JARED SOARES The Roanoke Times

Antonius Dillard (center) puts jackets on layaway at Kmart on Franklin Road in Roanoke. Dillard traveled from Glade Hill to use the service.

JARED SOARES The Roanoke Times

Kmart layaway associate Kristen Schaeman packs a box of items to be put on layaway.

The concept of paying for Christmas gifts over a period of time, without using a credit card, appealed to the Ingram family for the first time ever this holiday season.

Anthony Ingram was laid off from his job at Walmart in January, and now he's working as a crew manager at McDonald's in Roanoke. His hours are unpredictable, so the Vinton resident does not know how much money he will earn weekly.

This holiday season, putting gifts on layaway is the only way that Ingram and his wife, Brandy, can afford to buy toys and other surprises for their three young children.

This Great Depression-era payment service that slipped in popularity for years quietly is stepping back into the limelight. More stores are setting up layaway all year or for the Christmas season, and some are adding new online layaway options.

Consumer demand is sparking these changes. More people are using layaway for the first time this year to ease their budgets and curtail credit card debt in the face of rising interest rates and a rippling national recession. People find layaway convenient because they can make small payments on purchases over time, avoid credit cards that carry high interest rates and land a coveted item before it sells out.

The National Retail Federation said recently that cash and debit or check cards would be the preferred payment methods this holiday season. Credit card use is expected to drop by 10 percent this Christmas.

Since March, credit card rates have climbed 1 percentage point to 11.68 percent, according to Bankrate.com.

But consumers' inability to get credit, a result of the nation's financial crisis last year, is driving layaway's resurgence, said Greg McBride, a senior financial analyst with Bankrate.com

"Credit card issuers have been cutting credit lines, closing out cards, and just in general, doling out fewer approvals in this environment," he said. "If credit were available, there are plenty of consumers who would use it."

Still, layaway is a costly service for some retailers and for consumers who don't follow the rules. Many stores charge a flat layaway fee and an additional fee for canceled orders. And if shoppers miss one payment, the item goes back onto store shelves.

Layaway makes sense to the Ingrams, who pushed their shopping cart full of toys down the short hallway leading to the layaway counter at the back of a Roanoke Kmart store earlier this month. Their total purchase was $149, but they paid only about $23 as a deposit. They will take the items out of layaway in early December once they pay off the total balance.

With layaway "you don't have to pay a big lump sum, and you're broke every week," Anthony Ingram said. "You can get a little bit more for your money."

Kmart kept the service

Unlike many national retailers, including Walmart, Kmart never did away with layaway. The number of shoppers who are using layaway at Kmart for all kinds of purchases throughout the past year has increased significantly, said Tom Aiello, a spokesman for Sears Holdings Corp., which owns Sears and Kmart.

This increase in layaway orders is obvious at the Kmart on Franklin Road in Roanoke, where store manager Jeff Tussey said he had to create more storage space for the store's growing orders this year. He did not know the size of this storage space, but the "economy's tough," he said, referring to the swelling rate of which people are using this once antiquated service.

In response to this demand, Sears Holdings Corp. added layaway this year as an online service for both Sears and Kmart stores. People can pick up orders in stores or schedule delivery, once the purchases are paid off.

Sears brought back layaway last Christmas, though it excludes certain items, such as home appliances, automotive merchandise and cellphones.

"Last holiday, there were a lot of skeptics ... because it [layaway] didn't give the instant gratification that Americans love," Aiello said. "I think the customer response has been right in line with last year for the holidays."

Toys R Us stores nationwide, including the Roanoke location, are testing layaway this Christmas for certain items labeled as big gifts, such as trampolines, play kitchens, air hockey tables and car seats for babies.

The retail chain has not yet decided if it will offer layaway at other times during the year or even in the 2010 holiday season.

"We're definitely looking at it and evaluating the program," said Katie Reczek, a spokeswoman for the New Jersey-based toy retailer.

Layaway orders are stored in off-site distribution centers, rather than at Toys R Us stores. Dec. 6 is the cut-off day for paying off layaway items this year, but customers may wait up to 14 days to receive their purchases to allow time to ship the orders to appropriate stores.

Hannah Duncan put a $179 toy kitchen for her son and daughter on layaway a few weeks ago at Toys R Us in Roanoke.

She used layaway so that she could land the play-set early to avoid the last-minute shopping rush and risk the store selling out of the kitchens.

But Duncan said she's not sure if the layaway purchase was worth the money. She said she wished she could have laid away more toys, because Toys R Us charges a $10 fee for layaway. But only certain toys qualify.

Layaway has not been a slam-dunk for all consumers and retailers. Stores that sell gift items seem to have the most success with layaway, said Ellen Davis, spokeswoman of the National Retail Federation.

Also, their regular shoppers usually "would not have access to credit or don't like to use or rely on credit," she said.

"It might not make sense for a luxury retailer to offer layaway," she said.

Thuy Flora, who shopped at Toys R Us in Roanoke recently with her 9-year-old daughter, said she has not considered using layaway because making small payments to a retailer over time would be inconvenient for her.

"When I like something, I will just buy it," said Flora of Roanoke County. "You don't have time to come back to pay for it."

Customer response varies

Layaway has never taken off at Mimi's Plus, a women's boutique in Southwest Roanoke County.

Owner Kelley Clark added the service in March to help customers budget more easily during a tough economy. She made space for orders in a closet and dressing room in the back of her shop on Starkey Road.

But there only have been three layaway orders at her shop since then.

"Our customers choose to pay for it [merchandise] by check or cash or put it on a charge card," Clark said. "No one's even asked about it [layaway] or inquired about it."

Similarly, there's been a lackluster response to layaway this holiday season at Imaginations Toy & Furniture, a small toy shop in Blacksburg. Interest in layaway was much stronger last Christmas, owner Paula Bolte said.

More than a week ago, Bolte had four layaway orders. Christmas layaway purchases must be paid by Dec. 20, but Bolte will hold some items until Christmas Eve, mostly for parents who do not want their children peeking at their gifts. She has even delivered some orders to homes on Dec. 24.

Still, layaway may not be worth the cost to all retailers. Some stores must pay for an associate to handle layaway orders, and they have to make space to store layaway merchandise.

Also, stores run the risk of getting stuck with unsold merchandise that a customer lays away but never picks up. Stores cannot count layaway as a sale until the order is fully paid, said Davis of the National Retail Federation.

Even so, as the economy rebounds and credit is more widely available, layaway may not stick around, retail experts said.

But "there will always be a contingent of customers who love layaway," Davis said.

Louise Brown, 65, of Roanoke is one of them. She has been using Kmart's layaway for years to snatch deals. Brown likes that she can save sale items through layaway without worrying about the merchandise selling out before she can pay for it in full.

"That's the reason I love it," Brown said, before she laid away an electric scooter and an Xbox console for her son for Christmas at Kmart on Franklin Road in Roanoke. "You can get it and put it up."