July 25, 2012
Kmart Educates Consumers on Layaway Savings
With very few other retailers offering layaway programs, Kmart has a point of difference in the market. Now, the retailer is looking to draw even further attention to that difference and bring in new customers by promoting a five percent discount on layaway purchases made for back-to-school.
To qualify for the discount, Kmart customers put down $15 or 10 percent of the purchase amount, whichever is greater, and pay a $5 fee. The offer is good until August 18. The program is also available to online shoppers. Kids going back to college can pick up items ordered online at Kmarts close to their school.
"Kmart understands shoppers are seeking value and convenience," said Andy Stein, interim chief marketing officer, Kmart, in a statement. "Kmart is committed to helping manage back-to-school expenses by offering customers additional ways to pay, including five percent off of their layaways."
Back-to-school is a critical period for many retailers, ranking second only to the Christmas holiday season as the biggest of the year for many merchants. This year the National Retail Federation is predicting a significant upswing in purchases with total spending expecting to hit $30.3 billion. The average person with kids in grades K-12, according to a BIGinsight survey, is expected to spend $688.62 this year versus $603.63 in 2011.
Kmart is going beyond its layaway offer to drive back-to-school traffic. As part of its Shop Your Way rewards program, the chain is offering a free flu shot and gas rewards with qualifying purchases.
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Discussion Questions
Discussion Questions: Do you see layaway as a positive means for Kmart to differentiate itself from competitors during the back-to-school season? How effective will the program be in bringing new customers to Kmart?
Poll
Kmart’s layaway program is not one of a few but one of quite a few retailers offering a layaway program. Walmart, Toys ‘R’ Us and their Babies ‘R’ Us have a layaway program. Best Buy, Sears, TJX Companies, Burlington Coat Factory, Hallmark and many smaller jewelry stores are all offering layaway this year. Kmart is hoping to keep pace with WalMart’s program from last year and I think their only hope is that Target does not offer a program, or else it is just a me-too program for all of the discount variety stores.
The $5 fee negates the discount. Most shoppers are fully aware Walmart and Target are lower priced to such a greater degree, 5% is a waste of time. Worse yet, you have to go into an old clunky Kmart in some blighted shopping center. With the small tiny portion of back-to-school business Kmart will do, the $5 fee will be more than the discount. And a free flu shot! Whoo hoo! Like you can’t get that anywhere. It might be simpler to go to Kmart, hand the manager $10, and then just go to Walmart or Target.
If Kmart was the leader in the layaway plan, then maybe there would be a leader’s advantage. But they are again the follower. I see them keeping up with the pack until they find another way to lose ground which always seems to be the case with them.
This is a great move on Kmart’s part the first real innovation, if you want to call it that, in the last 10 years. It is a service that fixes its customer.
In 2011 Kmart reported annualized comp store sales decreases of 3.0%, 1.4% and 7.7% in their Sears, Kmart and Sears Canada stores respectively.
If you take the time to read their “sales” releases, they spend little if any time on merchandise (what is selling, what they are focusing on, how they are reaching their customers needs). Instead they talk about the “health” of their balance sheets.
No surprises, but this company has long left the ranks of merchants and any small wins that they have, such as their distinctive layaway program, is inconsequential in providing for the needs of those customers that they have been losing for years.
Anyone coming back to Kmart is likely doing so to cherry pick commodity needs and is a short-term convert.
I don’t see a wave of people choosing Kmart’s option, especially with the $5 fee. This is not going to steer anyone over because of their layaway plan.
Convenience is always important to customers and this provides a way to shop now and pay later with a discount. This will be a positive for Kmart, and so will the option of ordering online and picking it up at a Kmart near the college.
Do not see layaway being relevant in the 21st century, especially with the advent of closed loop prepaid cards.
I remember using layaway when I lived in Chicago and would walk to a State Street store downtown after receiving a paycheck and make a payment towards the item. But that kind of layaway was reward-building fun shopping at downtown retailers.
In the 21st century, I’m not going to drive 1.5 miles to any big box EDLP and pay down on a product; it doesn’t make sense and there is nothing exciting about it.
