Stores vie for customers with layaway programs

Fall is still weeks away — but don’t tell major retailers, many of which will kick into holiday season mode with Labor Day now past.

Despite Christmas being a little less than four months away, it’s not uncommon for retailers to begin hiring for the holiday rush and decorating their stores with ornaments as early as mid-September, National Retail Federation senior director of media relations Kathy Grannis said.

The head start is to capitalize on early shoppers. About 40 percent of consumers begin holiday shopping before Halloween, Grannis said.

As those shoppers began their treks, one popular option will be layaway programs.

“Layaway has always been for the consumer benefit,” Grannis said. “Some retailers, over time, ended up getting rid of it because it didn’t fit their customers. … But the recession has changed how consumers have changed their budgets, so a few retailers in recent years ended up bringing back their layaway programs.”

One such retailer is Wal-Mart Stores, which ditched its layaway plan in September 2006 before bringing it back for the 2011 holiday season. Wal-Mart’s upcoming holiday layaway program is penciled to start Sept. 13 and end Dec. 13.

Kmart and Sears have offered a year-round layaway policy for more than four decades.

However, layaway isn’t for everybody.

“It’s beneficial for a certain subset of consumers, but most consumers wouldn’t think of using a layaway plan and probably have no idea which stores offer it,” said Edgar Dworsky, founder of Consumerworld.org, a consumer advocacy site. “It’s mostly for people on a tight budget or people who don’t have credit or have bad credit.”

Other major retailers with layaway programs include Toys R Us, TJ Maxx, Best Buy, Marshall’s.

But Dworsky has a stern warning for consumers thinking of shopping through layaway — do your research beforehand.

“In terms of protecting yourself as a consumer, you have to know what the rules of the game are,” he said. “How much do you have to put down? Is there a fee to start? Is there a cancellation fee? What’s the deadline for paying?”

Wal-Mart recently announced earlier that it’s dumping its $5 entry fee for its pay-over-time program but is reimplementing a $10 cancellation fee this holiday season.

Initiation fees on layaway contracts at Kmart and Toys R Us both run at $5 with a $10 cancellation fee.

Moreover, not all merchandise is layaway-eligible from store to store. At Kmart, unauthorized items include personal computers, cellphones, portrait studio pictures, among others. Retailers have varying policy on online purchases, too.

Other questions to consider: Is a down payment required? Is there a minimum purchase limit? And how often must you pay?

The resurgence of layaway programs paired with a recovering economy has redefined which shoppers use layaway.

“I think the stigma of layaway shoppers has subsided,” Grannis said. “Layaway is no longer just for low-income consumers. What we’ve seen is for families looking to stay on a budget and people in general trying to stay away from credit, is layaway is a great option for them.”