Wal-Mart brings back layaway program for the holidays
Wal-Mart, seeking to reverse a prolonged U.S. sales slump and assist its core low-income shoppers, is bringing back its layaway program for the key holiday shopping season.
The discount giant and nation's largest retailer said Thursday that it was reinstating the program that it had discontinued in 2006.
Under the terms of the new program, which begins Oct. 17, layaway items will be limited to toys and electronics. Each item must be at least $15, and a customer's shopping basket must total at least $50. Shoppers are required to make a 10% down payment and pay a $5 fee upfront; a $10 cancellation fee applies if the item isn't picked up by Dec. 16.
In a call with reporters, Wal-Mart Chief Merchandising Officer Duncan Mac Naughton said customers had requested the return of layaway as a way to help them manage their budgets during the frenzied Christmas season.
"It just tells us that the customer is struggling," he said. "There's a fragile economy and our customer needs our help."
In particular, Mac Naughton said Wal-Mart's customers were faced with three major spending constraints: unemployment and job security woes; higher energy prices, especially for gas; and housing concerns tied to their mortgages and foreclosures.
Popular during the Great Depression, layaway programs had all but faded away by the turn of the century as shoppers turned to credit cards to shop. But layaway has made a comeback since the most recent recession because it enables shoppers to select their items early and pay off those purchases in a series of small payments; retailers will hold the items during that time and typically don't charge interest.
Wal-Mart's announcement follows similar moves by rival chains in recent years. Sears brought back layaway in 2008 after scrapping the program two decades previously; and Toys R Us in 2009 introduced a layaway program for big-ticket items such as bikes and cribs. Last year, Kmart, one of the few retailers to consistently offer layaway, said it would expand its program.
Wal-Mart did away with its layaway program five years ago, saying few people took advantage of it anymore.
On Thursday, the Bentonville, Ark.-based company said it would honor any price reductions during the time an item was on layaway, and said layaway merchandise was eligible for the chain's ad match program.
-- Andrea Chang
Photo: A Wal-Mart store in New Jersey. Credit: Associated Press