The Thanksgiving turkey hasn’t been carved, but nearly every retailer from Macy’s to JC Penney has already hung the plastic wreaths and reindeer in preparation for the Christmas buying season. And just in time for this week’s Black Friday, several retailers have also revived an old program to attract customers: layaway.
If you were alive for the Me Decade and Ronald Reagan’s presidency, then you probably remember this ghost of Christmas past.
Although such programs vary from retailer to retailer, the hallmarks of most layaway plans are essentially the same: A customer selects an item in the store, pays a small deposit which is applied to the purchase price, then makes regular payments on the item until it’s paid in full. The retailer keeps the item until the customer has finished paying. Some stores charge service fees and have requirements for down payments.
‘By expanding layaway to all toys … parents can reserve the hottest toys early.’ – Katie Reczek
After the economy hit the skids and credit became harder to get, layaway made a comeback, with several retailers reviving and heavily marketing this option.
“Marketing for layaway picked up in 2008 and 2009. Layaway never completely died, because many of the nation’s largest retailers still carried it even as smaller retailers were getting rid of it,” said Kathy Grannis, media relations manager for the National Retail Federation, last week. “But what has also happened in the last two years is, there are retailers that have either a) brought it on for the first time, or b) brought it back from the dead.”
Grannis pointed to Walmart as one retailer that has recently resurrected its layaway program. The company is currently running an aggressive holiday ad campaign that prominently features its layaway option for customers.
Customers wanted option
A spokeswoman for Walmart explained why the company revived their program.
“Our customers told us they want a layaway option for Christmas, and that they’re most interested in layaway on toys and electronics,” said the spokeswoman. We also know the holiday season brings additional financial pressure, and we’re always looking for ways to ease our customers’ budgets. Our Christmas layaway program…will provide a worry-free way for our customers to fulfill their families’ Christmas wish list.”
Walmart had phased out layaway in 2006, she said, on most products except jewelry.
Sears, Kmart, Marshalls, and Kohl’s are among the other retailers that offer some form of layaway option for their customers.
Another big national retailer, Toys “R” Us, introduced layaway for the first time in 2009 on “big gift items,” according to Katie Reczek, a spokesperson for the toy store chain.
“Since we introduced layaway…hundreds of thousands of items have been placed on layaway in our stores, with customers taking advantage of the program for its flexible payment terms,” said Reczek. “We know that consumers will continue to look for ways to stretch their dollars this holiday season, but still want to make sure they have that special Christmas gift for the children in their lives.”
This Christmas, customers will be able to buy nearly every Toys “R” Us item through layaway at 450 of the chain’s 600 stores, since the program was expanded for 2011.
Previously, only the most expensive items – bikes, swing sets, dollhouses, video game hardware, tablet computers – were available for layaway.
“By expanding layaway to all toys in most of our Toys “R” Us locations, parents can reserve any of the year’s hottest toys early in the season when selection is at its best, make a series of small payments over the next [two] months and have peace of mind knowing that they’re ready for the holidays,” Reczek said.
‘Value’ for consumers
Not every retailer offers layaway, despite the economy, and those that do may have different policies.
Some, for example, may only offer such programs through their web sites, while others only offer it as an in-store option. Some stores may limit layaway to their most expensive merchandise – think flat screen TV – while excluding cheaper items, like silver jewelry. Most will require that a minimum deposit be paid up front and will set a timeframe within which the item must be paid off.
And be prepared for service fees.
Toys “R” Us requires a 20 percent minimum deposit and $5 service fee on layaway purchases. Fifty percent of the purchase price must be paid within 45 days of the deposit and the item must be paid in full within 90 days, Reczek said. (All toy purchases for Christmas, Reczek said, must be paid off by Dec. 16.)
If the customer cancels the purchase or doesn’t pay off the balance, the company may charge a $10 fee before returning the customer’s payments.
Walmart imposes similar requirements on its layaway plans, although the required minimum down payment is only 10 percent.
Despite the fees, Grannis said, “Consumers find layaway to be of value. Obviously, a retailer wouldn’t bring the program back if they didn’t think their shoppers were going to take advantage of it. And we believe there is a demand from American consumers – in all income levels, actually.”
E-mail E. Assata Wright at email@example.com.