Layaway eclipses credit on buying school supplies
Aug 25 2009
Retail Wrap >>

To gauge US consumers’ strain, look no farther than the rows and rows of plastic bags awaiting layaway payments at Kmart. They are filled with back-to-school basics — not just T-shirts and jeans, but notebooks, Magic Markers and pencils. A record number of shoppers, shut off from credit and short on cash, are relying on Kmart’s layaway program to pay for all of their kids’ school needs, said Tom Aiello, a spokesman for Kmart’s parent, Sears Holdings Corp.

Layaway allows shoppers to pay over time, interest-free, and pick up their merchandise when it’s paid in full.

“It’s a sight. In the past, we would see layaway start to pick up around Halloween” as people get a jump-start for Christmas, said David Travis, manager of a Kmart in Conover, N.C.

Burlington Coat Factory Warehouse Corp. said its layaway business is stronger than a year ago.

And e-Layaway.com, which offers online layaway services for about 1,000 merchants, has seen its business double from the same time last year.

The word “layaway” had more than double the interest among U.S. searchers this month than it had in August 2008, according to Google Insights for Search.

Retailers that don’t offer layaway are seeing financially strapped shoppers keep buying smaller amounts and using more cash than credit to pay.

Layaway has its roots in the Great Depression. It became passe in the past two decades with the rise of credit cards. But the recession and financial crisis have caused banks to raise rates, pare credit limits and close accounts. For some consumers, layaway is the best option to budget for purchases.

Adapted from source: www.nhregister.com, 25 August 2009