A payment method that became passe in the 1980s is being promoted again this holiday season as a way for budget-conscious shoppers to buy gifts without breaking the bank.
Layaway – the practice that allows people to pay for everything from tools to televisions bit by bit before taking their items home – is back in advertisements for the first time in years for discount chain Kmart.
In a national campaign launched last week, the ads proclaim “beat the rush and pay the easy way with Kmart layaway.”
They mark the first time many shoppers have even heard the phrase, even though the chain has offered the option for decades.
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“In the backdrop of this economy, it all of a sudden has a great deal of relevance,” said Tom Aiello, a spokesman for the Hoffman Estates-based subsidiary of Sears Holdings Corp.
Discounter Burlington Coat Factory Warehouse Corp. – one of the few remaining national chains offering the option – saw its percentage of layaway sales grow from 4.6 percent in August to 5.3 percent last month.
But experts say the practice likely won't make a full-fledged return to stores any time soon. The practice accounts for a fraction of overall sales and has been a dwindling segment
“Consumers would much rather have the merchandise with them and make payments on it while they own it, instead of having something sit at the store that they can't have right away,” said Kathy Grannis, a spokeswoman for the National Retail Federation.
Layaway, which has its roots in the Great Depression, was largely eclipsed in the past two decades as economic prosperity grew and consumers began lining their wallets with credit cards.
George Rosenbaum, chairman of retail consulting firm Leo J. Shapiro and Associates, said retailers that offer layaway may find themselves with a jump on the competition during the make-or-break fourth quarter, which is already generating dismal predictions.
That's because shoppers who buy items on layaway make the initial purchase weeks before they take goods home, locking sales statistics in early.
But Michael Dart, a retail strategist and leader of private equity practice for consulting firm Kurt Salmon Associates, said some shoppers might instead bank on the idea that deep discounts will be available closer to Christmas.
Emily Fredrix in Milwaukee contributed to this report.