When Walmart news hits the New York Times, as it often does, it’s generally big news.  One of the latest Walmart items to be reported along with ‘all the news that’s fit to print’, was a note that the retail giant plans to bring back its layaway program for the upcoming holiday season.  The company sees this action as a key to re-establishing its reputation as a haven for financially challenged shoppers.

Walmart dismissed its traditional layaway policy in 2006.  At the time the company claimed that the popularity of credit and debit cards along with very profitable gift cards made layaway obsolete. 
Shortly after, times changed.  When the recession hit, banks were forced to tighten loan policies.  Many consumers found themselves unable to continue paying almost usurious interest rates to credit card companies and pretty much had to change their ways, especially in light of rising unemployment and the financial chaos surrounding them.  Thus credit cards have actually declined in popularity as amassing debt has actually been replaced by saving for many American families.
When Walmart did away with its layaway policies pre-recession, it also abandoned a significant number and class of customers.  At the time of Walmart’s announcement, I remember the shock stated by a number of coworkers, most of whom likely did not employ layaway plans.  They simply noted, with considerable empathy, that many consumers had relied on such plans for years, especially during the holiday season.  This was an emotional attachment by consumers as they saw layaway plans as affording the ability to give the gifts of choice to loved ones or to obtain essentials, such as replacing damaged major appliances.

Walmart’s exit from this market was good news for the perennially struggling Kmart.  On Walmart’s announcement of the withdrawal of its layaway plan, Kmart promoted its determination to extend its layaway policy to its customers with no end in sight.  At that announcement, a number of my coworkers thought Kmart had instituted the equivalent of the ultimate loyalty policy to many of its customers.
Kmart has continued to institute merchandising initiatives aimed at increasing its total customer base, in part by focusing on key socio-economic classes of customers it sees as its own, as part of its struggle to survive.  A good example of this is based on the realization of the increasingly rapid increase in the nation’s Hispanic population.  Recently the company launched a first of its kind, fully customized YouTube channel in Spanish. The channel consists of novelas or soap operas that include an end story, called Madres y Comadres. The series focuses on two Latina women and the challenges they face raising a family in Americawhile enjoying their Hispanic culture and maintaining their family heritage.
Layaway is just one of many merchandising policies that Walmart has had to reconsider.  The company tried to compete with Target’s ‘cheap chic’ image by upgrading its apparel lines.  This resulted in dismal results, confused customers and the dismissal of the executive Walmart brought in to upgrade its brands and its image.  Recently, Walmart began to restock many of the skus it had systematically deemed inefficient and essential for removal from inventory.  These restocks were largely determined as an answer to disappointing domestic financials over many consecutive quarters.
 
The degree of success of Walmart’s layaway policy reversal will be determined quickly as the company must determine if layaway is a keeper after the coming holiday season.  While layaway may seem as necessary as ever as the country fights a second recession, Kmart may just have earned the company enough loyalty through good will while maintaining its layaway policies through good years and bad.

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Arthur Rosenberg, Senior Editor 
Arthur has worked at Chain Store Guide for 20 years. He received a B.A. degree from City College of New York and attained a master’s degree in electronic communications from Brooklyn College. Please contact him if you have questions or comments.