The National Retail Federation is forecasting a $465 billion in sales this holiday season. That’s a 2.8% increase over last year. Economists suggest that shoppers are not only spending more, but spending wisely.
One reason for the optimism is the return of the idea of layaway at major retailers. Putting items on layaway is a form of payment that dates back to the great depression when shoppers couldn’t afford to pay for an entire item and credit cards weren’t available yet. Now it’s making a comeback.
“Now with the economy getting worse, more and more consumers are becoming more savvy,” said Steve Bernas, the President and CEO of the Better Business Bureau of Chicago and Northern Illinois. “They don’t want to spend their hard-earned money on interest rates or putting it on credit.”
Shoppers make a down payment on their products plus typically pay a one time fee. The customer then pays the remainder off in weekly payments and the merchant holds the items until paid off in full.
One customer who’s taking advantage of that plan for the first time is a Bolingbrook mom who’s buying her electronics for her kids.
“Instead of Barbies and Legos, they want Nintendos that are $200 and I have an older one who’s off to college so any way to stick to my budget is the best,” Alisa Galosozis.
Layaway has been a big part of KMart’s brand over the last 45 years.
The Naperville store discontinued its layaway service about 10 years ago but this season, they’re bringing it back.
“We have a $5 layaway fee and then there’s a $10 cancellation fee, which doesn’t happen that often because what you’ll find is when a layaway customer is shopping, she has a budget and she wants to financially manage her money wisely,” said Shelly schwartz, the store’s General Manager.
Bernas says paying in cash increments protects a shopper’s budget by avoiding interest rates chared by credit card companies, often as high as 30%. But there are some drawbacks.
“One of the downsides is you can’t get those sales prices when they change,” he said. “Most retailers as it gets closer to Christmas, start doing the deep discounts to get you into their store. Unfortunately the day you do layaway is the price you pay.
Wal-Mart is following suit, offering layaway just for the holidays on electronics, toys, and jewelry at all locations. Bernas says once the economy improves, layaway may start to recede again. For now, customers are finding it useful for their seasonal spending.
Other stores offering lay-away include tj max, sears, and toys ‘r us.
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