Wal-Mart expanding holiday layaway

After seeing high customer demand for layaway during last year's winter holiday season, Wal-Mart is expanding the interest-free pay-over-time program for the winter holidays this year.

The new program will last a month longer than last year's and will include more items than the toys and electronics featured last year.

The world's largest retailer says its mostly lower-income shoppers are still having a hard time stretching their dollars to the next paycheck. A little more than three years into the economic recovery, shoppers, particularly in the low-income bracket, remain particularly hard hit by unemployment and other financial worries.

The return of layaway is also occurring after Wal-Mart, based in Bentonville, Ark., saw its sales momentum slow at its namesake U.S. business according to its latest quarterly results, though business has rebounded from a more than two-year slump.

The announcement, made Monday, also indicates what's expected to be another intensely competitive holiday shopping season where merchants will do whatever it takes to lure shoppers into stores.

"Last year, millions of Americans replied on layaway at Wal-Mart to provide a great Christmas for their families," Wal-Mart executive Duncan MacNaughton said in a prepared in a statement. "Because of their feedback, we're offering the service again this year and making it better than ever."

Wal-Mart says its layaway program, which will begin Sept. 16 and end Dec. 14, will give shoppers an extra month to spread payments. The list of items that will be available for layaway has broadened too and goes beyond last year's toys and electronics. Shoppers will be able to set aside small home appliances and select sporting goods such as trampolines and large exercise equipment.

Wal-Mart is still requiring that each item is priced at $15 or more, and the total layaway purchase must be at least $50.

A down payment of 10 percent or $10, whichever is greater, is required and will be applied to the purchase, the same terms as last year. There's also a $15 fee to open an account. If the order is canceled or not paid in full, the $15 is not refunded, but no additional cancellation fee will be charged. Shoppers who make their final layaway payment get a full refund of the $15 fee in a form of a Wal-Mart gift card.

In comparison, last year, the open fee was $5, but shoppers had to pay a cancellation fee of $10.

Layaway became popular during the Great Depression. Before the most recent recession, easy credit had made it largely a thing of the past. But when credit dried up and the job market soured, Sears, Toys R Us and other merchants added back or expanded the service.

Citing increased costs and lower customer demand, Wal-Mart phased out its layaway in September 2006 -- about a year before the recession began -- with the exception of jewelry. But the store chain faced criticism because it built its reputation on helping the low-income shoppers.