Layaway is back! Can Christmas savings clubs be far behind?

Credit cards allow you to buy things before you have the money. Layaway allows you to put them on hold until you have the money.

With the old-fashioned savings clubs, shoppers put money aside throughout the year, then withdrew it in time to do their holiday shopping with cash, when they had the money. Imagine!

I’m not sure when the old holiday savings clubs faded away, or whether any local banks still operate them. But as the two items below illustrate, they were active in the 1950s  and 1930s.

The first item is a bank ad published in the New Era on Nov. 21, 1958. Below that, is a New Era article from Dec. 5, 1933. And, at the bottom, I’ve posted a link to today’s New Era story on the return of layaway as a shopping strategy that avoids using credit.

From 1958:

And, from 1933:

 And from today’s New Era:

Layaway makes a comeback in 2008

By TIM MEKEEL
New Era Staff Writer

Layaway, that old-fashioned way of gradually buying merchandise, is back in style.

Retailers here and nationwide say the feeble economy is making the retro shopping method popular again, as the holiday season hits its stride.

“We’re not shocked, because of the economy,” said Gary Olsen, human resources manager at Kmart’s East Towne Mall store.

“It’s the smart way to do it.”

Olsen said the store’s layaway department “is very, very busy. People started using it a lot earlier this year.”

Veena Madison started her first layaway in mid-October at the Kmart in Columbia. She now has three, for Christmas gifts for each of her three children.

“A lot of the time, you don’t have the money to buy what you want, when you want to buy it,” said Madison, 44, who lives in Columbia and manages the Little Caesars pizza restaurant in the Columbia Kmart. “Layaway is convenient. You make payments every two weeks, then you pick it up.

“I love it.”

Layaway became passe in recent years, as people used easy credit to put more purchases on credit cards — and take the items home immediately.

That led numerous stores to drop the option, most notably Wal-Mart in 2006.

But Kmart, Burlington Coat Factory, Boscov’s, T.J. Maxx and Marshalls are among the stalwarts who stuck with it.

Now they’re being rewarded.

Boscov’s, which is promoting its layaway program more this year, believes a slight increase in layaway sales at its Park City store this fall will grow greater soon, as the holiday nears.

“We get a lot of positive feedback for having it. A lot of people are appreciative. It’s always been a service we felt was necessary…,” said assistant manager Carol Nowakowski.

“Not everyone wants to use charge cards,” she added.

One of the retailers who dropped layaway even has brought it back. That’s Sears, which has the same owner as Kmart.

“We saw the very positive response to our sister retailer’s — Kmart — layaway program,” said chief marketing officer Don Hamblen in a prepared statement.

“In this difficult economic climate, extending the layaway program at Sears is an easy decision and one that we hope will provide additional value to our customers,” he said.

Here’s how layaway works.

The shopper’s purchase is held by the store, sometimes for a small fee of $5 or so.

The shopper makes a minimal deposit, say 10 percent, then makes regular partial payments over a month or two until the price is paid in full.

If the shopper cancels the layaway purchase before the item is paid off, another small fee of $5 or so is charged by some stores.

Layway is a mixed blessing for the shopper.

Besides requiring the shopper to sometimes fork over a small fee, layaway denies the shopper the instant gratification of taking the item home on the spot.

But there are advantages to layaway, too. The shopper doesn’t have to worry about having enough cash to buy the item all at once, or fret over racking up costly credit-card finance charges or smacking against ever-tighter credit limits.

Madison laid away a dollhouse, dolls and a flute for her 5-year-old daughter, socks and shirts for her 16-year-old son, and bathroom furnishings for her 29-year-old son.

She’ll pick them all up by Dec. 10, in time for the holidays.

Then, after Christmas, she’ll wait for sheets, bedding and winter coats to go on sale and start a new round of layaways.

“I don’t have credit cards,” she said. “I don’t do well with that. Once I get this home, I don’t owe anyone. No one is calling me, telling me you still owe a balance.”

There are no local statistics to document the growth of layaway sales here this year. But anecdotal evidence shows there are more and earlier such sales.

“I don’t have the data to back this up, but I do think it’s slightly more prevalent this year,” said David Weimer, operations manager at Burlington Coat Factory at East Towne Mall.

John Wagner, manager of the Columbia Kmart, said his store is seeing “definitely a lot more” layaway business this fall, which he credited to increased corporate promotion of the program.

A spokesman for TJX Companies, owner of T.J. Maxx and Marshalls, declined to comment on how the layaway business at their Lancaster stores is faring.

Although some local retailers that kept layaway say volume is increasing, the manager of one major store that dropped the program has no regrets.

“We were not getting a return on our investment. It took up a lot of space and took a lot of man-hours to run it,” said Russ Colton, manager of the Ephrata Wal-Mart.

Colton said he “occasionally” gets requests from shoppers to reinstate layaway, but the number of requests has not risen as the economy has fallen.

Here’s a sampling of the cost of layaway at local stores.

Boscov’s has no service fee and requires a deposit of 10 percent of the price. Burlington Coat has a $5 service fee and requires a 25 percent deposit. Kmart has a $5 service fee and a deposit of 10 percent or $15. T.J. Maxx and Marshalls have a $5 service fee and a 10 percent deposit.

(Staff writer Cindy Stauffer contributed to this report).