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Published Oct. 28, 2008

Experts who sounded the death knell for layaway were too quick with the eulogies.

The slumping economy has prodded many merchants for the first time in years to promote this form of installment buying, which dates from the Great Depression. Anecdotal evidence suggests layaway is gaining traction with tapped-out consumers.

Wal-Mart stopped taking layaway orders in 2006, citing an era of easy credit and the headaches of handling the goods. Well, guess what? Consumer credit is getting tighter at a time when rising joblessness, foreclosures and prices make it harder to pay off credit card debt.

"The American consumer didn't vote to end layaway, only retailers," said Michael Bilello, vice president of business development for, a three-year-old Tallahassee startup that handles layaway for 1,000 retailers and wants to be the PayPal of a revived industry. "People this year are wising up to their parents' advice: If you can't pay in full, try layaway."

Since stepping up promotion this fall, the site's weekly registration leaped from 150 to 7,000 people.

The few chains still offering layaway get less than 5 percent of their business that way. But this year, finding ways to coax frugal shoppers to spend early for the holiday has taken on a sense of urgency.

Wal-Mart won't be offering layaway this season, but stores like T.J. Maxx, Marshalls and Burlington Coat Factory remind shoppers about their installment buying plans in signs and at checkout. The TV shopping networks tout their own form of layaway pricing like Flex-Pay at HSN, which breaks a big purchase into two or three payments. For the first time in decades, Kmart is promoting layaway in TV ads.

"We've had more customers use layaway this season, and they started much earlier," said Carolyn Kestner, an assistant store manager at Burlington Coat Factory in Seminole, which usually holds holiday purchases in a stockroom for about 500 families. "We expect to be slammed with layaway this year."

Layaway is not as easy as putting something on a credit card. But it can be a deal for those whittling a card balance larded with 22 percent interest.

Most stores want a $5 service fee up front, then break the purchase into three or four monthly payments. You can't take the item home until the last payment. Cancel and you get back what you paid - less fees. Usually you would be out $10 on a $100 transaction.

The eLayaway site charges a 1.9 percent transaction fee and handles installment payment terms through HSBC for everything from two-months on toys to two years for plastic surgery. Cancellation: about $25.

Layaway is a big strategy for other types of chains. Pawnshops get about half their revenue from high-interest, short-term loans for which customers put up goods as collateral. The other half comes from selling goods that are forfeited when someone cannot repay a loan. Layaway represents about 40 percent of those retail sales.

"People mistakenly think pawnshops do well in a bad economy," said Joe Thedford, chief executive of Orlando-based Value Pawn & Jewelry, which has 15 outlets in the bay area. "If our customers - people like construction workers and nurses - are struggling to pay us back, it's rough for us, too. But layaway definitely is helping us through this difficult time."

Layaway sales at his 65-store chain soared 20 percent over 2007. Forfeitures rose 5 percent.

Bargain hunters check in daily for deals on jewelry, HDTVs, video game controllers, musical instruments and power tools.

"When gas hit $4, we had people pawn watches for gas just to get to work until they could buy them back on payday," said Chris Sebastian, manager of a Brandon Value Pawn that is headed for $3-million in revenues this year, almost $700,000 of it layway. "This is our best year for layaway ever."

Mark Albright can be reached at or (727) 893-8252.