Kmart is introducing a rent-to-own program charging the equivalent of 100-plus percent annual interest, a move into an industry that has drawn criticism for hurting low-income consumers.
The Lease-to-Own program touts instant gratification — customers without credit take a product home right away, make biweekly payments, then decide whether to buy or return the product. A typical deal could turn a $300 television into a $415 purchase.
Sears Holdings Corp., which owns Kmart, debuted a similar program at its namesake stores this year.
Kmart’s lease-to-own program begins Nov. 22. The move could help boost the struggling chain’s sales, but Kmart risks hurting an already damaged brand, said Michael Stone, who runs a New York brand-licensing agency.
“I think it probably lowers the brand value of Sears,” Stone said. “The question is, survival or brand?”