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Layaway shopping is the new black as Kmart joins revival
Geoff Williams
Oct 17th 2008 at 10:00AM

Filed under: Shopping

You may have seen their commercials. Kmart has been touting their new layaway plan as a great way to shop for Christmas gifts, except, of course, it's not a new plan. They've had it for years. But the concept of layaway--paying for something in installments before you make your purchase and thus not raking up any interest--that feels new to a lot of people. Including myself. I'm in my late 30s, and I can't think of any time when I've ever bought anything on layaway.

But you look through old newspaper ads, and you can see how it once not just a concept but a way of life, just as credit cards are today. Everyone bought everything on layaway -- furniture, jewelry, suits. In an April 25, 1947 copy of the St. Petersburg Times, for instance, there's an ad touting a layaway program for a graduation gift for a high school senior: a $15 pen with a gold-plated cap. Boy, times have changed.

But layaway may be coming back, thanks, of course, to the swing in the economy in the last few weeks, and so I thought I'd compile a list of some of the places you can find layaway programs:

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Layaway requires a discipline that's hostile to our 'instant gratification' up-bringing.  I mean, what good is it if you don't get it until it's paid for?  Sheesh!

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In tough times, layaway makes comeback

BY ANDREA CHANG
Los Angeles Times

    LOS ANGELES — Qiana Zimmerle got an early start on her Christmas shopping last week, heading to a local Kmart where she loaded up a cart with toys, clothes and a “High School Musical” game.
    But with money tight this year, Zimmerle, 28, dropped the gifts off at the store’s layaway counter, paid a small deposit and left the store — for now. Over the next few weeks, she’ll make regular payments on the remaining $113.18 balance and pick up the items when she’s paid it off.
    “I have 12 nieces and nephews, so that’s why I have to do it this way,” Zimmerle said. “It’s easier on me, moneywise.”
    After pulling back on layaway programs for years, retailers are touting the service as a financially savvy way to buy goods this holiday season. Already, many cash-poor and credit-strapped shoppers are responding by flocking to layaway counters at stores such as Kmart, Marshalls and Burlington Coat Factory and using online options such as eLayaway.com.
    “The response has just been tremendous,” said Tom Aiello, a spokesman at Kmart, which is running a national holiday ad campaign to hype its longtime layaway service. “We know for a fact that it’s a big increase over the usage from last year.”
    Retailers are hoping the availability of a layaway program will attract consumers who need a more manageable way to pay for goods, which could boost customer traffic during the coming weeks.
    “The expectation on all retailers is that this is going to be an extremely tough holiday season,” said Richard Giss, a retail analyst with accounting company Deloitte & Touche. “So they’re reaching into the old retail bag of tricks. How do you get people to spend money when they can’t afford it? You help them budget, you help them plan — that’s really what a layaway plan is at its core.”
    Unlike credit cards, layaway plans usually carry no interest. Most stores require a small deposit or flat fee up front and place some restrictions on what can be put on layaway, such as perishables and clearance items. A typical layaway term is between 30 and 60 days, Giss said.
    Layaway programs rose to popularity during the Great Depression and became a common form of payment for consumers who couldn’t afford the total amount of a purchase up front. But once credit cards became widely available, layaway all but disappeared with the exception of a handful of retailers.
    These days, layaway is making a big comeback.
    “People are looking to buy the things they want with non-credit-based terms,” said Michael Bilello, senior vice president of business development at eLayaway.com. “The lend-and-spend boom is over.”
    Bilello said eLayaway.com, a payment processing service affiliated with more than 1,000 merchants including Gap and Adidas, has seen a sharp rise in business from both consumers and retailers. The company, which was founded in 2005, has seen its membership rise from 10,000 registered shoppers in January to 75,000, Bilello said.
    “Big-box retailers are now contacting us and saying, ‘We want to offer layaway terms to our consumers,’ ” he said.
    Leticia Castaneda of Glendale said seeing Kmart’s layaway commercial sold her on the service.
    “I heard on the news that there was a layaway department, so I came,” Castaneda, 45, said as she placed $502.82 worth of Christmas presents on layaway at Kmart last week. “Instead of paying three, four hundred bucks at once, I take my time. It makes it easier on the Christmas shopping.”
    Wal-Mart Stores Inc. made headlines two years ago when it announced that it would drop its layaway program. Despite the recent resurgence in the service, the country’s biggest retailer said it wasn’t going back.
    “Right now there are no plans to bring back layaway,” Wal-Mart spokeswoman Anna Taylor said. “Traditional layaway programs are expensive, and ultimately that cost is factored into the cost of products, which affects the customers.”
    And the availability of layaway programs hasn’t helped some businesses.
    Nancy Maher, who owns a jewelry stand in downtown Los Angeles, said despite offering a flexible layaway plan that doesn’t include a set deposit amount or fixed payment dates, she’s had fewer customers lately and has seen layaway usage drop 50 percent over last year.