Teresa Walton has relied on Wal- Mart’s layaway program to help buy Christmas gifts, school clothes for her three children and household items including a microwave.
That is no longer an option.
The world’s largest retailer is eliminating layaway, a decades-old program that allows customers to keep items on hold while paying them off a little at a time. While the program has significantly declined in popularity, it retains a following among low-income shoppers and parents who use it to keep gifts away from prying eyes.
“I’m overheated about it. I use layaway all year round,” said Walton, 29, who jokes that she is absolutely not related to Wal-Mart founder Sam Walton.
Bentonville, Ark.-based Wal-Mart stopped taking new layaway items Nov. 29; customers must pay off any existing layaways by Friday. The company says it’s simply bowing to market forces that have led to declining demand and the rising cost of maintaining the program.
The move comes as the retailer, which got its start bringing discounted items to the masses, struggles to reinvent itself as a destination for higher-earning shoppers.
“It you look across the industry, (layaway) is becoming less and less common,” Wal-Mart spokesman Dan Fogleman said. “Today’s customer continues to embrace the modern payment methods that were not available when layaway was created.
“Plastic is very popular.”
While Fogleman declined to quantify the decrease in demand, he said it no longer was enough to justify the storage and personnel costs it incurred.
Wal-Mart employees who worked at the layaway counter were offered other positions within the company, he said.
Consumer researcher Britt Beemer wasn’t surprised by Wal-Mart’s decision: “It’s a ‘Leave It to Beaver’ service that’s no longer needed.”
In recent surveys conducted by Beemer’s firm, America’s Research Group, 4.5 percent of consumers said access to layaway was important to them. Five years ago, 12 percent of consumers considered layaway an important service.
But Wal-Mart’s move has prompted a small outcry in the form of online petitions begging the retailer to reconsider. One such petition, posted at petitiononline.com, has garnered more than 34,500 signatures. Another, at thepetitionsite.com, has about 1,100 signatures.
Wal-Mart is telling customers they can apply for its Wal-Mart- branded credit card, Fogleman said. Only a small number of people are complaining.
“Obviously, there are a few folks that are going to miss it, but by and large most of our customer base has embraced modern-day payment methods,” Fogleman said.
Wal-Mart has company in its decision to eliminate layaway – and is, in some ways, late to the table.
Target spokeswoman Brie Heath said the retailer dropped its layaway program several years ago because of low demand and the costs involved. The company often took a loss on products that customers laid away but never picked up. Those products often had to be sold at steep discounts because they were no longer in season, she said.
But Kmart is sticking with its layaway program. Following Wal-Mart’s announcement, Kmart issued a statement saying it would continue offering layaway “as a value-added service and as part of the company’s mission to build long-lasting relationships with our customers.”
Sears, which along with Kmart is owned by Sears Holdings Corp., offers layaway for fine- jewelry purchases and occasionally holds the service out as a promotional offering on other big-ticket items.
Mary Hollimon of Denver said she has used layaway at Kmart and Wal-Mart as a matter of convenience.
“I usually use it around the holidays if there are toys that are expected to sell out,” Hollimon said.
Layaway allows her to snag the toys early and pay for them when it’s more convenient, she said.
Wal-Mart’s move will lead more low-income customers to rely on credit cards for their purchases, predicted George Shoemaker, executive director of the Colorado Center for Financial Education.
That’s not an option for Walton, who lost her job as an administrative assistant three months ago.
“I guess we’ll just have to start paying with cash,” she said.
Staff writer Kristi Arellano can be reached at 303-954-1902 or karellano@denverpost.com.
