Nov 5, 2008

Budget-minded shoppers rediscover layaway plansBy Andrea ChangLATimes.com

Qiana Zimmerle got an early start on her Christmas shopping last week, heading to a Kmart in Burbank where she loaded up a cart with toys, clothes and a High School Musical game.

But with money tight this year, instead of going to the checkout line, Zimmerle dropped the gifts off at the layaway counter, paid a small deposit and left the store — for now. Over the next few weeks, she’ll make regular payments on the remaining $113.18 balance and pick up the items when she’s paid it off.

“I have 12 nieces and nephews, so that’s why I have to do it this way,” said Zimmerle, 28, who lives in Eagle Rock. “It’s easier on me, money-wise.”

After pulling back on layaway programs for years, retailers are again touting the service as a financially savvy way to buy goods this holiday season. Cash-poor and credit-strapped shoppers are responding by flocking to layaway counters at stores such as Kmart, Marshalls and Burlington Coat Factory, and using online options such as ELayaway.com.

“The response has just been tremendous,” said Tom Aiello, a spokesman at Kmart, which is running a national holiday ad campaign to hype its longtime layaway service. “We know for a fact that it’s a big increase over the usage from last year.”

Retailers are hoping the availability of layaway will boost customer traffic during the coming weeks.

“The expectation on all retailers is that this is going to be an extremely tough holiday season,” said Richard Giss, a retail analyst with accounting firm Deloitte & Touche. “So they’re reaching into the old retail bag of tricks. How do you get people to spend money when they can’t afford it? You help them budget, you help them plan — that’s really what a layaway plan is at its core.”

Unlike credit cards, layaway plans usually carry no interest. Most stores require a small deposit or flat fee upfront and place some restrictions on what can be put on layaway, such as perishables and clearance items. A typical layaway term is 30 to 60 days, Giss said.

Layaway programs rose to popularity during the Great Depression and became a common form of payment for consumers who couldn’t afford to pay cash upfront. But once credit cards became widely available layaway all but disappeared, with the exception of a handful of retailers.

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