Wal-Mart announced Thursday that it is bringing back layaway for the holiday season, part of the big box behemoth’s ongoing efforts to recover from recent missteps and draw back customers still struggling to make ends meet.
The company had discontinued layaway in 2006, during the heady days before the recession. Layaway allows shoppers to put merchandise on hold and pay for it in installments, and Wal-Mart said that resulted in crowded storerooms and headaches for employees. Meanwhile, demand had dropped off as customers favored the immediate gratification of paying with credit cards, it said.
But that was before housing values plummeted, the unemployment rate soared and the nation’s financial system verged on collapse. As the era of easy credit began to wane, layaway staged a comeback: Sears reinstated it in 2008, and sister company Kmart made it a signature piece of its holiday campaign that year. Toys ‘R’ Us launched its layaway program in 2009.
Wal-Mart said it will bring back the program starting Oct. 17 for purchases of toys and electronics. As in the previous program, shoppers will have to pay 10 percent of the cost upfront. Each product on layaway must cost at least $15, and the minimum purchase required is $50. However, Wal-Mart has also added a one-time $5 service charge and a $10 cancellation fee.
“This is a key component that our customers asked us for ... to make their lives easier,” said Duncan Mac Naughton, Wal-Mart’s chief merchandising officer.
Wal-Mart was slated to make its announcement this afternoon on Facebook, where several shoppers had started campaigns to encourage the retailer to bring back the service.
In March, one user posted this critique on Facebook: “i think by them taking away layaway is the most foolish thing ever .... not everybody is rich and it was a way for the low income families to make Christmas, Birthdays and anytime a special time for their loved ones.”
Mac Naughton said restoring layaway was part of Wal-Mart’s “continuing commitment to meeting customers’ expectations.” The retailer has fallen short of that mark in recent years. Sales at existing U.S. stores fell 0.9 percent in the most recent quarter, though executives expressed hope that they would turn around later this year. The company has put products back on its shelves that it had cut in an attempt to streamline its stores and refocused on low prices.
Mac Naughton said the company has not decided whether it will continue layaway after the holidays. (Wal-Mart’s year-round layway program for fine jewelry, which it never discontinued, will not be affected by these decisions.) But it plans to prominently market the program as it launches its holiday campaign.
Prices for several toys, such as the Leapfrog Scribble and Transformers 3 Mechtech, will be reduced to $15, the amount needed to qualify for layaway. In addition, Mac Naughton said Wal-Mart plans to begin rolling holiday merchandise later this month, two weeks earlier than usual, starting with Christmas decor.