eLayaway

Layaway resurgence continues for the holiday shopping season

Before credit cards, layaway was a popular way to pay for holiday gift items over time.

That system -- where the store holds the items and the customer makes regular payments -- is making a slight comeback as shoppers hesitate to use plastic that comes with rising fees and interest rates. They fear building up debt when jobs are shaky.

Sears Holding attracted national attention last year when it advertised its long-standing, but consumer-forgotten, layaway program at its Kmart stores.

More than 600,000 shoppers used the Kmart layaway program last holiday season, said Sears Holding spokeswoman Shannelle Armstrong.

Hoping to cash in on the layaway resurgence, the nation's largest toy retailer, Toys 'R Us Inc. introduced its holiday-gift layaway program two weeks ago.

Layaway is available only for big-ticket items, including bicycles, battery-powered vehicles, dollhouses, outdoor play equipment, outdoor basketball goals, televisions and indoor table games. Many infant and baby items can be purchased on layaway, including furniture, car seats, strollers and bassinets.

Retailers who have introduced the programs see them as a way to keep customers buying in a time of tight credit and other economic problems. It's a pay-on-time alternative to credit cards.

Toys 'R Us CEO Gerald Storch said his company's customers were requesting a layaway program as a way to stay within tight holiday gift-buying budgets.

"Through the 'Big Gift' layaway, gift-givers can make important holiday purchases early in the busy holiday season when selection is at its best, giving shoppers peace of mind that they have reserved the exact item at the top of a loved one's wish list." Storch said.

The Toys 'R Us layaway program requires a 20 percent deposit of the total amount and a $10 service fee. Payments can be made anytime at the store register using cash, check, credit card, debit card or gift card.

Final payments must be made by Dec. 6. Since Toy 'R Us will not store layaway items on site, merchandise will be shipped to stores and be available for pickup seven to 10 days after the final payment is made.

Sears Holding was so pleased with its layaway success at Kmarts, it added a layaway option this season for online purchases at sears.com and kmart.com. The program is a natural evolution and intended to take advantage of the increasing popularity of Internet shopping, Armstrong said.

Online shoppers will find a layaway icon next to items that can be purchased using biweekly payments either at a store or online using a credit card. A down payment is required, the higher of either $15 or 20 percent of the merchandise total at Sears or 10 percent at Kmart.

There's no online layaway at Toys 'R Us, although there might be in the future, the company said. The layaway program is likely to keep going after the holidays, though terms may change.

As credit cards became easier to get and more popular, many retailers, such as Walmart, eliminated layaway programs. Most are reluctant to bring it back or start one because it does require stores to make a financial commitment of setting aside a merchandise storage area and dedicating employees to oversee the program, said Barton Weitz, executive director of the University of Florida's Center for Retailing Education.

"It is growing, but in the long run, once the economy bounces back a bit, layaway will fade again," Weitz said. "It's attractive to a certain segment of consumers, but for the retailer it is not economical."

It also often requires the removal of merchandise from the shelf for storage that the layaway customer may not end up buying. With companies looking to maintain minimal inventories, taking items off the shelves and away from potential customers may not be productive.

Layaway's revival also has sparked new online companies.

The Tallahassee company eLayaway started in 2006 and operates online payment programs for the Jacksonville Jaguars and Minnesota Vikings football teams and hockey's Detroit Red Wings.

There also are online retailers using layaway options. Based in Chicago, lay-away.com started in 2002 selling home products to include appliances, electronics, toys and games. It provides up to six months to pay for items.