Sometimes better isn't good enough. Despite signs that consumers are becoming a wee bit more confident, it looks like retailers are well aware that many people will still be strapped for cash in the upcoming holiday shopping season. Privately held Toys "R" Us is the latest major retailer to offer layaway programs for big-ticket items.
According to the Associated Press, the toy retailer, which has to compete with the likes of Amazon.com
Layaway programs -- in which shoppers have a retailer hold an item while they pay for it over time -- had become an anachronism during the bubble times of easy credit. Thanks to Visa
Even more interestingly -- and disturbingly -- Sears Holdings reported that during the recent back-to-school season, many shoppers at its Kmart stores were putting simple, cheap items like pens, markers, or notebooks on layaway. Apparently, many peoples' budgets remain seriously constrained, which means investors need to choose their retail stocks carefully.
Need further grim tidings for the holiday season? Continued consumer indebtedness and the high rate of unemployment remain serious drags on the retail landscape. Worse yet, many retailers recently indicated that they plan to hire fewer temporary employees for the upcoming shopping season.
Never forget how crucial the holidays are for retailers; they usually rake in the most sales at the end of the year, which helps many retailers go into the black for the first time in their fiscal years. With this year's holidays looking unusually lean, investors should take a hard look at their portfolios, purging weak retailers with high levels of debt and consistently dwindling sales. It's quite possible that only the strong will survive the next few months. Layaway's return is just another sign of the times.
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