Buying on Layaway: The Gift That Keeps On Giving

The wrappings are cleared, the toys have disappeared into the bedrooms. All that's left of Christmas 2010 is....paying for it.

Unless you were smart enough to latch on to a layaway plan back in October. If so, you, like the chipper gal in the Kmart commercial that ran back then, would be shocking your husband with the news that there is no nasty surprise lurking in the mailbox in the form of a catalog-sized credit card bill. You paid for everything in advance, and you're starting the New Year in the black! (Just for the record, this is news my husband has never received.)

Layaway is a rudimentary form of consumer credit. You bring what you want to buy to the store layaway desk and make a small down payment. You get a few weeks to make the rest of your payments. The stuff is its own collateral.

Of course, once consumer credit cards burst on the scene, layaway took a nosedive. Who needed to wait for their basket of goodies when you could cart them out right then and promise to pay later?
The recession that's supposed to be over has whacked a lot of sense into consumers. Layaway is back, and it's the wave of the future.

I never thought I'd be saying this about K-mart, whose stores I find grimy and depressing, but they got this one right.

Just about the time when Kmart was advertising the renaissance of layaway, Experian, the credit-scoring giant, released a holiday shopping trends report. One of its top-line forecasts: 65% of women planned to start holiday shopping earlier to spread out the impact of purchases on their budgets.

I can say that in one word: layaway.

But let's let Experian have their moment: "...women also are more focused than men on absorbing their holiday spending into monthly budgets to become less dependent on credit. Survey data reveals that 65 percent of women plan to start shopping earlier in order to spread out the impact of their purchases on their budget, compared with 49 percent of men. Not only do women want to absorb their holiday spending into their monthly budgets, but more women also plan to make 2010 a debt-free holiday season. Thirty-six percent of women indicated that they do not plan to use credit for their holiday purchases this year, compared with 27 percent of men. "
Christmas is barely over, so we don't know yet how total spending shook out. But I can tell you one thing: Moms won't let a little thing like a recession get in the way of giving their kids a wonderful Christmas morning. If they have to steal from the weekly food budget all fall to cover the gifts on layaway, they'll do it.

My bet is that smart retailers will launch layaway in July for back-to-school shopping. Smart online shoppers will offer virtual layway starting in September, with the big payday coming in boxes arriving the first week of December. For moms, the gratification isn't much delayed, especially when laying away means sidestepping the shock of the big fat bill.
Image courtesy of Morguefile contributor cohdra.