Stores, consumers returning to layaway option to get gifts for Christmas

GENESEE COUNTY, Michigan -- Layaway may be the hot item this holiday shopping season.

With a tough economy and credit becoming harder to come by, we're tightening how much we pull out of our wallets this holiday season, and retailers such as Kmart are taking notice.

Layaway, which dates back to the Great Depression as a payment option, is making a comeback after retailers such as Wal-Mart and Meijer cut their programs in recent years.

The service allows you to select and "buy" merchandise now (i.e. get the hot toys while they are in stock) and pay for them over time in exchange for paying a small fee, usually $5.

Advantages include snagging deals now and potentially keeping purchases off credit cards. Are there disadvantages? Yes. You likely won't see that cashmere sweater or Elmo toy for 30 days or more, until the item is paid off. And if you change your mind and don't want the item anymore, you'll have to pay a fee to cancel your layaway.

Kmart is advertising its longtime layaway offering on TV and radio commercials for the holidays. At least one local store manager says people are increasingly using the service.

"It seems to have perked in popularity this fall," said Joe Kerin, store manager of the Miller Road Kmart in Flint Township, which advertises its layaway availability on its roadway sign.

Kmart said that more than 3.2 million customers used layaway at its stores last year.

Kerin said consumers who use layaway for the holidays like the fact they can complete most of their shopping in one trip and that the kids can't peek in closets to see what presents they're getting.

"What they are putting in is a lot of basics, a lot of clothing," he said.

Burlington Coat Factory stores have offered layaway since 1972. Jani Malowinski, manager of the store at the Genesee Valley shopping center in Flint Township, said use of the service started to pick up in September.

"They're putting in larger layaways and they're putting in for the whole family," she said, adding the economy may be the reason for the uptick.

A handful of other national chains currently have layaway programs -- T.J. Maxx and A.J. Wright to name two -- but one retail expert expects more chains and maybe even the electronics giants will offer some type of layaway option this holiday season for cash-strapped consumers.

"What we're seeing with layaway, this will appeal not just to modest income folks," said George Rosenbaum, a founder of Leo J. Shapiro and Associates, a Chicago-based retail research firm.

That'd be welcome news to consumers such as Stephanie Shaw, 28, of Linden.

Shaw wanted to put a popular electronics item on layaway (it's a gift for Christmas so we aren't divulging just what) to avoid paying credit card interest.

"Then it's paid off and then you don't have a huge debt after Christmas," she said.

But Shaw found Target and Meijer don't have layaway and that the item couldn't be placed in layaway at Kmart. So she reluctantly charged it.

Shaw said she plans to use layaway to buy Christmas presents for her son, 2, and newborn daughter, 3 months old.

"I'm going to definitely go to Kmart and get some toys," she said, adding she may try Burlington Coat Factory for clothes for her daughter.

Stores generally charge a $5 fee for the service and contract times can vary from a typical 30 days to 90 days at some stores.

"It's better to do it this way if you ain't got the money to pay it all at one time," said Tiniya Tyler of Flint, who made a payment of about $20 Tuesday at Kmart toward $170 in Christmas presents she has on layaway for her two grandchildren.

Some use layaway as a budgeting tool.

Sierra Lane, 22, and Darnetta Mance, 26, both of Flint, put toys for Christmas on layaway Tuesday at Kmart for their sons, Leonadias Powell, 1, and Daiveon Parrish, 9 months, respectively.

"It's helpful," Mance said. "Especially when you've got a big family."

If you do want to use layaway, make sure to check the retailers' policies on payments, what happens if you miss a payment and if you can cancel the order. Most charge a fee of $10 or so to cancel a layaway transaction.

For those of us who like to shop online, there's also a Web site where you can buy products such as iPods, jewelry or clothing from more than 1,000 merchants using layaway as a payment option.

With eLayaway, you enter into contracts with merchants and money is deducted from your bank account when you want it to be taken. eLayaway charges a 1.9 percent flat fee to use the service.

"We have over a 92 percent completion rate because the consumer is able to put things on their schedule," said Michael Bilello, senior vice president of business development for eLayaway.

Bilello said he expects use of the site to increase for the holidays and that consumers will be happy when they wake up on Christmas and realize their gifts are paid for in full.

"I think it'll be a way for Americans to shop for a very long time," he said.

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