DETROIT (WWJ/AP) - Walmart is bringing back something its customers have been asking for since the Great Recession: layaway.
The world’s largest retailer, which ditched the pay-as-you-go plans in 2006, is rolling out a holiday layaway plan from Oct. 17 through Dec. 16. Walmart is following rivals that brought back the service during the thick of the recession.
Walmart’s layaway option comes at a time when its mostly low-income shoppers are being squeezed by high unemployment and rising costs. Walmart is trying to reverse nine straight quarters of revenue declines at its namesake U.S. stores open at least a year - a key measure of a retailer’s health.
“We’re always looking for ways to ease budget strain for our customers, and we know this holiday season brings with it additional financial pressure,” said Duncan MacNaughton, chief merchandising officer at Walmart’s U.S. division. “This was a key component that our customers asked us for.”
Layaway - which allows shoppers to pay over time, interest-free, and pick up their merchandise when it’s paid in full - became popular during the Great Depression. The practice had become largely a thing of the past as the economy flourished and credit cards became common.
But when credit dried up and the job market soured during the recession that began in late 2007, Sears and other merchants added back or expanded the service.
Citing increased costs and lower customer demand, Walmart phased out its layaway in September 2006 - roughly a year before the recession began - with the exception of fine jewelry. But the discounter faced criticism because it built its reputation on helping its low-income shoppers.
Walmart Stores Inc., based in Bentonville, Ark., said it will be able to limit costs now by limiting the layaway program to toys and electronics. In order to participate, each item must have a price of $15 or more, customers must have a total minimum layaway purchase of $50, make a 10% down payment on the total purchase and pay a one-time non-refundable $5 service fee.
Walmart will charge a $10 cancellation charge for orders not picked up by Dec. 16 or cancelled by the customer.
The program is only available at stores Oct. 17 through Dec. 16. The company said if the program is successful, it may extend it throughout the year.
The layaway plan is part of Walmart’s efforts to turn around its struggling U.S. business. In addition to the layaway program, Walmart said that starting Monday, it will cut prices on dozens of holiday toys to $15. The company also said it will start offering small samples of holiday merchandise, including outdoor decor, later this month – two weeks earlier than a year ago.
Walmart has been going back to “everyday low prices” instead of pricing gimmicks like temporarily slashing prices on select items. It’s also finishing up restocking thousands of items it cut during an overzealous bid to clean up its stores.
The Associated Press contributed to this report.