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Holiday layaway season now starts in late summer

Earlier head-start lets shoppers spread payments from Labor Day through winter

By  |  Published: August 30, 2016

Holiday layaway season now starts in late summer Pamela Moore/iStock /Getty Images Plus/Getty Images

 

Holiday layaway season now starts in late summer Pamela Moore/iStock /Getty Images Plus/Getty Images

 

The final days of summer are beginning to look a lot like Christmas. Santa’s holiday layaway sleigh landed even ahead of Labor Day at some big retailers in 2016. 

Toys R Us and Babies R Us led the way, launching Christmas layaway Aug. 28. Wal-Mart kicked off its holiday layaway program Sept. 2. ​Kmart and Sears joined the shop-now/make-payments bandwagon Sept. 15. (See chart: Selected retailer layaway plans)  

Some smaller, regional retailers and even shopping services for military families, too, are getting a head start on holiday layaway. Texas supermarket chain H-E-B rolled out its program the last week of August. And at military exchanges all over world (2,500 stores in 33 countries), the $3 service fee for holiday layaway now is waived.

Why the rush? About 14 percent of consumers – 32 million Americans – have already begun their holiday shopping, and a tiny fraction – 1 percent – say they are already done, according to a 2016 scientific poll by CreditCards.com. In a separate study of early bird holiday shoppers, by the National Retail Federation, 61 percent say they start early to spread payments out longer. 

“Some shoppers take advantage of our free layaway program to stretch their budgets, secure must-have toys early or keep those big gift purchases hidden from curious little ones,” says Toys R Us spokeswoman Elizabeth Gaerlan. 

Budgeting for the holidays and spreading payments over three, four or even five months “allows families to plan for the gift-giving season throughout the fall and helps give the most epic gifts that they may not otherwise be able to give,” says Ken Bennett, director of marketing-financial services at Sears Holding Corp. 

Some shoppers take advantage of our free layaway program to stretch their budgets, secure must-have toys early or keep those big gift purchases hidden from curious little ones.

— Elizabeth Gaerlan,
Toys R Us spokeswoman

Layaway: Boom to bust to boom again
Layaway plans started in the 19th century and became popular in the 1920s as a way for customers to pay for big-ticket items such as washers and refrigerators, says Ron Hess, associate professor of marketing in the Mason School of Business at the College of William and Mary in Williamsburg, Virginia. 

Layaway plans faded in popularity over the years, but came roaring back during the recession.

“Layaway is a great way to make sure you don’t overspend,” says Mark Ellwood, author of “Bargain Fever: How to Shop in a Discounted World.” 

With layaway, shoppers can stick to a budget and spread out the pain of what would otherwise be a big payment. With plastic, “You’re likely to overspend – that’s the credit card splurge that hurts at month’s end,” Ellwood says.

“Layaway is the reverse: You feel pain every time you shell out a small amount, so you only spend what you can afford. When you receive an item … you end up enjoying it more. It’s a win-win.”  

Though the recession is over, many Americans – especially millennials who grew up in the recession – have maintained their credit-wary, frugal ways.

For budget-minded shoppers, even in Beverly Hills
Layaway’s appeal isn’t limited to low-income shoppers. At Kmart, layaway is popular across the country, including at the retailer's Beverly Hills store, a Kmart spokeswoman says.

“Layaway is returning, especially among higher-end brands,” Ellwood says. “Take Fashionphile, the elite purse reseller based in Beverly Hills and selling online nationwide. … With layaway, you can stretch that payment out, so you barely even notice it.” 

As with Fashionphile, layaway is increasingly an option whether you’re shopping from the comfort of your own couch, computer or mobile phone. And if you’re shopping in stores, you often can sign up for layaway there and make your payments online. 

With layaway at Kmart and Sears, “You can shop when and where it’s convenient for you” – in store or online, Bennett says. “No need to haul products to the layaway counter.” Kmart shoppers can use the Kmart mobile app’s Layaway & Go feature to scan products, add to a layaway list and make weekly payments.

