Wal-Mart Ends Layaway Service
Decision Follows Shopping Trend of Buy Now, Pay Later

By Ylan Q. Mui
Washington Post Staff Writer
Friday, September 15, 2006

Wal-Mart Stores Inc., which built an empire serving low-income customers, said yesterday that it was phasing out layaway, the plan that allowed generations of shoppers to put a purchase on hold until they could afford it.

Though Wal-Mart is not the last retailer to offer the service, it is the largest. And its decision is another reminder that living within your means is becoming an outdated concept in today's buy-now-pay-later culture.

"Layaway at Wal-Mart was something that they did as a courtesy to the customers," said Daniel Butler, vice president of merchandising and retail operations at the National Retail Federation, an industry trade group. "The layaway process has really become very obsolete."

Wal-Mart said demand for the service has dropped off, as consumers increasingly rely on credit cards and gift cards to pay for purchases. The idea of waiting to complete a purchase is no longer attractive. Wal-Mart said shoppers will have until Nov. 19 to put items on layaway and must pick them up by Dec. 8.

"It's really a matter of people turning to different types of payment options, and people wanting to take it home today," said Linda Blakley, a Wal-Mart spokeswoman.

Blakley said that none of the two dozen stores the retailer opened in August had layaway departments, and that business was not affected.

Several retail chains still offer layaway plans. Mid-price department store Boscov's Inc., a regional chain based in Reading, Pa., offers a 30-day plan for apparel and a 60-day plan for all other merchandise. Customers must put down 10 percent of the price, with a $5 minimum.

"We're pretty lenient with it," said Justin Horst, an assistant store manager. "If someone's continuing to make payments with it, even if they go beyond their 30 or 60 days, if it's an active account, it's pretty much okay with us."

Horst said that the program is especially attractive to older shoppers and that he gets questions about it daily.

Sears, Roebuck and Co. and Kmart, both subsidiaries of Sears Holdings Corp., also offer layaway programs. Kmart's eight-week plan comes with a $5 fee and requires shoppers to pay a 10 percent deposit with a $5 minimum. Sears's plan applies only to fine jewelry and big-ticket promotional items such as TVs, washers and dryers; it extends up to 90 days.

Circuit City Stores Inc. discontinued its layaway program two years ago due to lack of customer demand, a spokeswoman said. Best Buy Co. also does not have a layaway plan, nor does Target Corp.

"It is something that really for most retailers had gone away a long, long time ago," Butler said. "It's even surprising to me that the companies you name still have it."

Layaway started after the Great Depression as a way to help customers buy the products they needed -- and to help businesses move their merchandise, he said. But as credit became increasingly accessible and goods became more plentiful, layaway fell by the wayside.

Tod Marks, senior editor at Consumer Reports, said layaway was a boon to shoppers.

"Instead of instant gratification, [layaway plans] basically force you to save toward something," he said. "In our gotta-have-it-now society, we've moved away from that."

Instead, companies have moved toward credit card incentives to encourage shoppers to spend.

"Our complete mind-set about the purchase and acquisition of products has changed," Marks said.

Those inducements include offers to buy now and delay interest and payment until months later-- in other words, the opposite of layaway plans. Wal-Mart has a similar offer and in addition has instituted a $20 cash-back incentive for those who spend at least $100 on a new Wal-Mart or Discover card when they open the account at the store.

Butler said the end of layaway at Wal-Mart is unlikely to affect sales. Blakley said that she did not know how many customers used the program but that the number had been steadily shrinking.

"It has not been a major line of business for any retailer that even still does it," Butler said.

But layaway is not dead yet. Three years ago, Rob Holland started Lay-Away.com after realizing that he didn't have the money to buy a computer during college. Today he manages the site full-time from his home in Chicago, selling everything from appliances to electronics.

"I used to be the same customer that most of my customers are today: low income, horrible credit," he said. "We're a viable alternative to those customers."

And now, Holland added, his company might just pick up a few Wal-Mart shoppers.

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