September 8, 2011 – By Jessica Wohl
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CHICAGO (Reuters) - Eager to keep its sales momentum growing, Wal-Mart Stores Inc <WMT.N> is kicking off the holiday season early, cutting some toy prices in September, offering layaway in October and selling more Christmas decorations.
The winter holiday season, which traditionally runs from the day after U.S. Thanksgiving through Christmas, is the most important time of year for retailers. In recent years, U.S. chains including Walmart have advertised earlier and offered deeper discounts to drive sales amid the struggling economy.
Walmart, the world's largest retailer, is getting back into layaway after a five-year break, albeit on a smaller scale, after other chains received a boost by offering the service during the downturn. It is also bringing back a host of items, such as Christmas village sets and outdoor decorations, that it had removed from stores last year as part of a failed attempt to streamline its assortment of goods.
The moves announced on Thursday come as the chain's core shoppers continue to face a fragile economy including steep gasoline and food prices, high unemployment and a housing slump.
Sales at stores open at least a year fell for nine straight quarters, as shoppers went elsewhere, but they rose in July.
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As Walmart's sales rebound and the company works on cutting expenses, it can again become more aggressive with its pricing, said Gilford Securities analyst Bernard Sosnick.
During the last couple of years, Walmart had a small amount of Christmas merchandise in its stores in the middle of October. This year, those items will arrive in late September.
Wal-Mart is cutting prices on dozens of toys to $15 starting September 12, including Leapfrog <LF.N> Scribble and Write, Disney <DIS.N> Princess Toddler Doll, Hasbro Inc <HAS.O> Transformers 3 Mechtech and certain Lego sets. Those toys typically sell for around $20. That "rollback," as Walmart calls it, is also coming a little earlier than usual.
The layaway plan, which debuts on October 17, has restrictions and fees that should help reduce costs and complications that caused Walmart to walk away from general merchandise layaway after several years in 2006.
Wal-Mart, which still offers layaway on fine jewelry year-round, said its customers have been asking about layaway for other things. At this point, it will have layaway for toys and electronics leading up to Christmas and will then evaluate whether to proceed with a broader year-round plan.
"We're always looking for ways to ease budget strain for our customers, and we know this holiday season in particular brings with it additional financial pressure," said Duncan Mac Naughton, Walmart's chief merchandising officer.
Customers must spend at least $50 to sign up for layaway, and each item has to be priced at $15 or more. Customers must pay a $5 fee, put 10 percent down and complete their payments and pick up their items by December 16, or they risk having to pay a $10 cancellation fee.
LATE TO LAYAWAY
After Walmart walked away from layaway, other chains kick-started programs and found success.
Sears Holdings Corp's <SHLD.O> Kmart chain has been offering layaway plans for more than 40 years to help customers make expensive purchases. It offers many items for layaway, including appliances, clothes, electronics, furniture and toys.
Kmart gave its customers up to 12 weeks to pay for layaway purchases during the 2010 holiday season, versus the eight weeks that is typical. Normally, an eight-week contract requires a $5 service fee and a 12-week layaway contract requires a $10 service fee.
Toys R Us began offering layaway at its stores during the 2009 holiday season and has expanded the program to include a wider variety of items, such as iPods and digital cameras. Generally, it charges a $10 fee for layaway, and in the event an order is canceled, a $10 charge.
(Additional reporting by Dhanya Skariachan in New York; Editing by Steve Orlofsky)