No doubt someone who has a product on layaway at a big box store is constantly checking Amazon.com for a lower price of that same item.
The layaway plan is a positive differentiator for Kmart for the back-to-school season. With the current status of the economy, the need for back-to-school supplies and the ease and savings for the consumer, the layaway plan should definitely bring in new customers. The big question now is: will Kmart apply the same layaway benefits for the Christmas shoppers? That would definitely be a differentiator for Kmart.
Anyone who has actually shopped at a Kmart recently knows that they have better clothing brands and quality than Walmart and stylish clothing for children and juniors at much more affordable prices than Target. The layaway program is a good way of bringing in people to see the clothing lines and be able to lock in sale prices and budget for back-to-school shopping.
I was in my local Kmart last week and noticed many families doing just that. The Layaway section was busy with moms and teens purchasing lots of clothing, which has a large profit margin. Were they new customers? I don’t know but if they have a good experience, they will surely tell others.
Moreover, the Rewards card offers special deals and sales for members and the register receipts (reduce the number and length, please!) provide coupons for substantial savings on future purchases. Apparently, Kmart is working to create new and return customers on several levels.
Contrary to what’s been asserted here, Walmart no longer offers layaway. They dropped the program several years ago and only brought it back for Christmas last year, with limited categories of merchandise eligible. Kmart has always had layaway and they existed before Walmart.
I hope it works for them. There’s room for a well-run Kmart. Walmart’s merchandise is often low-quality and if folks are honest they’ll admit that, aside from special buys, Target is quite pricey for quality that’s maybe a step above Walmart. I find myself shopping at Kmart fairly often. The local store is squeaky clean, neat and organized and their brands offer good value for money.
Whatever it takes! If other retailers have discontinued the practice, and a significant number of shoppers still use the service, it could be a defining point of difference for Kmart. Back to School is a very difficult and expensive time of year.
Yes, yes and yes. Layaway was a key component of Kmart’s early success. It offers instant credit, plus incremental fees, to people who may not have credit. Plus it increases sales by making it easier for people to purchase more products when they don’t have money available to make a particular purchase.
Kmart is actually doing some interesting things with product, promotions, and loyalty activities. It is a shame that they get little credit, but the fault for that is their own. Until they can regain a merchant and customer experience-focused mentality and ability to effectively market both, they will continue to decline. Which is a shame, because there is room for a “well run Kmart” as commenter “teatime” states.
Very positive move in play by Kmart. Times are tough for its customer base. Kmart is going to make this crucial spending period for students and parents far less demanding. Racking up more credit card debt is a big “no-no” for this group. And you get the financial benefits of the Kmart awards program. A win-win for both Sears Holdings and loyal Kmart shoppers.
BTW, if anyone in Hoffman Estates is reading this, PLEASE bring back MR. BLUELIGHT!!!
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Kmart’s layaway program is not one of a few but one of quite a few retailers offering a layaway program. Walmart, Toys ‘R’ Us and their Babies ‘R’ Us have a layaway program. Best Buy, Sears, TJX Companies, Burlington Coat Factory, Hallmark and many smaller jewelry stores are all offering layaway this year. Kmart is hoping to keep pace with WalMart’s program from last year and I think their only hope is that Target does not offer a program, or else it is just a me-too program for all of the discount variety stores.
The $5 fee negates the discount. Most shoppers are fully aware Walmart and Target are lower priced to such a greater degree, 5% is a waste of time. Worse yet, you have to go into an old clunky Kmart in some blighted shopping center. With the small tiny portion of back-to-school business Kmart will do, the $5 fee will be more than the discount. And a free flu shot! Whoo hoo! Like you can’t get that anywhere. It might be simpler to go to Kmart, hand the manager $10, and then just go to Walmart or Target.
If Kmart was the leader in the layaway plan, then maybe there would be a leader’s advantage. But they are again the follower. I see them keeping up with the pack until they find another way to lose ground which always seems to be the case with them.
This is a great move on Kmart’s part the first real innovation, if you want to call it that, in the last 10 years. It is a service that fixes its customer.
