The long lost retail art of using layaway instead of credit is making a comeback. A layaway program benefits consumers because it allows them to make payments in installments without incurring interest charges. Retailers are able to capture the sale and they don't have to release the item until it has been paid for. Therefore, consumers can reserve products early in the Holiday season, setup a payment program, and have the item paid in full by the time Christmas rolls around.
Because of the ease in obtaining credit and the associated purchase rewards, layaway programs had been viewed as archaic until recently. K-Mart reintroduced the concept last month based on customer feedback. Other retailers are reporting spikes in their layaway programs as well. WalMart abandoned their layaway program two years ago and doesn’t have plans to bring back, given the recent surge in interest. Retailers also report that an advantage of layaway programs is that they bring customers back into their stores.
With the recent credit crunch and consumers feeling cash strapped, it makes sense that layaway programs are becoming more popular. Oprah captured current conditions best: “Remember Layaway? That is where we are heading.”
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