Business prognosticators once said that layaway would go the way of the dinosaur. The concept would be archaic and essentially extinct, as credit cards overtook layaway plans. Although many stores dropped their layaway policies for much of the late 20th and early 21st centuries when business was booming and credit was easy to secure, layaway has since made a comeback.
Many stores have resuscitated their layaway programs in recent years. Spurred on by the poor economic climate and consumer desire to avoid post-holiday debt, layaway is gaining in popularity. Polling through Frugal Living shows that of the nearly 5,000 respondents, 87 percent, plan to use layaway this year.
The growing number of stores that are offering layaway signals how layaway has come back. Babies R Us, Toys R Us, Wal-Mart, Kmart, Burlington Coat Factory, Hallmark, Marshall's, TJ Maxx and Sears are some of the well-known retailers now offering layaway.
Paying incrementally enables many shoppers to afford higher-quality items. Furniture, appliances or jewelry can be put on layaway and shoppers won't have to accrue any debt.
While buyers are able to enter stores and shop for exactly what they want, retailers benefit by increased profits on higher-end merchandise. Because there are penalties in place if a person defaults on their layaway order, and since merchandise is not leaving the store before it is paid for, there is a very low risk assumed by stores who offer layaway.
DISAPPEARING LAYAWAY FEES
Increased competition for layaway shoppers has led many retailers to remove traditional layaway fees. Stores may waive deposits on layaway accounts, making layaway even more attractive.
NO RISK FOR CREDIT CARD DEBT
Once the balance on a layaway account is paid in full, the merchandise can be taken out of the store. Unlike shoppers who pay for items with a credit card and get stuck paying down that holiday debt for months and years to come, consumers who choose layaway are debt-free once the account has been paid in full. Although layaway isn't risk-free, any fees tacked on to the account for failure to pay are likely to be less expensive than fees and penalties implemented by credit card companies.
LAYAWAY ATTRACTS SHOPPERS
Stores looking to increase foot traffic may want to consider instituting a layaway option. Layaway requires a shopper to make several trips to a store, and each of these trips presents the opportunity for a retailer to offer new merchandise or deals for shoppers, who may be inclined to increase their layaway tallies.
A LESSON FOR ADULTS AND CHILDREN
In a world where buy now, pay later has become the norm instead of the exception, layaway reinforces the fiscally responsible trend of getting only what you can pay for. Taking children along to make layaway payments can teach them the concepts of budgeting and living within your financial means.
Layaway has re-emerged as a sensible way to pay for holiday gifts and other big-ticket items without being racked with post-holiday debt.