Wal-Mart brings back layaway for holiday shoppers

NEW YORK -- Wal-Mart is bringing back something its customers have been asking for since the Great Recession: layaway.

The world's largest retailer, which ditched the pay-as-you-go plans in 2006, is rolling out a holiday layaway option from Oct. 17 through Dec. 16. Wal-Mart is following rivals that brought back the service during the thick of the recession.

The move comes as Wal-Mart's mostly low-income shoppers are increasingly being squeezed by high unemployment and rising costs. It also comes as Wal-Mart Stores Inc., based in Bentonville, Ark., aims to reverse nine straight quarters of declines at its namesake U.S. stores open at least a year ---- a key measure of retailer's health.

"We're always looking for ways to ease budget strain for our customers, and we know this holiday season brings with it additional financial pressure," said Duncan MacNaughton, chief merchandising officer at Wal-Mart's U.S. division. "This was a key component that our customers asked us for."

Layaway -- an agreement that allows shoppers to pay over time, interest- free, and pick up their merchandise when it's paid in full -- became popular during the Great Depression. The practice had become largely a thing of the past as the economy flourished and consumers were feeling more confident. But when credit dried up, and the job market turned sour during the recession that began in late 2007, Sears and other merchants added back or expanded the service.

Citing increased costs and lower customer demand, Wal-Mart phased out layaway in September 2006 ---- roughly a year before the recession began ---- with the exception of fine jewelry. But the discounter faced criticism because it built its reputation on helping its low-income shoppers.

Wal-Mart said it will be able to limit costs now by limiting the layaway program to toys and electronics with a price tag of $15 or more. It also added a $5 non-refundable service fee and $10 cancellation charge for any orders not picked up by Dec. 16 or cancelled by the customer.

The program, which has a minimum layaway purchase of $50, is only available at stores and doesn't include online purchases. It also requires a 10 percent down payment. The company said if the program is successful, it may extend the layaway throughout the year.

The layaway plan is part of Wal-Mart's efforts to turnaround its struggling U.S. business. In addition to the layaway program, Wal-Mart said that starting Monday, it will launch price cuts on dozens of holiday toys to $15. The company also said that it will start offering a small samples of holiday merchandise, including outdoor décor, later this month, two weeks earlier than a year ago.

These moves are just the latest effort by Wal-Mart to revive sales. Wal-Mart has been going back to "everyday low prices" instead of focusing on pricing gimmicks like temporarily slashing prices on select items that caused some shoppers to go elsewhere. It's also finishing up restocking thousands of items it cut during an overzealous bid to clean up its stores.