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article imageLayaway options offered to consumers makes a big comeback in 2011

By Leigh Goessl     Oct 4, 2011 in Business
Years ago as the holiday shopping season approached, consumers flocked to their favorite retailers to put their gift choices on layaway before item were sold out.
Getting in on the shopping action early with a down payment ensured the item(s) of desire would be available, and already paid for, in time for Christmas. No hefty credit bill to look forward to in January. Layaway programs allowed time to budget the money needed to pay for the selected gift items and had been in practice for decades.
However, over the years, as credit cards grew to become the more preferable payment option to a large percentage of consumers, many retailers dropped the once popular layaway programs. After all, why continue? Consumers had steadily moved away from paying in cash and didn't utilize layaway programs like they had in the past. With a plethora of credit options available, no cash needed, many consumers figured they would just pay their banks later.
Fast-forward to the last few years, and society finds itself in a financial crisis. Through these rocky economic times many consumers realized they needed to rethink their spending habits and, as a result, people began to scale back on credit based purchases in order to avoid accumulating too much debt and retail sales declined.
Reenter layaway programs.
Many retailers have been gradually reintroducing the once popular layaway program. Big names such as Toys 'R Us, Walmart and Sears are once again actively promoting and offering this service to their customers. For a nominal fee consumers can make their purchases without worrying they'll overspend and incur massive interest charges after the holidays.
In 2008 Sears began to heavily market and promote their layaway option (Sears' holding company Kmart has always offered an active layaway program) and this has proved to be successful in boosting sales.
The Sun-Sentinel reported in Sept., Salima Yala, Sears Holdings Company spokesman said,
"People are going through hard times during this recession and some no longer have the option to use credit," adding, "There are no finance charges and customers have the ability to pace themselves and teach themselves financial responsibility without major penalties."
Yala indicated the quantity of layaway sales have more doubled since Sears' reboot according to The Sun-Sentinel.
CNBC reported,Toys 'R Us brought back layaway for "big ticket" items in 2009, but for the 2011 holiday shopping season is expanding their layaway program and lowering the fee charged for the service of layaway. Even online shoppers will have the chance to take advantage of a virtual form of layaway. Toys 'R Us will offer customers a "bill me later" option for a limited period of time.
Retail giant Walmart decided to bring back their layaway program for the 2011 holiday shopping season; the company had axed their program back in 2006 because it had become obscure.
Despite this recent surge in layaway this year, not all retailers are keen on adding layaway programs at this time. For instance, Kohl's offers their customers a three day hold, but has no layaway program.
Although Kohl's offers such steep discounts for customers that shop with their store credit card through routine percentage off coupons and their regular promotional program, 'Kohl's bucks'. Customers might find these credit-centric discounted options more attractive than paying on layaway for full price if cash is used.
Toys 'R Us layaway program kicks off on Oct. 15; Walmart's on Oct. 17. Fees and restrictions on types of layaway purchases will vary depending on the retailer. Sears and Kmart had launched their program this week with "National Layaway Week" which runs Oct. 3 through Oct. 7.
More about Retail, Holiday shopping, Christmas shopping, layaway programs
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