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Why Kmart’s Lay Away Program Is Performing
November 14, 2008
Wal-Mart is now so dominating that it is hard to remember when Kmart was number 1. Well, Wal-Mart is certainly in no danger of losing its status, but Kmart may be on to something.
I am getting reports back from various sources that the Kmart Lay Away program seems to be working and working well. In a year where most retailers’ numbers are struggling, I am being told that Kmart’s (at least in the toy area) are heading up. I am also told that Kmart buyers are touting to anyone who will listen that the new layaway program as a real success for the company.
To understand why, read this excerpt from an article in the Charleston Daily Mail:
Joann Cook, 36, of Alum Creek put Christmas gifts on layaway a few weeks ago and will pick them up before Thanksgiving when they are paid in full. She has been paying regularly on her stash of gifts to avoid credit card debt.
"I layaway the big stuff," Cook said after making a recent payment at Kmart on Patrick Street. "I pay 10 percent down and make payments. If you are low on cash, the best way to do it is layaway. When you charge stuff, it really gets you into trouble. People don't have the money right now to just go out and buy and buy like they used to."
So here is what I am thinking. There are three ways for consumers to be careful with thier money:
1. Not spending their money (no retailer benefits).
2. Saving money through low prices and putting it on credit cards (Wal-Mart’s forte).
3. Paying a little more but paying in cash so they don’t take on debt (K-Mart’s strength).
At a time when consumers have their wallets shut, it looks like Kmart has the right idea, the right promotion behind it and the right timing…for a change. Tough economic times change the paradigm and call for different strategies. Go Kmart. We need all the retailers we can get.
Posted by Richard Gottlieb on November 14, 2008 | Comments (0)
