaway plans should consider revamping, if not for this Christmas season, then for the next. And retailers that do not offer layaway plans should pay attention to how this Walmart plan affects consumer shopping decisions.

Tim Smith
Guest
9 years 9 months ago

Cannot hurt. I think the added categories and extended payback period may offset the $10 increase in the fee up front. Does anyone know the percentage of layaway shoppers that pay in full vs those who have to opt out?

Roger Saunders
Guest
9 years 9 months ago
Walmart has taken proactive and positive steps with the Layaway Program this year. It is likely that it will be beneficial to Walmart both among their shoppers who take advantage of service, and by those Walmart shoppers who hear about it, but elect to pay in full at purchase. Consumer confidence is up slightly based on the August BIGinsight Monthly Consumer Survey, with 34.0% saying they are Confident/Very Confident about a stronger economy in the next 6 months, up from 32.6% in July. However, the consumer is still in a F.U.D. — Fear, Uncertainty, and Doubt. The July BIGinsight Monthly Survey asked 8,500+ Adults if they planned on “Spending more, the same, or less during the December Holiday. At this stage, only 5.6% of Walmart shoppers are planning on spending MORE, compared to 6.8% of the total population. 29% of those Walmart shoppers will spend the same and 31.4% say they will spend less. That compares to 30.8% and 28.8% for the general population. Top reasons among those planning on spending LESS mentioned by Walmart… Read more »
Ted Hurlbut
Guest
Ted Hurlbut
9 years 9 months ago

I was somewhat skeptical a year ago when WM reintroduced its layaway program, but it proved to be very successful. I would think with the tweaks and expansion of this year’s program, WM will again do very well with it. Competitively, I would anticipate other retailers marketing to lower to middle income groups following WM’s lead this year.

Jason Goldberg
Guest
9 years 9 months ago

It’s another chance to differentiate yourself from the bulk of your retail competitors (that don’t offer a program). Does Amazon offer layaway?

Further, those retailers that did offer layaway last year got a nice PR bonus, when good samaritans started paying off other people’s layaway balances which generated local press reports across the country.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
9 years 9 months ago

Layaway is usually back-room dependent. As back rooms have shrunk over the years in favor of just-in-time delivery, how much room is available to store layaways? Yes, some products could just be pulled from the shelf (if they’re not sold out), but that doesn’t hold true for trampolines and basketball goals. Walmart evidently has the space to store layaways in their back rooms, but many retailers don’t.

Anne Bieler
Guest
Anne Bieler
9 years 9 months ago

Smart move for Walmart where they may help the shoppers who are struggling in this economy. Doesn’t seem like it can hurt, will move merchandise, and keep shoppers coming back. Changes in timing and credit period will help, but the $15.00 open fee seems a bit high for these consumers where every dollar matters, especially around the holidays. More retailers should consider this option — another way to reach shoppers and earn their business.

wpDiscuz

Take Our Instant Poll

How much of a competitive advantage will Wal-Mart gain from its revamped layaway program?

View Results

Loading ... Loading ...