It is my opinion, that when Wal-Mart ended its layaway policy in 2006, it was a devastating blow to the personal finances of many lower-mid income Americans. I am open to your opinions and comments whether pro or con. I feel very strongly about this.

 

I fondly remember my mother using Wal-Mart’s layaway to buy our school clothes, Christmas presents and a whole host of other household necessities. We grew up on a fixed income. By having access to Wal-Mart’s layaway, it allowed us to purchase items when they would go on sale and have up to six months to pay them off. It allowed us to save money even though we did not get the instant gratification of having the item(s) right then and there. My mother never owned a credit card, which made the use of their layaway a highly valued financial tool.

 

I have attached a copy of the Washington Post article from September 2006 outlining the inauspicious reasons with which Wal-Mart decided to discontinue its layaway. According to the article, Wal-Mart’s decision to eliminate layaway was due primarily to Americans using credit cards rather than the “antiquated” layaway. Also, they state that costs associated with layaway were another reason for its demise.

 

I respectfully disagree with the assertion that cost played a significant role in their decision making process. I believe that costs played an insignificant role. Anyone, who used their layaway (especially around the holidays), will recall how poorly they staffed that department. I remember having to get associates paged on numerous occasions to come back to the layaway counter in order to place items on layaway or pick them up. I consider the cost argument laughable.

 

Another argument for doing away with layaway was the amount of floor space it required. Wal-Mart would have you believe that they could use this space for something else. This is what I have to say about that: I have been in a lot of Wal-Marts across this country. Some of the old and some of them newer. I have yet to see any of these stores being remodeled and that additional floor space being utilized for shopping area. In addition, Wal-Mart utilizes a JIT – “Just in Time” inventory management system. So, it is not using the layaway floor space to stock merchandise. As soon as a stocking truck arrives at the store, it is unloaded, staged, and the merchandise sent to the floor. I don’t accept the layaway floor space argument for one second!

 

I do believe Wal-Mart had ulterior motives for axing its layaway. Do any of you recall Wal-Marts recent attempts to rally the Federal Trade Commission (FTC) to allow it to diversify into banking and personal finance?  It just seems so strange to me that they are doing away with “pay as you go” layaway and attempting to diversify into the credit card industry. The point I am trying to make is that with banking comes credit. Wal-Mart would be the largest credit card issuer in a matter of months, if the FTC granted the right. I can hear their ad jingles already: “Get your new credit card at Wal-Mart and start shopping now! Pay later!”

 

I have read Sam Walton’s autobiography. I consider Sam the single greatest American entrepreneur in our country’s history. I am absolutely positive he would staunchly disapprove of his company’s decision to discontinue layaway. Layaway was the product of the Great Depression. People used layaway to purchase the items they needed for survival. Companies used it to move inventory. It worked really well for nearly 80 years.

 

In conclusion, I think that we as Americans are out of touch with our personal finances. Not since the Great Depression has there been such a low personal savings rate. The death of Wal-Mart’s layaway is the proverbial “canary in the coal mine” Only its demise is symbolic of our cultures “need it now” consumerism. I miss using layaway at Wal-Mart. I consider it just another attack by large corporations to force me to use my credit card. What do you think?

 

 

Respectfully yours,

GizmoInVA

 

 

 

Wal-Mart Ends Layaway Service

Decision Follows Shopping Trend of Buy Now, Pay Later

 

By Ylan Q. Mui

Washington Post Staff Writer

Friday, September 15, 2006;

 

Wal-Mart Stores Inc., which built an empire serving low-income customers, said yesterday that it was phasing out layaway, the plan that allowed generations of shoppers to put a purchase on hold until they could afford it.

 

Though Wal-Mart is not the last retailer to offer the service, it is the largest. And its decision is another reminder that living within your means is becoming an outdated concept in today's buy-now-pay-later culture.

           

 

"Layaway at Wal-Mart was something that they did as a courtesy to the customers," said Daniel Butler, vice president of merchandising and retail operations at the National Retail Federation, an industry trade group. "The layaway process has really become very obsolete."

 

Wal-Mart said demand for the service has dropped off, as consumers increasingly rely on credit cards and gift cards to pay for purchases. The idea of waiting to complete a purchase is no longer attractive. Wal-Mart said shoppers will have until Nov. 19 to put items on layaway and must pick them up by Dec. 8.

 

[Edited to remove copyrighted material - great post, though, thanks!]

