According to BusinessWeek, retail price wars have begun and they are brutal. Retailers are seeing same store sales decline in double digit numbers at the most important time of year and they don’t know what to do except mark it down.

Sales planning has gone to the wind and retailers are doing whatever they can to salvage the season. The article quotes one retail spokeswoman as saying that their approach will be to take better care of customers rather than “throwing money to marketing activities.”

However, now more than ever is the time to practice innovative retail marketing. Traditional techniques may not yield the necessary impact but stores in crisis need to do something dramatic to drive in customers. Marketers need to take a huge breath and stop flailing around just long enough to come up with a better plan than “how low can you go” otherwise we’ll all find ourselves in bigger trouble after the dust settles.

Kmart, however may have found a way — layaway.  Most retailers have done away with layaway, but Kmart is marketing this as a way to not only get the toys you want reserved early, but a way to manage the pinch of a tighter holiday budget.

RetailWire features a lively discussion on the resurgence of layaway. Could this be the only way around our current economic conditions? How else can retailers get scared shoppers into the stores?