Layaway Is Back in Fashion

With credit-card companies tightening limits and offering fewer specialty card promotions amid the continuing credit crisis, many consumers may not be able to tap credit cards as much this holiday season, experts predict. Meanwhile, retailers report that many customers spooked by the slumping economy are either already saddled with debt or determined not to be, all of which is making layaway are more enticing option.

Demand has surged so much at Kmart, in fact, that the discount retailer decided to tout its commitment to layaway as the centerpiece of a national advertising campaign.

The ads, which feature an animated Kmart light bulb known as Mr. Bluelight, began on radio and television this month and promote layaway as an affordable way for families to finance the holiday season.

ELayaway.com, which offers iPods, Hewlett-Packard laptops and clothes from the Gap on virtual layaway for a 1.9% fee of the cost of the item plus taxes, said traffic has increased 91% over last year. Customers can choose eLayaway as a payment option on affiliated Web sites or can shop at www.eLayaway.com, and receive the item in the mail once the payments are made in full.

Many of the site's customers are victims of the subprime-mortgage mess or simply have bad credit, said Michael Bilello, eLayaway's senior vice president of business development. He said that five major big-box retailers had contacted the company in recent weeks about adding an eLayaway payment option to their Web sites or putting eLayaway kiosks in stores.

"Business is booming," said Mr. Bilello, adding that the company noticed a surge in interest this summer during a promotion called "Christmas in July."

"It's the consumer credit crunch that's driving this," said Mr. Bilello. "Merchants are finally figuring out that when you tap people out on their credit cards, they can't consume the way they did. That's all coming home to roost right now."