Wal-Mart Ends Layaway Financing On Dec. 8, Wal-Mart will stop offering layaway financing. Many businesses have already done away with the low-cost finance option. Nancy Mullane reports.

Wal-Mart Ends Layaway Financing

Wal-Mart Ends Layaway Financing

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On Dec. 8, Wal-Mart will stop offering layaway financing. Many businesses have already done away with the low-cost finance option. Nancy Mullane reports.


Remember layaway? If you couldn't afford something, didn't have the cash on the barrel, the store would hold it for you. You'd pay in installments. And victory, take it home at the end.

Over the years, many businesses have stopped offering layaway. And next month, the giant retailer Wal-Mart is ending its 44-year program. Wal-Mart says most people use credit cards these days. But not everyone has a credit card, so what will the end on layaway mean for them?

From Oakland, California, Nancy Mullane reports.

NANCY MULLANE: It's about a month before Christmas and the layaway counter at the Wal-Mart in Oakland is jammed. Women and children wait in line to make a payment. Soca Brenson(ph) is with her mother and sister.

Ms. SOCA BRENSON: I just made a payment.

MULLANE: And what do you have on layaway?

Ms. BRENSON: Um, Christmas toys and underclothes for my son and I've been paying them off for two months and next one I'll be bringing it home. And it's Christmas next month so that gave me enough time to do Christmas, pay bills and still live day to day, you know what I mean?

MULLANE: Layaway works this way. You put 10 percent of the price down and pay off the rest in 60 days. You pay no fees or interest and the store keeps the item until you make your final payment. But in about two weeks that will end.

After 44 years, Wal-Mart is stopping its layaway service. At the Oakland store, a big blue poster tells patrons they've got to pick up their items by December 8th. Brenson says she didn't see the sign and her sister Takina Warren(ph) says it's not fair.

Ms. TAKINA WARREN: What if someone's pay period doesn't fall until after the 8th, you know, then what? That's not fair. That's not fair. So, I'll be completely out of luck and so will thousands of others.

MULLANE: Wal-Mart, with more than 3,000 stores in the U.S., finds people don't use layaway as much as they used to. Linda Blakely is Wal-Mart's spokesperson. She says the firm's offered layaway since 1962, the year it opened. But times have changed.

Ms. LINDA BLAKELY (Spokesperson, Wal-Mart): We have witnessed a declining use over the past several years and because of that declining use and increased costs, we are phasing out the layaway program this season.

MULLANE: Not all large retail stores have ended their layaway practice. Sears offers layaway year-round on fine jewelry and sale items, and K-Mart offers full line layaway all year around.

(Soundbite of noise)

Unlike Wal-Mart, some stores have never offered layaway. One is Ross, another chain, which has a store in Berkeley that sells low cost goods. Here's a Ross salesclerk.

Unidentified Woman (Sales clerk, Ross Store): We do a 24-hour hold. We never did a layaway. We don't have the room.

MULLANE: And then there's Tanya. She works in a small store across the street from Ross and doesn't know what layaway is.

TANYA (Store Clerk, California): I'll be honest with you, I didn't even know what layaway truly is. What is layaway? No, truthfully, what exactly is layaway? Is it just asking somebody to hold on to something and you pay for it later? People have credit cards now. I mean, if you buy the item you end up paying the credit card company back over a time. It's a foreign concept to me.

MULLANE: While layaway maybe an unfamiliar concept today, it was big when it started. Daniel Butler is vice president of merchandizing and retail operations for the National Retail Federation.

Mr. DANIEL BUTLER (Vice President, National Retail Federation): Layaway actually began in the 1920s and ‘30s as a way that small independent retailers, at that time, could make merchandise available to people who are really maybe strapped for income but knew that they wanted things. So, it helped small business at the time and it helped the consumer during the time period where the economy was extremely tight.

MULLANE: Butler says credit cards and the immediate gratification of taking your purchase home changed things.

Mr. BUTLER: In the ‘70s, we really saw a shift in consumer behavior and the consumer shifted to the use of credit cards and they decided if I'm going to make payments on something, I'd like to be able to use it while I'm making payments.

MULLANE: Back at Wal-Mart, Soca Brenson says not everyone has or wants credit cards.

Ms. BRENSON: Some families and some people are not able to get credit cards, you know, our income won't allow that. And on top of that, you know, I don't want to put myself in debt. I'm still in school trying, you know, build my career, I'm only 22. So therefore, you know, it helps me and it helps the family. So that will be a bummer.

MULLANE: Some economists say that getting rid of layaway as a business model does consumers a favor. They say layaway doesn't build credit history often among the populations that need it most. Dr. Kellie McElhaney is executive director of the Center for Responsible Business at U.C. Berkley's Haas School of Business.

Dr. KELLY McELHANEY (Executive Director, Haas School of Business): Layaway could be seen as a slightly useless tool in the whole credit establishment procedures. If you are trying to be responsible to consumers who need to establishment a good credit rating, layaway does nothing for that.

MULLANE: As fewer stores offer layaway, the one in four Americans who don't have credit cards will have to shop ever more selectively. Either that or join the millions of Americans who pay with credit and live with the debt.

For National Public Radio, I'm Nancy Mullane in Oakland.

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