It is another horrid sign of these spendthrift times, that layaway is nearly gone Nationwide.  The one thing I would say, though, is if one is conscientious about paying off a credit card debt on each bill, it works out the same way as 25 day layaway (many credit cards have a 25-day cycle.).  You just need to be veryy careful about paying it off timely, so that there is no late charge or interest.  Recently, I have been paying the card off by going in person to the issuing bank.  The payment is marked paid the very same day.

TASSIE That's A Stretcher

This post has won a TASSIE award. The award chosen was... Magnetic Dollar Stretcher Building Set

-------------------------------------------- 

Look at it this way:  if you can pay a small payment weekly on a layaway to pay for items why can't you set that same amount aside ahead of time (savings) and then go and pay cash?  That is money management.  If one is low income but can afford the payments than it stands to reason that the same amount can be saved in advance. 

That's a good idea, Rolo.  My only concern is that keepng envelopes for each item being saved for can be tempting to take the money out & use it for something that seems more pressing ....

Hello everyone, I am new here and wanted to comment on the post about Walmart discontinuing layaway.

 First of all I work for Wal-mart.  It is an older smaller store, not a Supercenter, although we will have a Supercenter by the beginning of 08.

In our area we have a lot of lower income families and people living on fixed income and many of them voiced their opinions to us about lay-away no longer being available to them.

Since our store is small and had such a small area for layaway, our store had to rent several storage trailers to store the layaways in.  Each store is responsible for their expenses and profits so this came out of our profits.(And they do share profits with their workers)  We made the same amount of money if the customer bought it immediately or had it stored for several weeks, it just cost us more to make the sale.

Second, we noticed many customers were running something like a scam to us with layaway. They would put large amounts of things on layaway, pay on it but not completely, and when they saw their items on clearance, they would cancel their layaway, get their money back and buy the items at the clearance price.  This might come across as frugal to some, but to us they were manipulating the system and we lost the opportunity to sell items at a profitable price.

And every year, within a few days of Christmas, we would have to call people to come and get their layaways.  Many never did, and we were stuck putting all this stuff back out.  I'm talking cart after cart of stuff.  It was a big headache to deal with.

 

So now we don't have layaway, and we don't miss it.  We don't have to pay for extra storage trailers and our store was more profitable this year.  The area that we had inside the store for layaway has been used to store extra items that we have on hand.  Like for my department we store extra jeans, socks and underwear.  We get a truck, 3 times a week and it takes awhile for the system to work to get things replenished, so we can stock our shelves from our extra on hands.

Hope this gives different view to the end of layaway.

Sadie

I can understnad that some people would manipulate the system, but I didn't and felt punished for it. I guess there's always two sides to every coin. Thanks for sharing.

If saving money budgeted for a particular item in an envelope is too tempting and results in it being spent on something else. Is it not reasonable then to believe that the original item was not truly wanted? I believe that would fall under a restraint issue which brings up a whole other problem.

The lay away program was  great for it's time. But just because something "was" provided at one time does not mean it always will be so. Times change. While I agree that for some lay away was a real life saver. But for those who used the program properly and know how to budget and set asside the weekly amount, a credit card could be just as useful. You simply set the money asside that you would have used to lay away the item and pay the card off with it each month. Wal*Mart is not the first company to do away with the LA program. And while LA was nice service to offer times do change and Wal*Mart is allowed to change as well.  I know that alot of people are anti credit card, but if used properly they can be a good thing. I have used both systems so I know the benefits and drawbacks of each.

I know I am bad at saving money unless it automatically comes out of the account into savings etc. On the darker side of life...it may have been the only way of affording something in the past. Because the money is put away where no one can touch it. The only way my mom could get major furniture, like a couch, was on a dept store credit card and pay it with the mthly family allowance (in the past it was something all moms got from the canada govt regardless of income, I think it $30 per kid 20yrs ago, now there is child benefits based on income) because my dad didn't think it was a priority. There wasn't many thift stores back then.  He earned a very good income but we weren't the priority. But what goes around comes around because now he is alone without family and friends in a nursing home because of his actions.

Sadie5, Thank you for explaining things from "the other side".  It was very helpful to be able to understand things from the store's point of view. 

-Frugalista 

 

I never used Walmarts layway but then I never shop at Walmart either. Don't use credit cards and I am not in debt. I think it depends on the individual. I pay myself first which means I save. It is the ones who want to keep up with the Jones that are mostly in debt. I never even finance a car but then I refuse to buy a new car too. It is a sign of the times, things are a lot like the '20's.