With retailers desperate for a way to lure cash-strapped customers this holiday season, several have begun promoting existing layaway programs. Now, however, a major retailer, Sears, is reviving its program after discontinuing it in 1989. Sears began discussing the possibility last week, said Tom Aiello, divisional VP-public relations at Sears Holdings. "We received so much feedback from consumers through store managers and associates that it could really help them better manage their holiday shopping."
Forgotten amid credit boom
The practice, which has its roots in the Great Depression, has lost relevance in recent years as Americans relied more heavily on credit cards. Wal-Mart discontinued its layaway program in 2006, citing falling demand and rising costs.
"What's smart about layaway this year is it's bringing shoppers into stores early who want to purchase but just can't afford to do it early," said Ellen Davis, VP at the National Retail Federation. "It promotes goodwill and loyalty with consumers, and in some regards, it's taking sales away from a competitor."
Sears plans to reintroduce its layaway program this Sunday. Don Hamblen, Sears' chief marketing officer, said that customer feedback as well as a positive response to Kmart's layaway program fueled the last-minute addition to Sears' holiday plans. Kmart, which is part of Sears Holdings, has long had a layaway program, but began touting it in a marketing campaign last month from Interpublic Group of Cos.' DraftFCB.
As for Sears, "in addition to PR, we are doing radio, in-store signage and looking at some other marketing tactics as well," said Mr. Aiello. WPP Group's Y&R, Chicago, is agency of record. Euro RSCG PR, New York, handles PR.
"In this difficult economic climate, extending the layaway program at Sears is an easy decision and one that we hope will provide additional value to our customers," Mr. Hamblen said in a statement. "We want our valued Sears customers to be able to stay within their holiday budgets this year."
Buy now, own later
The layaway program will include a range of goods, including Craftsman tools, toys, apparel and jewelry. Home electronics, appliances and consumables are excluded from layaway. Customers are required to put down $15 or 20% of the total cost, whichever is greater, and items must be paid off in full by Dec. 23.
Sears and Kmart are also promoting "Early Black Friday" pricing. Kmart rolled that out Nov. 2, while Sears will begin publicizing Early Black Friday specials this weekend.
Ms. Davis said consumers are shying away from credit cards, preferring instead to use cash this holiday season. Layaway allows them that flexibility, and it also enables consumers to shop early and get what they perceive as the best selection.
"It's a smart strategy to promote this year," she said. "Consumers do want to rely less on credit, and they want to spread their shopping over a period of time."
Other retailers with existing layaway programs include TJX Cos., which owns TJ Maxx and Marshall's, and Burlington Coat Factory.