Kmart shoppers nationwide can now take advantage of the retailer's new rent-to-own program. Previously, Kmart's parent company Sears Holdings (Nasdaq: SHLD) only offered the service in Sears stores, but the company said yesterday, Nov. 11, that Kmart will begin the service on Nov. 22.
The lease-to-own program allows shoppers to take home expensive items such as appliances and furniture right away while paying for the purchase over time in installments. Items priced at $150 and up are eligible for the plan.
"Kmart's lease-to-own program will help ease some of the financial barriers our members and customers will face this holiday season," Jai Holtz, vice president of financial services at Sears Holdings, said in a statement.
While some customers will be happy about the flexible payment option, others aren't quite convinced it's as beneficial to shoppers as it seems. After accruing interest, a typical deal could turn a $300 television into a $415 purchase, which analysts say hurts low-income consumers who already are not eligible for credit cards.
"The rent-to-own industry promises consumers the American dream of ownership," Ed Mierzwinski, consumer program director at U.S. Public Interest Research Group, told Bloomberg. "But its contracts provide for very high-cost payments, and it is difficult to complete the contract."
Sears Holdings rolled out the lease-to-own program in Sears locations back in May. Holtz said the initiative was launched as a "much-needed financial solution to those unable to purchase on credit, secure credit, or because of immediate need, can't use layaway."
For more see:
This Bloomberg article
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