Layaway once again popular in West Michigan for those short on credit, cash
Shandra Martinez | The Grand Rapids Press | Tuesday September 1st, 2009
PLAINFIELD TOWNSHIP -- Alexeyzia Merritt's little feet danced in anticipation as she trailed her mother back to Kmart's layaway counter.
"She has been excited all week," said Yukice Robinson, mother of Alexeyzia, 9, and Kasiel, 3.
Robinson spent the past two months paying off the $300 in back-to-school purchases she made in July. In that batch of school stuff was everything from pencils to clothes.
"Because the economy is a mess, it was hard to go shopping this year," said the single mother from Northeast Grand Rapids. Robinson decided to do her school buying at Kmart for the first time after learning about the retailer's layaway program from a co-worker. She even found a coupon online to cover the $5 transaction fee.
Layaway allows shoppers to pay over time, interest-free, and pick up merchandise when it is paid in full.
A record number of shoppers, shut off from credit and short on cash, are relying on Kmart's layaway program to pay for all of their children's school needs, said Tom Aiello, a spokesman for Kmart's parent Sears Holdings Corp.
Layaway also is available at such retailers as Sears, Burlington Coat Factory and some T.J. Maxx and Marshalls stores.
Other retailers are using online options, such as e-Layaway.com. The Web-based company offers layaway services for about 1,000 merchants and has seen its business double from the same time last year.
But the average layaway purchase has dropped to $330 -- from $599 a year ago, said Sergio Pinon, founder and chief marketing office of the Tallahassee, Fla.-based e-Layway.com.
Customers are setting aside even small items such as $25 calculators and $30 backpacks, he said.
At the Plainfield Township Kmart, rows and rows of plastic bags in the back layaway storage area are filled with children's clothing, backpacks and other school supplies.
"We are thinking, 'Where are we going to put everything?' " said Pete Dunn, store manager at the Kmart at 4111 North Kent Mall NE, off of Plainfield Avenue.
Layaway shelves began filling up in July as the first back-to-school sales began.
But even as shoppers come to pick up their delayed purchases, those shelves won't be empty long before they will be packed again by people buying for the holiday shopping season in early fall.
Once traditionally used for big Christmas purchases, layaways are becoming year-round purchase plans for consumers who don't have credit cards or prefer not to use them.
Last year, layaway purchases accounted for $140 million of Kmart's holiday sales.
Sears Holdings Corp. brought back its layaway program to Sears stores in November after seeing a strong response to the pay-as-you-go plan in its Kmart locations.
It isn't surprising that, during difficult economic times, more consumers are turning to the payment method that helped their parents through the Great Depression.
Over the decades, demand for layaway service declined in proportion to the rise of credit card usage. In 2006, Walmart and Meijer were some of the last retailers to drop their longtime programs.
Layaway was seen as too expensive and cumbersome, tying up merchandise for months.
Kmart has seen layaway purchases climb dramatically after other retailers stopped their programs.
"I think we do four times as much in layaways (now) than we did five years ago," Dunn said.
Keshia Quinn, 28, did her back-to-school shopping last week. But instead of taking clothing for her two sons' home, she put everything on layaway.
"By the time winter comes, everything will be out (of layaway)," said the Northeast Grand Rapids resident.
She spent $155 on clothes -- saving $74. She put $20 down and has eight weeks to pay off the rest.
"This is my first time doing it, but my mother used to do it for us," Quinn said.
-- The Associated Press contributed to this story.
