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As It Edges Upmarket, Wal-Mart Ends Layaway

One of the last to offer the 1920s-era method, the retailer says few use it. Shoppers without credit cards may suffer.

October 15, 2006|Abigail Goldman | Times Staff Writer

Three burgundy blankets and two white lamp shades wait for Audrey Larry in a small storeroom at a Wal-Mart in South Los Angeles.

But only until December. Seventeen days before Christmas the retailing giant will discontinue its layaway service, which for decades shoppers like Larry have used to stash their dreams -- color TVs, new coats, bedroom furniture sets -- until they could finishing paying for them.

Larry, 57, has used layaway at various stores her whole life as an interest-free way to save up for goods by leaving them at the store and paying for them in installments.

But over the last 20 years, as nearly every other national retailer quit offering the service, Wal-Mart became a mainstay for Larry and many others.

"This is going to be devastating," said Larry, who lives on her Social Security checks. "Layaway is for people who don't have credit cards and who don't have a lot of money and are on low budgets -- this is how they buy their stuff."

Wal-Mart, which built its business offering low-cost goods to customers with limited choices, said it would end its 44-year-old layaway service because few people take advantage of it anymore.

"Our goal is to help folks provide for all their needs but at the end of the day, fewer and fewer people are using layaway," said Wal-Mart spokeswoman Linda Blakley. "There are many customers who rely on this service and are glad we're offering it through the holiday season.

"We want them to continue to be our customers and that's one of the reasons we're looking at programs that will allow us to offer additional purchase options," she said.

Wal-Mart, which will continue its layaway service at stores in Canada and Puerto Rico, said the company offered no-interest financing options on its Wal-Mart credit card and also has tested prepaid debit cards.

The company has posted signs at its more than 3,200 Wal-Mart stores letting customers know that they will have until Nov. 19 to put items on layaway and until Dec. 8 to pick them up.

"Layaways came from a period when credit didn't exist for the working class," said Nelson Lichtenstein, a professor of history at UC Santa Barbara and editor of the book "Wal-Mart: The Face of 21st Century Capitalism." "It was a tangible symbol of an ongoing relationship with a customer who would be returning again and again."

Lichtenstein, whose family owned a five-and-dime store in rural Maryland, remembers working at the layaway counter as a child and watching as poor, working people carefully selected dolls, toys and party dresses to put aside and pay off in 50-cent or one-dollar increments each week.

But those days are long gone, he said, particularly for Wal-Mart, which is trying to remake its image as a slightly more upscale retailer.

There are still a few layaway programs around. Kmart offers the service storewide as a way to serve the lowest-income consumers; Sears, Roebuck & Co. offers layaway on some big-ticket items, such as jewelry. Both stores are owned by Sears Holding Corp.

Still, for shoppers who depend on layaway to make ends meet -- particularly at holiday time -- not having a payment plan option at the world's biggest retailer will be a serious blow.

While credit cards allow customers to enjoy goods now and pay for them later, often with interest added, layaway lets shoppers secure items at the store and pay them off over time, usually with no fees or interest.

Layaway programs began in the 1920s, and took off in the decades thereafter when money was tight and formal credit plans were nonexistent.

"The practice really became kind of a tradition in a lot of places," said Dan Butler, vice president of merchandising and retail operations at the National Retail Federation.

Layaway was particularly popular in rural America -- Wal-Mart's original terrain -- where farmers often only came to town once a month, Butler said.

But once credit cards became widely available in the 1960s and 1970s, Butler said, layaway was pretty much finished.

"Consumer preference changed," Butler said. "People decided that as long as they were making payments, they might as well charge it, since they at least had the use of the item while they were paying on it."

Most retailers did away with their layaway programs in the 1970s, Butler said. But not Wal-Mart, which opened its first store in 1962 and offered the service from the start.

That was one of the reasons Denae McKnight went to Baldwin Hills Crenshaw Plaza's Wal-Mart on a recent afternoon. The 25-year-old Inglewood bartender said she had bad credit, no credit cards and few other ways to buy bigger-ticket goods.

McKnight had made $100 worth of payments on an apartment's worth of goods -- a cordless telephone, TV, DVD player, microwave oven and George Foreman Grill -- in hopes of moving herself and her daughter to a new apartment.

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