Layaway, a payment practice that was made popular during the Great Depression but nearly became extinct due to the instant gratification of credit cards, is back in fashion thanks to the credit crunch.
Only a handful of national retailers still let consumers put purchases aside until they have paid for them in full. Many of those companies — which include TJ Maxx and Marshalls; Burlington Coat Factory Warehouse Corp.; and Kmart, — report that demand for layaway is stronger than it has been in years.
With credit-card companies tightening limits and offering fewer specialty card promotions amid the continuing credit crisis, many consumers may not be able to tap credit cards as much this holiday season, experts predict. Meanwhile, retailers report that many customers spooked by the slumping economy are either already saddled with debt or determined not to be, all of which is making layaway are more enticing option.
Demand has surged so much at Kmart, in fact, that the discount retailer decided to tout its commitment to layaway as the centerpiece of a national advertising campaign.
Several layaway Web sites sprung up earlier this decade to fill the void left after Wal-Mart Stores Inc. and other major retailers discontinued the seemingly outmoded service — and they are also reporting a big bump in business. ELayaway.com, which offers iPods, Hewlett-Packard laptops and clothes from the Gap on virtual layaway for a 1.9% fee of the cost of the item plus taxes, said traffic has increased 91% over last year. Customers can choose eLayaway as a payment option on affiliated Web sites or can shop at eLayaway.com, and receive the item in the mail once the payments are made in full.
Many of the site’s customers are victims of the subprime-mortgage mess or simply have bad credit, said Michael Bilello, eLayaway’s senior vice president of business development. He said that five major big-box retailers had contacted the company in recent weeks about adding an eLayaway payment option to their Web sites or putting eLayaway kiosks in stores.
Photo by eLayaway LLC.
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