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Sunday, October 25, 2009
Passé? No way!
By Rivkela Brodsky
Journal Staff Writer
With less credit and spending cash, some customers have turned to layaway, a practice that largely disappeared when credit cards became widely available.
Though not all stores have started offering it, retailers nationwide are seeing an increase in layaway shoppers who started using it at back-to-school time.
Locally, some stores say the purchase option is gaining popularity, while others say the option has always been used by its customers.
You can find layaway at Kmart, Sears and Burlington Coat Factory as well as several galleries in Old Town, among others.
Toys R Us Inc. introduced a layaway program Monday for larger-ticket items such as bikes and cribs ahead of the holiday season. The largest U.S. toy retailer said the program is effective immediately in stores nationwide. Toys R Us CEO Gerald Storch said his company's customers were requesting a layaway program.
Target and Wal-Mart do not offer layaway. Wal-Mart discontinued the practice in 2006, except for jewelry, citing rising costs and falling demand.
TJX Cos. offers layaway in its Marshalls stores and at the T.J. Maxx location in Albuquerque.
Layaway allows shoppers to pay for an item over time, interest-free, and pick up their merchandise when it's paid in full. Often a down payment or percentage of the item is required upfront and payments must be made within certain time increments. No credit check is required of the buyer.
Layaway has its roots in the Great Depression. It became passé in the past two decades with the rise of credit cards.
But the recession and financial crisis have caused banks to raise rates, pare credit limits and close accounts. For some consumers, layaway is the best option to budget for purchases.
Retailers that don't offer layaway are seeing financially strapped shoppers keep buying smaller amounts and using more cash than credit to pay.
"It just tells you that consumers have no money — even that $30 backpack is something they can't afford," said C. Britt Beemer, chairman of America's Research group.
A record number of shoppers relied on Kmart's layaway program to pay for all of their kids' school needs, said Tom Aiello, a spokesman for Kmart's parent Sears Holdings Corp. Jean Broughton, an employee at Kmart at 9500 Montgomery Blvd. NE who works with layaway, said she saw the practice pick up around that time.
The company is also expecting to see a "record-setting" layaway season.
Items put on layaway include mostly clothing, Broughton said, and near the holidays toys are added to the list.
"It's a very convenient way of making your payment," she said.
Sears expanded its program for the holidays last year, and due to its popularity Sears and Kmart introduced an online option this year.
Burlington Coat Factory Warehouse Corp. said its layaway business is stronger than a year ago.
Leanna Baca, store manager at the Albuquerque location at 5001 Montgomery Blvd. NE, said Burlington Coat Factory has offered the program for 25 years. Last year the company expanded the time customers have to pay off a layaway item from two weeks to 60 days. Customers have 90 days to pay off Baby Depot items.
Baca said the store had to double the size of the area where layaway items are kept because of its popularity this year.
"At back to school, it was unbelievable," she said. "We're expecting it to be more (for the holidays)."
Cathy Cauley, manager of Margaret Moses Gallery at 326 San Felipe Street NW, said layaways at the store have doubled this year.
She also said that customers went from using the option for more expensive purchases in the $500 range, to using it for less expensive items in the $200 range.
"I think people want to buy artwork but they can't really justify buying all that at once," she said.
Yvonne Stokes, gallery manager at Andrews Pueblo Pottery at 303 Romero Street NW in Old Town, said she bought her first pot from the shop using layaway 20 years ago. The gallery has offered layaway for 35 years.
"It was more expensive than I expected," she said. "The terms (of layaway) were so very friendly."
She said the gallery has many customers who keep an ongoing line of goods on layaway, buying a new item and putting it on layaway as soon as the last is paid off. Layaway is used by local, out-of-state and international customers, she said.
"Our merchandise is very high-end and it's something we've always promoted," she said. "It's a good way for customers to start collecting, to get something that is more expensive than you can afford right now but can aspire to."
The Associated Press contributed to this report.
Pros of layaway
• Item can be paid for over time, allowing you to budget
• Purchase is interest-free
• There is no credit check
Cons
• Delayed gratification. You may not own the item for several months
• It adds a monthly payment to that stack of bills you receive
• You may be charged a service fee, which is usually nonrefundable
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