In sour economy, layaway shopping may be good option

Nov 27, 2008 (Leader-Telegram - McClatchy-Tribune Information Services via COMTEX) -- SHLD | Quote | Chart | News | PowerRating -- A soft national economy and tightening credit standards have fueled the return of a valuable tool for consumers: layaway.

Area retailers that make layaway available for customers include Kmart and Sears, which both operate under the Sears Holdings Corp. umbrella.

Layaway is a payment plan in which a buyer reserves merchandise by placing a deposit with the retailer until the balance is paid in full. The merchandise then can be picked up.

Sears instituted its layaway policy Nov. 16. Some categories, such as consumables, gift cards and automotive, are excluded, and the policy does not affect an already existing fine jewelry layaway program. There are fees to participate and down payments must be $15 or 20 percent of the purchase, whichever is greater.

There's a lot to like about layaway purchases such as the absence of interest charges. A side benefit is you don't have to worry about snoopers finding their gifts early.

Most stores that offer layaway require a small down payment and an initial fee. Some have a cancellation fee. There often are restrictions, like no beer or wine, perishables or plants. Some stores won't let you put some things on layaway after a certain date; for example, pricey electronics or obvious Christmas items.

Sears has a list of things you can't put on layaway and requires all items be picked up by Dec. 23. It won't accept any new layaways after Dec. 22.

Kmart recently began promoting its existing layaway program, which allows many purchases to be made over an eight-week period. Participating stores include the chain's locations in Eau Claire, Chippewa Falls and Menomonie. The move already has paid dividends.

"We're the only major discount retailer offering it," said Harvey Reckard, who manages Kmart in Eau Claire. "[Layaway sales] have significantly increased for us from last year."

Kathy Grannis, a spokeswoman for the National Retail Federation, told The Associated Press that layaway accounts for just a small fraction of overall retail transactions and doubts other large chains will add the option anytime soon.

"But with economic conditions the way they are," she said, "it really is going to be creativity and heavy discounts and unique promotions that get consumers into stores."

Others offering the service include T.J. Maxx, Marshalls and Burlington Coat Factory.

Some locally operated retailers have less formal layaway programs.

"We work with our customers who need to have products put on layaway on a case-by-case situation," said Chuck Olson, who manages FS Appliance-TV-Audio in Eau Claire. "We usually have money down and will hold the product depending on the length of time the customer needs, [but] we do not have a set policy.

"If our customer is building a house, they might need the appliances and TVs they picked out for three to four months down the road. It can really vary."

Though it's early in the holiday shopping season, Reckard said televisions have been a big seller for Kmart, at least in part because of the upcoming switch from analog to digital signals. As far as toys, he said longtime favorites such as games and Legos have been popular.

Reckard also said the season may not prove as gloomy as some have predicted, at least in the Chippewa Valley.

"You have had some significant closings like Linens 'n Things," he said. "But we haven't gotten hit nearly as bad as some other areas."

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