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Layaway returns to the store shelves as a buying alternative for holidays

More and more shoppers are using layaway, long thought to be out of fashion.

More and more shoppers are using layaway, long thought to be out of fashion.

The sign over the entrance to a tiny room in the back corner of a Kmart store is familiar to anyone above a certain age and below a certain economic level. It reads: “Layaway.”

It describes a practice that’s poised for a comeback across the country.

“It’s really picked up over the last month or so,” said Bill Gier, manager of a Des Moines, Iowa, Kmart. “It’s probably double from normal. It’s a combination of regulars and a lot of new people who are finding a way to pay for their Christmas.”

Kmart has made layaway a centerpiece of this year’s holiday advertising campaign. It is one of a handful of national retailers – along with Burlington Coat Factory and TJ Maxx – who still offer layaway to their customers.

Wal-Mart dropped layaway in 2006, saying the practice had “really become very obsolete” in an era where most shoppers preferred the convenience of easy-to-get credit cards.

Analysts predict that a souring economy, combined with the credit crunch, is going to have more shoppers searching this season for plastic-free bargains. Layaway could be a boon to the few retailers who offer it.

“It’s going to be a deal,” said Bob Robicheaux, marketing department chairman at the University of Alabama-Birmingham. “How big a deal remains to be seen. But retailers have to pull everything they can out of their pockets to make it possible for people to buy something this holiday season.”

Layaway was born during the 1930s as a way to help Depression-era shoppers afford purchases. Store owners let shoppers make payments on an item over time, but they held the item in the store until it was paid for in full.

The practice held little risk for the retailer, because the item could always be sold again if would-be purchasers missed a payment. It was a boon to customers unable to finance big purchases in the era before easy credit.

“The beauty of layaway, is that it’s free credit to the customer,” Robicheaux said.

At one Burlington Coat Factory store in Des Moines, layaway is popular year-round, but its use tends to increase around Christmas time.

“We’ve always had a huge layaway here,” said Debbie Olson, assistant manager. “We have a lot of regulars.”

Robicheaux said recent economic turmoil has soured most shoppers on overextending themselves.

“More people will use it,” he said. “Whether it’s 10 or 50 percent more remains to be seen.”


Questions to ask before a layaway

What happens if I change my mind? Most stores will give money back, minus a required, upfront fee, ranging from $5 to $15, if future payments are skipped. But make sure.

What is the payment amount?

When is it due? Most stores require minimum installments during a set period of time. Some are more flexible.

When must I pick it up? Many stores, hoping to avoid long delays, will require the shopper to take possession of the item well before Christmas Eve. Plan ahead.

Source: creditcards.com and local retailers

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