Layaway Continues to Evolve in 2013

Navigator Edition: September 2013
By: Tim Skeen and Jeff Kalski

Layaway has gained some momentum in recent years as a way for consumers to plan for and purchase merchandise during the holiday season and, in some cases, year-round.  Layaway programs give customers the ability to make regular down payments without accruing interest on qualifying merchandise while the store reserves the products until the full payment is made. There have been some notable changes to the landscape of layaway offerings in 2013 as retailers continue to adjust their programs to better meet the needs of customers and keep up with competition.  However, Best Buy will no longer offer a layaway program and has no plans to re-introduce layaway in the near future. Kmart began its holiday promotion in advance this season with the launch of its earliest-ever holiday ad campaign in September, focusing on its “no service fee for new layaway purchases” in a limited-time offering.  Walmart has altered its fee structure, re-introducing the $10 cancellation fee it repealed in 2012, but fully eliminating the former $5 service fee. In 2012, customers were refunded this fee in the form of a Walmart gift card once the full payment was made.  When asked about the change in fee structure in a recent CNBC  article , Walmart spokesperson, Veronica Marshall said, “The idea of having a $10 cancellation fee was based on feedback from our customers… They told us they would rather pay nothing down to open their layaway account and apply that money to their actual purchases, and pay a cancellation fee on the back end if they had to do that.” In fact, all of the retailers First Annapolis surveyed in 2013 are imposing cancellation fees this year (see Figure 1), a significant change from 2012.

Retailers are again likely to pull out all-the-stops this holiday season to generate sales, and layaway is one tactic being used to attract the frugal consumer. A few major retailers, especially Walmart and Kmart, have already been aggressively promoting their layaway offerings for the 2013 holiday season. Walmart offered ‘fans’ of its Facebook page access to layaway two days before the general public to promote social media engagement and both Walmart and Kmart launched a national TV add in September advertising their programs. Layaway continues to be a differentiation point among retailers with Walmart joining Kmart and Toys ‘R’ Us in offering the service free-of-charge this year. It’s clear that many retailers continue to see the benefits of layaway in the current economic environment and have carefully retooled their offerings to better optimize their programs for the Holiday season.

Figure 1: Retailer Layaway Offerings 2013
(As of September 2013)


Note: 1Customers who are fans of Walmart’s Facebook page were offered a 2-day head start on Layaway in 2013 (available Sept 11 & 12). 2Otherwise, $5 opening fee for 8-week plan and $10 fee for 12-week plan; Shop Your Way rewards members offered free Layaway beginning July 17th 2013. 3Final payment must be made on or before Dec 13. 4Final payment must be made on or before Dec 15; certain minimum payment thresholds (e.g. 30% of total within 35 days) must be met within 90-day period. 512-week plan requires minimum purchase of $300 or more and is only available in-store. 612-week plan requires minimum purchase of $400 or more and is only available in-store. 7Cancellation fees can vary by state (Maryland, Ohio, Rhode Island & DC often excluded). *Offered year round for first time in 2013.
Source: Retailer websites, First Annapolis Consulting research and analysis.


For more information, please contact Tim Skeen, Associate,; or Jeff Kalski, Analyst, Both specialize in Credit Card Issuing.


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