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At Kmart in Concord, Calif., layaway items are stored in plastic bags in upstairs storage.

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PLEASANT HILL

Layaway is here for the holidays as stores bring back the old-fashioned retail practice in response to consumers seeing reduced credit lines, rising unemployment and overall lean economic times.

An alternative to using credit cards or cash to pay for merchandise, layaway requires shoppers to make a down payment followed by additional payments made in person, through the mail or electronically, until the item is paid for in full.

Burlington Coat Factory, Kmart, Marshalls, Sears, T.J. Maxx and Toys "R" Us are among the retailers offering layaway programs. But not all shoppers are takers nor or all stores providers of layaway. Among retailers that don't offer layaway are Kohl's, JC Penney, Ross Stores, Target and Wal-Mart.

"I never use layaway. I prefer cash," Patricia Medina said as she browsed the shelves of the Pleasant Hill store of Toys "R" Us, which unveiled a layaway program in October for big-ticket items such as bicycles, doll houses and karaoke machines.

Another strike against layaway is that it does not allow for impulsive buying, said Medina. "You see something you want, you want to buy it that moment," she said.

Several other shoppers at the Toys "R" Us store also said they don't plan to use layaway for holiday purchases. "If I can't afford it, I can't get it," said Jim Kimball, a Fairfield resident.

While layaway can be a hard sell among some shoppers,

Although layaway currently represents a small segment of the brick-and-mortar retail world, it has found a growing online presence with the emergence of Web sites that see the practice as a growth opportunity.

Consumer electronics, appliances, toys and games are sold at www.lay-away.com, which charges no service fees to consumers since revenues come from sales commissions paid by retailers. A $35 fee applies on canceled orders.

Consumers who go to www.elayaway.com are charged a 1.9 percent transaction fee on merchandise purchased from retail partners that include Apple, Bass Pro Shops, Best Buy, and Home Depot. Cancellation fees are $25, or 10 percent of the cost of the merchandise, whichever is less.

Layaway makes it possible to place a hold on popular merchandise that may run out of stock during the holiday season. But taking the early-bird approach could work to a shopper's disadvantage. Policies vary as to whether retailers will pass on later discounts on certain merchandise after it has been put on layaway.

Before using layaway, shoppers should read and understand the contract and ask about cancellation fees, said Susan Grant, director of consumer protection at Consumer Federation of America. Also, check on a retailer's policy for refunding payments when a cancellation occurs.

"Layaway can be a cost-effective way of making a purchase in light of your budget. ... In many respects, layaway is better than putting something on your credit card if you are not able pay your credit charge all at once," Grant said. "Ultimately, you have to figure out what is the most economical way to make the purchase ... The best solution is to save, so that when you need to make the purchase, you've got the money to do it."

In the early 1990s Sears did away with its layaway program as more and more customers turned to credit cards. Sears brought back it back this year in response to some customers seeing reduced credit lines, said company spokeswoman Shannelle Armstrong.

"It provides a payment option for consumers who would like to pay over time. It's a planning tool," said Armstrong. "We've had an overwhelming positive response from shoppers."

Kmart, which acquired Sears in a merger several years ago, has always offered a layaway program.

Armstrong said the vast majority of Kmart shoppers who use layaway make all the required payments to receive the merchandise but declined to give a specific percentage, saying it was proprietary information.

Wal-Mart stopped offering layaway in 2006 after determining it was too expensive to operate and that not having it made it easier to keep prices low for customers, said Wal-Mart spokeswoman Kelly Cheeseman.

Back in the 1960s and 1970s layaway was much more widespread in the retail world than it is today because credit cards were not that common. The resurgence of layaway today is tied to tighter credit, said Kit Yarrow, psychology department chair and professor of psychology and business at Golden Gate University in San Francisco

"It's not as much a change in consumer preference as it is a response to not being able to get credit. It went from basically dead to very alive overnight when credit dried up," she said. "It's like a structured, regimented saving-towards program."

Reach Eve Mitchell at 925-952-2690.