In 2011 Kmart reported annualized comp store sales decreases of 3.0%, 1.4% and 7.7% in their Sears, Kmart and Sears Canada stores respectively.
If you take the time to read their “sales” releases, they spend little if any time on merchandise (what is selling, what they are focusing on, how they are reaching their customers needs). Instead they talk about the “health” of their balance sheets.
No surprises, but this company has long left the ranks of merchants and any small wins that they have, such as their distinctive layaway program, is inconsequential in providing for the needs of those customers that they have been losing for years.
Anyone coming back to Kmart is likely doing so to cherry pick commodity needs and is a short-term convert.
I don’t see a wave of people choosing Kmart’s option, especially with the $5 fee. This is not going to steer anyone over because of their layaway plan.
Convenience is always important to customers and this provides a way to shop now and pay later with a discount. This will be a positive for Kmart, and so will the option of ordering online and picking it up at a Kmart near the college.
Do not see layaway being relevant in the 21st century, especially with the advent of closed loop prepaid cards.
I remember using layaway when I lived in Chicago and would walk to a State Street store downtown after receiving a paycheck and make a payment towards the item. But that kind of layaway was reward-building fun shopping at downtown retailers.
In the 21st century, I’m not going to drive 1.5 miles to any big box EDLP and pay down on a product; it doesn’t make sense and there is nothing exciting about it.
No doubt someone who has a product on layaway at a big box store is constantly checking Amazon.com for a lower price of that same item.
The layaway plan is a positive differentiator for Kmart for the back-to-school season. With the current status of the economy, the need for back-to-school supplies and the ease and savings for the consumer, the layaway plan should definitely bring in new customers. The big question now is: will Kmart apply the same layaway benefits for the Christmas shoppers? That would definitely be a differentiator for Kmart.
Anyone who has actually shopped at a Kmart recently knows that they have better clothing brands and quality than Walmart and stylish clothing for children and juniors at much more affordable prices than Target. The layaway program is a good way of bringing in people to see the clothing lines and be able to lock in sale prices and budget for back-to-school shopping.
I was in my local Kmart last week and noticed many families doing just that. The Layaway section was busy with moms and teens purchasing lots of clothing, which has a large profit margin. Were they new customers? I don’t know but if they have a good experience, they will surely tell others.
Moreover, the Rewards card offers special deals and sales for members and the register receipts (reduce the number and length, please!) provide coupons for substantial savings on future purchases. Apparently, Kmart is working to create new and return customers on several levels.
Contrary to what’s been asserted here, Walmart no longer offers layaway. They dropped the program several years ago and only brought it back for Christmas last year, with limited categories of merchandise eligible. Kmart has always had layaway and they existed before Walmart.
I hope it works for them. There’s room for a well-run Kmart. Walmart’s merchandise is often low-quality and if folks are honest they’ll admit that, aside from special buys, Target is quite pricey for quality that’s maybe a step above Walmart. I find myself shopping at Kmart fairly often. The local store is squeaky clean, neat and organized and their brands offer good value for money.
Whatever it takes! If other retailers have discontinued the practice, and a significant number of shoppers still use the service, it could be a defining point of difference for Kmart. Back to School is a very difficult and expensive time of year.
Yes, yes and yes. Layaway was a key component of Kmart’s early success. It offers instant credit, plus incremental fees, to people who may not have credit. Plus it increases sales by making it easier for people to purchase more products when they don’t have money available to make a particular purchase.
Kmart is actually doing some interesting things with product, promotions, and loyalty activities. It is a shame that they get little credit, but the fault for that is their own. Until they can regain a merchant and customer experience-focused mentality and ability to effectively market both, they will continue to decline. Which is a shame, because there is room for a “well run Kmart” as commenter “teatime” states.
Very positive move in play by Kmart. Times are tough for its customer base. Kmart is going to make this crucial spending period for students and parents far less demanding. Racking up more credit card debt is a big “no-no” for this group. And you get the financial benefits of the Kmart awards program. A win-win for both Sears Holdings and loyal Kmart shoppers.
BTW, if anyone in Hoffman Estates is reading this, PLEASE bring back MR. BLUELIGHT!!!