Photo: Walmart
Who will win the 2016 Christmas layaway competition?
It doesn’t seem like that many years ago that retailers were ditching their Christmas layaway programs pointing to the increase in credit card transactions and the high costs associated with offering such services. Today, however, layaway programs are going strong and retailers from coast-to-coast are trying to capture their share of the 17 percent of all shoppers that, according to Deloitte, make holiday purchases using this method.
Kmart hasn’t done much right in recent years. News of 64 more store closings by mid-December was a major headline this week. But Kmart’s decision to maintain layaway after other retailers discontinued similar programs about a decade ago proved the right move as evidenced by a number of others, including Walmart, that reversed course.
Speaking of Walmart, the chain began taking layaway orders on Sept. 2. This year, customers will need to put down $10 or 10 percent of their planned purchase, whichever is greater, to reserve their Christmas presents. Walmart customers can put items as low as $10 in their layaway basket, with a minimum order of $50. They will have until Dec. 12 to pay off their account.
H-E-B is offering layaway at its H-E-B plus! locations between Aug. 26 and Dec. 14. Customers can use layaway to purchase a wide variety of products, including consumer electronics, outdoor furniture, small appliances and toys. Each H-E-B plus! store will have a designated layaway area with dedicated employees. The chain is playing up the service with in-store signage, print ads and promotion via social media. The chain is running promotions this month and next, intended to generate early sales for the holidays with layaway customers in mind.
Discussion Questions
DISCUSSION QUESTIONS: Are concerns about the costs associated with layaway programs still valid or do you think retailers have found ways to more profitably offer such services? In what ways, if any, do you see layaway programs changing in the future?
Poll
BrainTrust
Tom Dougherty
President and CEO, Stealing Share
Tom Redd
Global Vice President, Strategic Communications, SAP Global Retail Business Unit
Seems to me this would be better served if done online or with a kiosk at the store. Just let the customer choose their products, put down their $10 and, when it’s paid off, mail it to them or let them pick it up at the store. I see no need to go old school like Kmart. H-E-B might be unique since they are located in one state with a high density low-income immigrant population that uses only cash. I always assume H-E-B is one step ahead.
David Livingston has the right idea here. Layaway has an archaic feel to it that means, emotionally, many would avoid it for just that reason. (I know I would.) However, making layaway self-serve can push consumers over that perception. I still don’t think layaway will produce as much revenue (or preference) as it once did but let’s set it in today’s world at least.
No matter how it is done, layaway works and is helping retailers sell larger baskets. It also lets me be a part of other peoples’ Christmas. Each year my family goes to our local Walmart and selects a person with a basket or person with a layaway account that has a lot of younger kids toys. We pay off their layaway account — except for $1.00. Next time they go to make a payment — that they can do online — they are told that their account was paid off. I leave a note — “Santa Cares” — on all baskets I pay off.
Great way to make sure more people have a great holiday!
Use layaway — you might hear from Santa!
As noted 17% of shoppers use this method of purchasing products. That is a significant portion of the population, although I suspect the total of their purchases represents less than the percentage of customers.
Layaway is the original enabler purchase methodology. It was replaced for most people with credit cards. However, for some it is still a way to manage their spending and control any debt they may have. I see it continuing to increase until the economy fully recovers and real unemployment or underemployment numbers drop.