Kmart Touts Layaway for the Holidays

DETROIT Kmart has launched a campaign that positions the company as the only mass discount retailer to offer a layaway service. The hope is to drive sales at Kmart stores this holiday season, as consumers search for penny-pinching options during the recession.

Print ads will break in November and broadcast spots will start airing this week. The ads feature Mr. Blue Light, Kmart’s animated lightbulb, who promotes the layaway service as a way to get gifts at affordable prices in time for Christmas. The service allows consumers to place a deposit on a purchase and have the retailer hold it until a full payment is made at a later time.

“People are going to have to be very creative this year to get Santa to show up,” said Terry Brophey, vp, integrated marketing communications at Kmart, Chicago. “And the whole campaign is based on promoting value.”

The campaign, via Draftfcb Chicago, targets moms with household incomes starting at $50,000. In addition to the layaway option, ads tout Kmart’s exclusively branded merchandise such as Jaclyn Smith apparel, Craftsman tools and Martha Stewart Everyday cookware.

A total of seven broadcast spots will air, which includes a major buy in cable (TLC and sports programming). Two print ads will run in decor, lifestyle and women’s titles. Web banners will also run on Web sites offering consumers financial tips like Oprah’s finance page and money wizard David Bach’s site. Radio ads, where Mr. Blue Light explains the deals offered at Kmart, broke this week.

“We just wanted to really turn up the heat on our value message across the board,” Brophey said, adding that the retailer will advertise 25,000 gifts under $25 and other deals, as part of the creative.

Kmart spent $160 million on ads last year, per Nielsen Monitor-Plus, and $85 million through July.

Laura Gurski, a partner at consulting firm A.T. Kearney, Chicago, said the layaway is a “brilliant” idea. “It’s right for the time and it’s right for the traditional Kmart customer,” she said.

Rival Wal-Mart at one point also offered layaway to consumers, but phased out the service in 2006 because of declining use and rising costs, per the company.

Now with the current economic downturn, retailers stand to benefit from such services and analysts predict more advertising that promotes bargains.

“People cut back on general spending and they go from Neiman [Marcus] to Macy’s and from Macy’s to Target,” said Rachael Croson, a professor of behavioral economics at the University of Texas at Dallas. “People are still going to spend this time [shopping]; what changes is where.”