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Christmas in September?

Retailers spur early holiday sales with layaway incentives

Each year, since the “big recession,” retailers have been putting out their holiday decorations and starting their promotional sales as early as mid-October. It used to be that Black Friday was the kick-off that got everyone out to the stores in search of that must-have discounted gift for their loved ones. This year, however, the calendar barely hit September and I saw Christmas trees on display at my local Costco and retailers announcing their layaway program incentives.

Toys “R” Us seemed to be out ahead of their competitors this year when they announced they would be waiving the service fee and minimum purchase requirements for their layaway program (for anything put on layaway before Halloween). Walmart followed almost immediately with an announcement that they would be cutting their up-front service fee from $15 to $5, and, following suit just days later, Sears and Kmart announced they would be waiving holiday-season layaway fees altogether (until Nov. 17). While the specific terms of each of these layaway promotions vary, the mere fact that they have been announced — and announced so early on — is, to me, an indication that retailers will once again be aggressive in their efforts to win the limited dollars of consumers this season. And, it shows they are proactively trying to spur brick and mortar sales as soon as possible, extending what has long been the “traditional” holiday shopping season.

While the retail economy is nothing like it was a few years ago — sales have been quite good since July, and back-to-school numbers were particularly strong — it is far from robust. It would seem likely that these layaway programs will spur some additional sales from savvy, deal-hungry shoppers, but will it be enough? The administrative costs associated with layaway programs are actually quite large, and margins are pretty slim, so I’m not sure retailers will gain that much ground. However, I do think it could lead to a significant boost in brick-and-mortar sales, which in turn, has an impact on expansion plans for next year. Really though, I think that these early promotions are more about marketing and messaging than anything else — about getting the message out there that holiday shopping is here and “flipping the switch” in shoppers’ minds. If these announcements do nothing more than just get people thinking about their holiday shopping, then I think they have been successful. It worked on me: I’m already writing about holiday shopping!

What do you think? Are consumers likely to start their holiday shopping early because retailers are providing them with incentives? Will retailers see the results in sales and be bullish on their expansion plans? Have you started your holiday shopping yet?

Please make a public comment below or feel free to e-mail me privately at jeff@jeffgreenpartners.com.


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