[ToyAddict]

Quote:

With layaway, it's not so much popularity as it is profitability. Walmart stopped its year-round layaway program specifically because in the end they were losing money on the deal. Now the only time it potentially turns a profit is during the holiday season.

What I'm puzzled about is how K-Mart is able to continue offering layaway, in spite of what Walmart has done with it.

I think it goes something like this. . .it used to be that EVERYWHERE offered layaway. Then Walmart decided (probably correctly) that they'd rather use their store space to sell stuff more quickly -- increase inventory turnover. Layaway takes up a lot of space, is comparatively labor-intensive (expensive, compared to, say, regular stocking of shelves).

Then since Walmart decided it wasn't profitable, then most other places followed suit in a knee-jerk reaction.

Then someone figured out it would be a way to differentiate their store from the others. KMart's not going to win business on price, store beauty, and possibly even location. So they're trying to do it with services. IN THEORY, their website is better than Walmart's. They offer a better selection (at least in toys. . .you're much more likely to be able to order an individual figure on KMart.com than on walmart.com. . .now getting their workers to fill the orders correctly is a different story, which is why I say IN THEORY). Anyway, ordering on the website from another store is a service. Layaway is another service.

They also try to "win" with product differentiation, like Martha Stewart exclusive merchandise.

I think their approach is pretty good, IN THEORY they should be doing better than they are. I think what they miss is that their stores look dingy and straight outta the 80s. They need to invest in upgrades. I think Walmart schedules a facelift every 10 years. . .fresh paint, flooring, shopping carts, etc.

Anyway, layaway may or may not be profitable in and of itself for KMart. It's possibly a "loss leader" to get people into the store and buy from them.