There’s still a place for layaway

MINNEAPOLIS — For Gale LeFlore, the layaway counter at Wal-Mart is a place where childhood dreams came true.

It’s where her mother stored her first bicycle — a pink beauty complete with streamers, basket and a bell. It’s where she put her children’s Christmas presents those years when cash was tight and she needed extra time to spread out the payments.

“You could always count on Wal-Mart to work with you, to help you pinch a little here and there so that your kids could feel joy on Christmas morning,” said LeFlore, 44, of Robbinsdale, Minn., a medical secretary at a children’s hospital.

But the Wal-Mart layaway counter, long a destination for low-income families with limited access to credit, is history. The world’s largest retailer stopped accepting new layaway orders on Nov. 19 because the company said too few people were using the service to justify the expense of storing the items and staffing the counters. Customers had until Dec. 8 to pick up any layaway items.

Wal-Mart’s decision is the latest sign that layaway, created in the 1920s when credit was limited, is losing its appeal. Only a handful of retailers still offer the service, which allows customers to keep items on hold for weeks or months as they pay off their purchases. Most department stores eliminated layaway decades ago, as did Target. Last year, one in 20 shoppers said they used layaway, down from 12 percent in 2002, according to a survey by America’s Research Group.

Even so, Wal-Mart’s move at the peak of the holiday shopping season surprised many shoppers and retail analysts. Wal-Mart built itself by selling low-cost items to people with modest incomes and limited credit. By eliminating layaway, the company might alienate some core shoppers at a time when it can ill afford to lose them, some analysts said. Wal-Mart recently reported its first monthly sales decline in 10 years at established stores (those open at least a year).

“Wal-Mart appears to be forgetting who brought them to the dance,” said Patricia Edwards, a managing director at Wentworth, Hauser & Violich, a money management firm in Seattle.

“At a time when they should be improving service for lower-income shoppers, they’re taking service away,” Edwards said.

Kmart, the only Big Three discounter to still offer layaway, could be a beneficiary.

Todd Teiken, manager of a Kmart store in Minneapolis, has heard predictions of layaway’s demise before. But he’s not buying it.

“Take a look at this,” he said, as he walked through a back storage room in the store.

In an area the size of a tennis court, metal shelves are stacked 40 feet high with hundreds of items. There are big-screen TVs, power tools, Barbie dolls, children’s play kitchens, bikes and sweaters — most of it packed neatly in tagged plastic bags.

“This is evidence that there is a place for layaway,” Teiken said.

By 12:30 p.m. on a recent weekday, a line of shoppers with carts loaded with toys and games waited to have their items tagged and stored.

Julie Bratton, 34, a homemaker from Minneapolis, and her boyfriend, Michael Butler, 35, had two shopping carts overflowing with $800 worth of Christmas presents for their nine children. Among the goodies: a Spiderman comforter, Hot Wheels cars and some video games. The couple planned to put down $400 and return with the rest of the money in a week, after Butler got paid.

However, Charles Fishman, author of a book on Wal-Mart and a senior editor at Fast Company magazine, said layaway isn’t needed like it once was.

“There was a time years ago when layaway made sense, in a world without credit, so that people could buy things that they really needed — like a new refrigerator or a washing machine,” Fishman said. “But in today’s world, it tends to be used for nonessential items. … It’s hard to believe that Wal-Mart is really inflicting pain on its customers when they can’t put a big-screen TV on layaway.”