Amid gloom, Sears brings back layaway

The economic slowdown has retailers reconsidering an old idea.

CHICAGO (AP) — Sears Holdings Corp. is bringing layaway back to its namesake stores next week, nearly two decades after it was scrapped, after seeing a strong response to the pay-as-you-go plan at its Kmart locations.

The move comes as shoppers look for ways to save money during what’s expected to be the worst holiday shopping season in decades.

Layaway will be available beginning Sunday in virtually all Sears departments except home appliances and home electronics, following the success of the reinvigorated program at the company’s discount chain.

“Going into the holiday season with the economic uncertainties we all face, we just wanted to be very mindful and attentive and help support our customers,” said Sears chief marketing officer Don Hamblen.

Kmart has maintained the program for decades, but began promoting the option for the first time in years late last month. So far executives, who declined to release specific figures, called the results “tremendous.”

Layaway, which has its roots in the Great Depression, was largely eclipsed in the past two decades as economic prosperity grew and consumers lined their wallets with credit cards. Wal-Mart Stores Inc. discontinued the practice in 2006, citing falling demand and rising costs, leaving the option at a smattering of discount chains, independent retailers and Web sites. Since 1989, Sears had offered the option only for fine jewelry purchases.

When Kmart began promoting layaway three weeks ago, some experts scoffed at the idea, saying it might resonate with the company’s budget-conscious shoppers, but likely wouldn’t take roots throughout the rest of the retail sector.

Since then, the nation’s economy has only gotten worse. And now, some experts say other retailers may be eyeing the strategy with renewed interest.

“This is a tool that people are going to use quite heavily this Christmas in those stores that have it available,” said George Rosenbaum, chairman of retail consulting firm Leo J. Shapiro and Associates. “And then retailers will see whether this was a great thing they missed and whether they should install it next year.”

Sears’ new layaway program will be available on everything from clothing and toys to tools and home fitness equipment on items bought for Christmas. But items must be purchased on or before Nov. 22 to meet the contract’s billing schedule, and must be picked up no later than Dec. 23.

Executives at the Hoffman Estates-based company said they expect to extend the program if it proves to be a success.

Kathy Grannis, a spokeswoman for the National Retail Federation, said layaway accounts for just a small fraction of overall retail transactions and doubts other large chains will add the option — at least right now.

“But with economic conditions the way they are, it really is going to be creativity and heavy discounts and unique promotions that get consumers into stores,” she said.