CHICAGO (Reuters) - Wal-Mart Stores Inc has begun its holiday layaway program as it hopes to cash-in early on demand for gifts like toys, which saw slower sales growth industry-wide last December and has struggled to pick up so far this year.
The world’s largest retailer started the layaway program on Sept. 1, a day before it did last year where customers can pay as little as $10 to hold items worth a minimum of $50.
Layaway programs, which have made a comeback since the 2008 financial crisis as customers avoided using credit cards to make purchases, allow shoppers to put aside holiday merchandise like electronics and toys and make payments in installments until the full price has been paid.
These plans tend to have a sizeable impact on sales and analyst estimates suggest the program accounts for as much as 15 percent of holiday revenues at Wal-Mart stores in poorer areas of the United States.
Wal-Mart expects demand for toys to remain strong this year, despite worries about possible viewer fatigue after two strong years for the Star Wars franchise.
“We think episode eight is going to be a strong movie, strong theatrical, the weekend was what we expected ... and what was going on in our stores and anticipate that will carry through,” Anne Marie Kehoe, Wal-Mart’s vice president of toys, said on a conference call. The retailer released Star Wars products at its stores on Sept. 1.
She said Wal-Mart has stocked a bigger assortment of Star Wars items at a variety of price points this year.
According to data from The NPD Group, the U.S. toy industry grew 5.5 percent between January-November 2016 but in December sales grew 3 percent, bringing annual 2016 growth to about 5 percent at $20.4 billion. In 2015, sales grew 6.7 percent.
Sales are also off to a slower start in 2017, the NPD group said in a note in July.
Toy sales have been under pressure as they compete with videogames and YouTube videos. Toymakers like Lego A/S and Mattel Inc, who are seeing sales decline, have been attempting to modernize toys for the digital age.
For the holiday season, Wal-Mart said it will have 300 toys exclusively available at its stores and on its website from 400 toys last year. It includes Frozen Sleigh and Monster Jam Grave Digger along with collectible items like Fingerlings, L.O.L. Surprise Fizz Factory and littleBits Star Wars Droid Inventor Kit, Kehoe said.
Reporting by Nandita Bose in Chicago