Layaway Santa Conspiracy

Hypothesis: the “Layaway Santa’s” are not anonymous philanthropists walking in and paying off all of a single Walmart or Target store’s layaway purchases in the spirit of Christmas. Instead, it’s the company “paying” for the purchases (at cost) and publishing a press release announcing the anonymous Santa visited here, too.

Rationale: this is lottery marketing thinly disguised: you, too, could have all of your Christmas gifts paid for IF the Layaway Santa visits your store. So, commit now to the gifts you might not be able to afford, just in case you win!

Financials: in doing so, this costs the retailer very little. The total wholesale cost of all of the goods on layaway at a single store are minimal, particularly if you pick a store with a lower-than-average layaway usage compared to other stores in the same demographic. Let’s say $100k. That’s pocket change for marketing spends for advertising for the top 10 retailers, even if you tripled it for the Black Friday and Cyber Monday weeks. The cost of the press release announcing the anonymous Santa? Those are practically free.

Benefit: Limitless media coverage because the media knows that we love these stories and it will get coverage, and it only cost the company $100k. The corporation sees a spike of layaway orders in low-income areas and now they have metrics for what dream products are hot for the season, as an A/B split against what their local consumers can afford. Those dream products now see a pricing supression (instead of typical increase) over the next few weeks after the company has made last minute reorders for inventory due to demand based on analytics. Having inventory is advantage over competitor because it’s a loss-leader: give the impossible away to get the rest of your items ordered here and nowhere else.

This is a numbers game. But I’m smelling what the press release is spreading out on the lawn and it stinks like bait. Extremely inexpensive but alluring bait. Take note of what companies these Layaway Santa’s visit this week. Then wait for Q4 2018 earnings announcements to see if it paid off.