While President Obama introduced his plan to bring back the jobs, gigantic retailer, Walmart, launched a plan to bring back layaway. Although Walmart is known for its bargain prices and its reasonable goods, Walmart re-released its Christmas layaway program because of the mention of consumer fears and the realities of a recession that may make an impact on its holiday sales.
Back in 2006, Walmart created a layaway option for its customers. However, after a little over a year, the retailer removed the program as a result of low customer participation.
Nowadays, to combat the risk of decreased holiday sales from recession woes, Walmart will rerun its layaway program on 10/17/11 until 12/16/11, excluding Black Friday, November 25, 2011. Unlike traditional layaway programs and its 2006 layaway option, this time Walmart’s layaway is limited to toys and electronic goods.
Since layaways cannot be reserved online, customers must actually go inside a Walmart store and create a layaway request online at a walmart.com desk and pay a $5 service charge. In addition, customers must make purchases totaling over $50 with each individual item amounting to no less than $15. They must make at least a 10% down payment on the item when they pay the $5 service charge.
With the added restrictions, it is unclear whether Walmart’s layaway program will achieve its goal to promote retail sales. After all, once Black Friday arrives, consumers tend to seek out the retailer who is the lowest bidder on their favorite items in terms of price.
Moreover, some layaway programs function improperly, when more customers make promises to pay for goods that they never actually fully pick-up, and never finish paying for. If layaways are not monitored, retailers can actually lose money in missed opportunities to convert lost sales to alternative customers committed to the purchase.
Within the last two years, Walmart, like other retailers, has started to advertise Christmas promotions and sales months in advance of the Thanksgiving holidays in the hopes of attracting more customers, in spite of their consumers’ economic hardships. Still, Walmart’s layaway program faces great competition from Kmart, a retailer that offers more flexibility in layaway options.
Based on Kmart’s layaway plan, customers do not have to spend a minimum of $50 on toys or electronics and customers can buy back to school items on layaway as well. Also, customers may sign up for layaway online where they can create layaway contracts for up to 12 weeks at any time.
If customers break their layaway contracts, Walmart can make $15 from cancellation fees on unsold items. The main test will be whether customers will sign-up for layaway at Walmart, only to price shop and cancel their contracts for better deals at other competitive retailers.
Sources:
Admin.”Christmas Layaway is Easy,” walmart.com.
Admin. “How Does Kmart Layaway Work?” kmart.com.
Andrea Chang. “Wal-Mart’s Layaway Program is back,” LATimes.com.
Jessica Wohl. “Layaway, $15 toys among Walmart’s US Holiday Plans,” Reuters.com.