Kmart, the discount unit of Sears Holdings Corp. (SHLD:US), said it will remove fees from layaway purchases to help customers strained by tighter shopping budgets.
Free layaway at Kmart will be available online and in stores today through Nov. 17, said Jai Holtz, vice president of financial services at Sears, adding that the company will consider extending the program past the holidays.
Kmart, which offers layaway throughout the year, is working to boost holiday sales amid increasing competition from Web retailers such as Amazon.com Inc. (AMZN:US) Comparable-store sales at Kmart fell 4.7 percent in the second quarter, hurt by lower electronics prices and declining sales of lawn and garden equipment.
Layaway “is a significant portion of our sales throughout the year,” Holtz said today in a telephone interview.
Kmart previously charged $5 for an eight-week contract and $10 for 12 weeks. Customers make a down payment on merchandise and then pay in biweekly installments.
Sears stores will introduce a similar program for the holiday starting next month, Holtz said. Like Kmart, Sears offers a year-round layaway program.
“Many of our competitors do not offer it on Black Friday,” Holtz said. Kmart started testing the no-fee program a couple of months ago, he said.
Sears, controlled by hedge fund manager Edward Lampert, rose (SHLD:US) 1.4 percent to $58.18 at the close in New York. Shares of the Hoffman Estates, Illinois-based company have gained 83 percent this year.
Wal-Mart Stores Inc. (WMT:US), the world’s largest retailer, last month announced plans to bring back an expanded layaway program for the holiday season to help customers save for gifts. The retailer lowered its Christmas layaway open fee to $5 from $15, according to a statement this week.
Bentonville, Arkansas-based Wal-Mart resumed the program last year after canceling layaway for everything except jewelry in 2006.
Toys “R” Us eliminated its layaway fees earlier this week, through Oct. 31.
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