Kmart’s rent-to-own program turns $300 TV into $415 buy

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Posted: Thursday, November 14, 2013 12:00 am

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?”

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