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Practice becomes popular again, with Kmart, Sears, Burlington Coat Factory among those offering service
By Betty Lin-Fisher
Beacon Journal business writer
Published on Sunday, Nov 16, 2008
As retailers brace for a dismal holiday buying season and consumers face the credit crunch and high food and energy prices, some retailers are turning back the clock to a simpler sales idea.
Layaway — a practice that waned in popularity as consumers had ready access to credit cards — is making a comeback.
The number of national retailers offering layaway is slim, but they are reporting brisk business. Last month, Kmart had a big advertising push to tout its layaway plan, which it never took away as other retailers stopped their programs. Burlington Coat Factory also offers layaway and starting today, Sears is bringing back layaway nationwide in time for holiday shopping.
Some TJ Maxx stores nationwide also offer layaway, though several Akron-area locations said they didn't have it.
Layaway plans are getting consumers such as Jennifer Apati of Mogadore into stores. She hasn't used layaway in 20 years but vowed not to use her credit card on holiday purchases.
''I have two kids and they want everything under the sun. Last year, I charged and I'm still paying on it,'' said Apati, who was at the Tallmadge Kmart earlier this week putting items on layaway. It was the second Kmart she had visited in
two days to use layaway. Apati said she normally doesn't shop at Kmart.
''Things are a little tighter this year,'' Apati said.
This year, she's cut back more than half on the amount she spends on her sons, 10 and 7, and will spend about $600. She's only paying cash or putting items on layaway.
''I don't want the [credit-card] payments,'' she said.
Back to the future
That's music to the ears of Jay Seaton, area president of the Consumer Credit Counseling Service.
''Given the times, it really is back to the future. There was some reason why layaway worked the way it did. I think given the times, it'll work again,'' Seaton said.
''If you put dollars aside, then you know you can get the item within a prescribed period of time and that payment doesn't extend past the holidays. You have the item, it's paid for. Done. During these times, that's comforting,'' he said.
Seaton said it is important consumers understand the rules of layaway or any other type of payment plan.
Check whether there are any items that can't be put on layaway. For instance, home electronics and appliances can't be put on layaway at Sears. Also, find out the last day to pay off your layaway in order to get it in time for the holidays or whether there are dates when you can't put something on layaway — at Kmart that date is Dec. 12.
Fees can vary
Store fees vary slightly, but in general, the customer will pay a small layaway fee of about $5 and put a percentage of the total purchase down (about 10 to 25 percent). Payments are usually set for every two weeks, but might go faster for holiday delivery. Lack of payment could void the layaway and send the items back to the store shelves. Cancellation costs a fee (about $10) in order to get a refund.
Burlington Coat Factory has been offering layaway since 1972 and has ''very active'' programs in all stores, particularly this year, Haigney said.
Some retailers are benefiting this year from the timing of layaways and the tough economy, but the National Retail Federation does not think other large retailers will be bringing the program back, spokeswoman Kathy Grannis said.
''There's costs involved in starting this back up. There's labor, operations costs and shelf room. Many retailers have found it to be more efficient to utilize staff and labor and space in other ways,'' she said.
Wal-Mart discontinued its layaway program in 2006 and has said it does not intend to bring it back, Grannis said. Target has also indicated no interest, she said.
Kmart has seen a combination of people using layaway this year. There are those on a tight budget who want to have a good Christmas and pay off the items before hand and a group of more affluent customers who want to get good prices without putting it on a credit card, said Tom Aiello, division vice president of public relations for Sears Holdings, the parent company of Kmart and Sears.
Tallmadge store packed
At the Tallmadge Kmart on South Avenue, store manager Debbie Mendat has areas with rows of clear hanging bags filled with items that are on layaway. The store had to clear out three bays in its receiving area to store more layaway items and will soon be getting trailers to store merchandise to make room inside for more.
''On the weekends, we have a constant line out to the registers,'' Mendat says of her layaway area, which is in the back of the store. ''The sheer volume has been amazing.''
Online retailers also are trying to get some of the layaway action. Online layaway sites have popped up as well as online retailers offering layaway through vendors such as http://www.elayaway.com, a payment process company.
Elayaway.com started the year with 7,500 members, now has 75,000 and is projecting more than 100,000 members by the end of this month, Senior Vice President of Business Development Michael Bilello said.
The company partners with more than 1,000 online merchants to offer layaway payments. Bilello said the company is close to announcing layaway deals with two major big-box retailers and has just launched http://elayawaysports.com to partner with a major sports franchise to offer season tickets and licensed apparel via layaway.
Bringing in buyers
The revitalization of layaway is one way for retailers to get people buying and into the stores, said Dale Lewison, a University of Akron professor of marketing who has written textbooks on retailing.
Retailers are going to pull out every sales and marketing technique they can to get customers into stores, said Lewison, who is also the director of the UA's Taylor Institute of Direct Marketing and the Suarez Applied Marketing Research Laboratories.
''You want people to respond,'' he said. ''You get them on the hook and you reel them in.''
There's also an added benefit for the retailer with layaway — repeat business, Lewison said.
Customers have to come in usually every two weeks to make their layaway payment. And retailers hope they'll grab a few more things in the store when they're there, he said.
Layaway doesn't give consumers the ''instant gratification'' of buying something and taking it home immediately, but it does offer customers who don't want to rack up credit-card debt added value.
''Now as things have tightened up and consumers are looking for multiple ways to add to their finances, it does add the extra proposition to buying,'' Lewison said.
Betty Lin-Fisher can be reached at
330-996-3724 or blinfisher@
thebeaconjournal.com.
As retailers brace for a dismal holiday buying season and consumers face the credit crunch and high food and energy prices, some retailers are turning back the clock to a simpler sales idea.
Get the full article here.
Comments
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akron, oh
Posted 09:33 AM, 11/16/2008
wow - what a novel idea! just buy what you can afford.