Spreading out the costs of the holidays
The costs of layaway vary, but the plans are generally aimed at making it easier for budget-conscious shoppers to stash away a holiday haul of presents by paying over time. 

Wal-Mart, for instance, charges no service fee for layaway. The minimum layaway basket is $50 with a minimum $10 per item. The minimum down payment is $10 or 10 percent, whichever is greater, a Wal-Mart spokeswoman Molly Blakeman says.

At Kmart and Sears, layaway is offered year-round, with a no money down option available at key times of the year when shoppers may need it most, Bennett says. In spring, shoppers are gearing up for the summer’s barbecue and camping seasons. In summer, the promotion can help with back-to-school shopping. And, of course, for those early-bird holiday shoppers.

Toys R Us and Babies R Us also drop the layaway fee for holiday shopping. The rest of the year, the retailers charge a $5 service fee.

Layaway is a great way to make sure you don’t overspend.

— Mark Ellwood,
author of “Bargain Fever: How to Shop
in a Discounted World”

Layaway benefits the stores, too
While layaway benefits savvy shoppers, it’s also like a holiday present for store owners. Layaway is “an amazing way to lock in customers,” Ellwood says. “These days, there are too may shops and not enough shoppers.” 

If a store tells you that it doesn’t offer a layaway plan, ask. “I suspect most stores will find a way to accommodate partial payment plans just like a ‘Bachelor’ contestant,” he says. Many retailers are determined to win your business no matter what it takes, he adds. 

Beware, though, of online sites claiming to offer layaway programs for just about every other retailer – and even cruises. Since you’re not dealing with the specific store, you’re on your own, and oftentimes these sites steer would-be shoppers to personal loans, with a higher interest rate, instead of true layaway services. 

Spreading out the costs spreads beyond retail
Lastly, layaway isn’t just for holiday purchases now. 

For many, the holidays wouldn’t be complete without traveling to see loved ones. Now you can put airline tickets on layaway through a Chicago-based startup, Airfordable. Minimum ticket price is $200 with a service fee of 10 to 20 percent of the cost. 

Pay for your sack of gifts and your holiday travel with layaway? Sounds like something Santa, with that sleigh full of gifts and annual round-the-world travel plan, might benefit from. With layaway, he could spread the costs of the holidays over several – and now late summer – months.

SELECTED RETAILER LAYAWAY PLANS
  Wal-Mart Sears/Kmart

Toys R Us

Service fee None Cost: $5 for an eight-week contract; $10 for a 12-week contract (Sears: 12-week contract not available at all locations; Kmart: 12-week option only available in stores). The 12-week payment plan is available only for Sears in-store purchases of $400 or more and Kmart in-store purchases of $300 or more.
None
Eligible items Electronics, toys, jewelry, small appliances, select sporting goods, infant toys, large furniture, infant furniture and automotive electronics, such as speakers and stereos.
Most items Most items, except clothing, food, formula and special orders.
Online Available in stores only.
Sears: Available in store and for some online purchases. Eligible online items will be specified on the individual product pages.
Kmart: Available online and in store.
Layaway process must be started in store. Subsequent payments can be made online.
Down payment $10 or 10 percent, whichever is greater.

Sears: No money down in store. (Cost is a penny online.)
Kmart: No money down Sept. 15 to Oct. 15 and Oct. 30 to Nov. 26.

