A Holiday Season Retail Classic is Back... LAYAWAYS!

Submitted by SadInAmerica on Wed, 12/10/2008 - 5:33pm.

For many families, it's long been a shopping mainstay. Put $10, $20 or $50 down on that new dress, winter coats for the kids or a crib for the baby. Make regular small payments, then pick up the merchandise in 30 to 90 days. But in recent decades, layaways got shelved by many retailers as consumers increasingly were only too happy to plunk down the plastic.

This year, in an economy battered by layoffs, bankruptcies and a stubborn credit crunch, some high-profile retailers are reaching out to cash-strapped customers by reviving the old standby.

"Layaway is very big for us," said Mike Meade, manager of the Sacramento Kmart on Stockton Boulevard, where layaway transactions helped boost holiday sales this year.

On Black Friday, when business was up 20 percent over a year ago, layaway transactions accounted for 10 percent of the Stockton Boulevard store's sales, Meade said.

Sears, which dusted off its holiday layaway program in mid-November after a 20-year hiatus, is among U.S. retailers that are touting layaway plans in a big way.

"It's a good move for retailers in response to the pain consumers are feeling from everything that's going on in the economy," said Mike Romano, executive vice president of Irvine-based retail industry tracker SmartReply. "It's a case of 'what goes around, comes around.' "

Sacramentan Rochelle Kemp, a self-described "layaway queen," agrees, saying the policy is tailor-made for a rough economy.

"We're in a recession. People don't have a lot of money, so they're trying to get the best deal they can," said the retired electronics technician, while waiting in line Friday at a Dressbarn in Natomas.

At the women's clothing shop, layaway transactions are about 20 percent of the store's business, said store manager Dalia Pryce-Mickens. Another Dressbarn shopper, Lynn Adams of Sacramento, said she was glad the policy is making a comeback. The mother of three adults, Adams said she relied on layaway for buying her kids' clothes while they were growing up.

"When the kids were small, we used layaway plans all the time," she said. "Layaways make people more aware of what they're spending."

Layaways have also reached cyberspace. Companies like eLayaway.com, a Tallahassee, Fla.-based Web site, offer online layaway plans for merchandise from more than 280 merchants, ranging from Adidas and Apple Computer to Callaway Golf and Home Depot.

Billing itself as "the smart way to plan and pay," eLayaway.com acts as a broker, setting up shoppers with three- to 13-month payment schedules. Layaway payments are automatically deducted from a shopper's bank account; the buyer's merchandise is shipped once the items are paid off.

After years of dormancy, layaway's return has caught the attention of retail watchers.

Scott Krugman, a vice president for the Washington, D.C.-based National Retail Federation, said in tough economic times, it's a way for retailers to aggressively go after increased sales.

"It's a smart idea to announce programs like that now. When you're competing on price, how do you stand out?" Krugman said.

Heading into 2009, he said, "Retailers will look at the economy ... you might see more programs like this."

Although Krugman had no hard data on layaway traffic, he said next year the federation might start tracking those purchases.

Some large retailers, such as Target and Wal-Mart, have not signaled any intention of reviving their layaway payment plans, which were reportedly abandoned due to administrative costs and lack of consumer demand. But those who've stuck with it, like Burlington Coat Factory, a retailer with two Sacramento-area stores, are reaping the benefits.

"We've always had layaway. We felt it was something our customers enjoyed," said Burlington vice president Robert LaPenta, speaking from the retailer's New Jersey headquarters.

Burlington officials said layaways represented 5.3 percent of the company's total sales in August - the most recent figures available, representing a 15 percent increase over the same month a year ago.

Though LaPenta did not offer specifics ahead of a soon-to-be-released quarterly sales report, he said the trend has gathered steam during the holidays. "We've seen an increase in layaway sales. There's been a popularity with customers because of a tightening of credit," he said.

Layaway plans can benefit consumers because of shorter terms for payments. But, as with any type of credit payment plan, consumers need to do their homework, said Karen Metoyer of ByDesign Financial Services in North Highlands.

"They need to think about it before doing a layaway plan," Metoyer said. "It can offer an excuse to spend more money than you planned because you're not paying (the entire) lump sum."

Some of Metoyer's tips:

"¢ Stick to your shopping list. Stay within the spending limits you've budgeted.

"¢ Check the retailer's layaway policy. Does the store charge interest? What are the minimum and maximum payments? How long can you leave items without a payment?

"¢ Does the layaway plan fit your budget?

"¢ Can you get a refund? What happens if you decide you don't want the merchandise after all?

"This is all stuff that you have to consider before taking a plan," Metoyer said.

With four children ranging from toddler to pre-teen, Aliaya ParkerWright of Sacramento says layaway is a must. She recently stocked up on winter clothes - rain jackets, coats and boots - for her kids at a Sacramento Burlington store, putting about $110 down on a $480 purchase.

A state employee whose paydays are once a month, she said layaway gives her pocketbook some breathing room.

"Layaway is a blessing to those who don't have the money right then and there. It takes some of the sting out of having to pay for everything all at once," ParkerWright said. "And in this economy," she added, "if I'm a retailer, I'd want people in my store whether they're layaway customers or not, because they're shopping."

Darrell Smith - December 8, 2008 - source Sacbee

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Submitted by SadInAmerica on Wed, 12/10/2008 - 5:33pm.