Thread: Just what the economy ordered: layaway

Just what the economy ordered: layaway
By Mark Albright, Times Staff Writer

Published Monday, October 27, 2008 9:44 PM


Experts who sounded the death knell for layaway were too quick with the eulogies.

The slumping economy has prodded many merchants for the first time in years to promote this form of installment buying, which dates from the Great Depression. Anecdotal evidence suggests layaway is gaining traction with tapped-out consumers.

Wal-Mart stopped taking layaway orders in 2006, citing an era of easy credit and the headaches of handling the goods. Well, guess what? Consumer credit is getting tighter at a time when rising joblessness, foreclosures and prices make it harder to pay off credit card debt.

"The American consumer didn't vote to end layaway, only retailers," said Michael Bilello, vice president of business development for eLayway.com, a three-year-old Tallahassee startup that handles layaway for 1,000 retailers and wants to be the PayPal of a revived industry. "People this year are wising up to their parents' advice: If you can't pay in full, try layaway."

Since stepping up promotion this fall, the site's weekly registration leaped from 150 to 7,000 people.

The few chains still offering layaway get less than 5 percent of their business that way. But this year, finding ways to coax frugal shoppers to spend early for the holiday has taken on a sense of urgency.

Wal-Mart won't be offering layaway this season, but stores like T.J. Maxx, Marshalls and Burlington Coat Factory remind shoppers about their installment buying plans in signs and at checkout. The TV shopping networks tout their own form of layaway pricing like Flex-Pay at HSN, which breaks a big purchase into two or three payments. For the first time in decades, Kmart is promoting layaway in TV ads.

"We've had more customers use layaway this season, and they started much earlier," said Carolyn Kestner, an assistant store manager at Burlington Coat Factory in Seminole, which usually holds holiday purchases in a stockroom for about 500 families. "We expect to be slammed with layaway this year."

Layaway is not as easy as putting something on a credit card. But it can be a deal for those whittling a card balance larded with 22 percent interest.

Most stores want a $5 service fee up front, then break the purchase into three or four monthly payments. You can't take the item home until the last payment. Cancel and you get back what you paid — less fees. Usually you would be out $10 on a $100 transaction.

The eLayaway site charges a 1.9 percent transaction fee and handles installment payment terms through HSBC for everything from two-months on toys to two years for plastic surgery. Cancellation: about $25.

Layaway is a big strategy for other types of chains. Pawnshops get about half their revenue from high-interest, short-term loans for which customers put up goods as collateral. The other half comes from selling goods that are forfeited when someone cannot repay a loan. Layaway represents about 40 percent of those retail sales.

"People mistakenly think pawnshops do well in a bad economy," said Joe Thedford, chief executive of Orlando-based Value Pawn & Jewelry, which has 15 outlets in the bay area. "If our customers — people like construction workers and nurses — are struggling to pay us back, it's rough for us, too. But layaway definitely is helping us through this difficult time."

Layaway sales at his 65-store chain soared 20 percent over 2007. Forfeitures rose 5 percent.

Bargain hunters check in daily for deals on jewelry, HDTVs, video game controllers, musical instruments and power tools.

"When gas hit $4, we had people pawn watches for gas just to get to work until they could buy them back on payday," said Chris Sebastian, manager of a Brandon Value Pawn that is headed for $3-million in revenues this year, almost $700,000 of it layway. "This is our best year for layaway ever."

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

http://www.tampabay.com/news/busines...icle877011.ece

Layaway can be a good way for a retailer to stock examples of their product line. A floor model would other wise need to be financedby the store. As long as the customer has it on a payment plan it can be pointed to for future customers

BTW The thread is off topic

Absolutely nothing wrong with layaway With four kids to shop for, I have NEVER been too proud to use it.....not even before my husband became ill and could no longer work leaving us in our current financial situation.

I don't know why, but I just could never bring myself to spend that kind of money, even when we had it, all at one time and just always preferred to pay for it a little at a time every two weeks when the paycheck came in.

But this just goes to show that people and businesses WILL adjust to the economic crisis and they don't need government telling them how to do it. We will all just find a different way because we HAVE to.

Originally Posted by Richard

Layaway can be a good way for a retailer to stock examples of their product line. A floor model would other wise need to be financedby the store. As long as the customer has it on a payment plan it can be pointed to for future customers

BTW The thread is off topic

LOL....I'm sure one of the mods will wave their magic wand and it will reappear under the appropriate topic.

Heck I couldn't have managed without lay-away when my kids were young. I was ticked when so many started cancelling it. When people get paid every 2 weeks instead of weekly, you miss out on alot and can't always afford the whole lot at one time.

Layaway is a heck of a lot better than putting your purchases on a credit card with an 18% interest rate( or higher) and then carrying that balance! I have never used layaway, so i'm going to assume the majority of the layaway installment payments are made in cash. That's generally not a bad thing!

In addition, it provides an opportunity for those who do not have credit to make purchases they may need as a family.

Nothing wrong there!

so i'm going to assume the majority of the layaway installment payments are made in cash. That's generally not a bad thing!

It's a mix. Sometimes people come in and find something they want for sure, but have to wait till pay-day and can have it held in lay away without risking someone else buying it. At Christmas time it's alot easier to have the store hold your bundle of goodies from prying eyes a little longer. I was amazed people actually charged lay-a-way payments.........but they do.

It got to be a scam though......I mean for the business. People would put stuff on lay-away and wait for the item to go on sale and some would adjust your items while others would make you pay full price, then the people would return it and the buy it back right away at the sale price. Until they tighten up those loopholes it's alot of money lost for the store. I know where I worked it was like 3-4 months you could have your stuff on lay-away and everything goes on sale sometime during that period. I mean I could understand 2 wks, or even a month......but to have it all up for sale prices during that span was really cutting into any profits.