10 percent 
Minimum purchase amount Individual items must be $10 or greater; total purchases must be $50 or greater.
Not specified. None.
Pickup date Last day to pick up purchases is Dec. 12. Not available Black Friday.
Sears and Kmart: Pick up in store when purchase is completed. (With Sears, if layaway items are held off-site, customer can schedule a delivery time or pickup date.) Final payment Dec. 14. Items purchased must be picked up in store.
Payment schedule None. Shoppers can pay every day or wait until the last day to make the full payment.
Every two weeks. Payments can be made in stores or online. Payments must be made every 30 days: 40 percent within 30 days; 70 percent within 60 days; and the total price of the order must be paid within 90 days or before the end of the free layaway period Dec. 14, whichever is earlier. Payments may be made online or in stores.
Cancellation fee $10 cancellation fee in most states. Down payment and payments made will be refunded.
Sears: $15 cancellation fee for an eight-week contract; $25 for a 12-week contract, except where prohibited by law. You also forfeit service fee.
Kmart: $10 for eight-week contract; $20 for 12-week contract, and you forfeit service fee.
$10 fee.
Grace period Not applicable.
Sears: 14 days, then contract is canceled, you're charged a cancellation fee, and item is returned to stock.
Kmart: seven days, then contract is canceled, you're charged a cancellation fee, and item is returned to stock.
None. If you don't meet payment schedule, contract will be canceled and merchandise returned to stock (some variations by state).
Price protection Will match price if the price of the layaway item is lowered. Will match price of competitor's printed ads.
Customers can receive one price adjustment on advertised items within seven days of the initial layaway date. No price adjustments on clearance or holiday merchandise. Will adjust price of layaway item to match sale price within seven days of final payment.
Source: Store websites
SELECTED RETAILER LAYAWAY PLANS
Wal-Mart
Service fee None
Eligible items Electronics, toys, jewelry, small appliances, select sporting goods, infant toys, large furniture, infant furniture and automotive electronics, such as speakers and stereos.
Online Available in stores only.
Down payment $10 or 10 percent, whichever is greater.
Minimum purchase amount Individual items must be $10 or greater; total purchases must be $50 or greater.
Pickup date Last day to pick up purchases is Dec. 12. Not available Black Friday.
Payment schedule None. Shoppers can pay every day or wait until the last day to make the full payment.
Cancellation fee $10 cancellation fee in most states. Down payment and payments made will be refunded.
Grace period Not applicable.
Price protection Will match price if the price of the layaway item is lowered. Will match price of competitor's printed ads.
 
Sears/Kmart
Service fee Cost: $5 for an eight-week contract; $10 for a 12-week contract (Sears: 12-week contract not available at all locations; Kmart: 12-week option only available in stores). The 12-week payment plan is available only for Sears in-store purchases of $400 or more and Kmart in-store purchases of $300 or more.
Eligible items Most items
Online Sears: Available in store and for some online purchases. Eligible online items will be specified on the individual product pages.
Kmart:
Down payment Sears: No money down in store. (Cost is a penny online.)
Kmart: No money down Sept. 15 to Oct. 15 and Oct. 30 to Nov. 26.

Minimum purchase amount Not specified.
Pickup date Sears: 14 days, then contract is canceled, you're charged a cancellation fee, and item is returned to stock.
Kmart: seven days, then contract is canceled, you're charged a cancellation fee, and item is returned to stock.
Payment schedule Every two weeks. Payments can be made in stores or online.
Cancellation fee Sears: $15 cancellation fee for an eight-week contract; $25 for a 12-week contract, except where prohibited by law. You also forfeit service fee.
Kmart: $10 for eight-week contract; $20 for 12-week contract, and you forfeit service fee.
Grace period Grace period is seven days, then contract is canceled, you're charged a cancellation fee, and item is returned to stock.
Price protection Customers can receive one price adjustment on advertised items within seven days of the initial layaway date. No price adjustments on clearance or holiday merchandise.
 

Toys R Us

Service fee None
Eligible items Most items, except clothing, food, formula and special orders.
Online Layaway process must be started in store. Subsequent payments can be made online.
Down payment 10 percent 
Minimum purchase amount None.
Pickup date Final payment Dec. 14. Items purchased must be picked up in store.
Payment schedule Payments must be made every 30 days: 40 percent within 30 days; 70 percent within 60 days; and the total price of the order must be paid within 90 days or before the end of the free layaway period Dec. 14, whichever is earlier. Payments may be made online or in stores.
Cancellation fee $10 fee.
Grace period None. If you don't meet payment schedule, contract will be canceled and merchandise returned to stock (some variations by state).
Price protection Will adjust price of layaway item to match sale price within seven days of final payment.
Source: Store websites

See related: 10 questions to ask about layaway plans, Vacay layaway: Pay now, enjoy later plans spread to vacations

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Updated: 05-25-2017

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