Stores bring back layaway plans to lure consumers

Her basket is spilling over with learning games, Dora the Explorer and Diego toys, cars, trucks and other goodies for her toddlers, a boy and a girl ages 2 and 3. Dresses, pants and tops hang on the sides of the buggy. Rivas, a stay-at-home mom who also has a 12-year-old, knows the tab is mounting, but she isn't stressed.

"I know I can do it because I have eight weeks to pay for it," she said.

According to an America's Research Group survey, 87 percent of American consumers use some form of credit to help finance holiday shopping. As a result, many people are still paying on debt incurred late last year. As the recession deepened, consumers became less motivated to shop. Luring them back has been a prime objective of retailers offering layaway.

"It is a part of our business," said Melisha Williams, an assistant manager at the Doraville Kmart. "It is not something that's hush-hush."

Kmart requires a $5 nonrefundable service fee along with an initial payment of $10 to $15, or 10 percent of the purchase price, whichever is greater. That is followed by payments every two weeks over an eight-week period. Other large retailers such as Sears, AJWright, Toys "'R" Us and Burlington Coat Factory have varying payment plan stipulations.

High Plains Western Wear in Marietta, part of the Horse Town Corp., has had layaway for years. Manager Peggy Monie's storage office is filled with boxes of designer boots, high-end leather coats and other pricey items that are being paid for in installments over a 90-day period.

Hollyanna Hite is making payments on her 14-year-0ld daughter's cowgirl boots for Christmas. Hite also has some bedding in layaway at Sears and winter clothing she's paying on at Burlington.

"I'm very cash conscious," Hite said. "I set a limit on what I'm going to spend. My husband and I are on a real tight budget."

She used to be a Wal-Mart layaway shopper until the retailer did away with it in 2006 after 44 years. The mega discount store cited the expense of layaway, including staffing and storage space, among its reasons for discarding all aspects of the program except for fine jewelry. It also conceded in media reports at the time that the increase in the use of credit made layaway less attractive.

"Traditional layaway programs are expensive," Wal-Mart spokeswoman Kelly Cheeseman said. "The expense is ultimately factored into the costs of the products, and Wal-Mart wants to keep prices as low as possible."

Kmart and Sears, both owned by Sears Holdings, have addressed the storage issue, in part, by offering for the first time online layaway. Merchandise can be put on layaway online and items can be retrieved at any of the stores' locations. There are also independent Web sites such as eLayaway.com and Lay-Away.com in which items can be purchased from stores that don't have their own programs, as well as layaway sites for travel and concert tickets.

Stores are seeing big-ticket items such as expensive toys, video game systems, cribs and costly attire being put in layaway, along with everyday items.

Layaway is not for everyone, though. Despite its growing popularity, most major retailers do not offer it, and according to America's Research founder Britt Beemer, only 6 percent of consumers have any real interest in it. There's the risk of paying on an item and being unable to complete payments, in which case money may not be refunded. There may also be a cancellation fee.

Kmart's layaway program saw double-digit increases in customers and sales in 2008, but not all are sold on the idea.

"For me, it's better to buy whatever you're interested in or wait until you have enough money," Kmart shopper Ben Rodriguez said. "It's not as exciting to buy it little by little. It's a good option for some people, but not for me."

But Len Gray, shopping at High Plains,said it gives him "something to look forward to."

Wendy Davis still keeps her credit cards in her wallet. But she's not pulling them out as much, either. Having layaway, like the program at High Plains where she has a pair of $200 boots waiting, makes it easier.

"If it's more expensive, I can have it in three months or not have it at all," she said.