Donna Santos got an early jump on her Christmas shopping this year, selecting gifts in October from Kmart.
She likes to plan ahead, but that's not the only reason Santos started her holiday shopping early.
"The way the economy is right now, it's pretty bad," said the 57-year-old Petaluma woman, who owns a cleaning business, Santos Janitorial.
So she's buying all of her Christmas gifts, one small shopping cart load at a time, on layaway.
"I've never had a credit card and I don't want one," Santos said. "I don't want to end up owing thousands of dollars."
Santos is one of a growing number of shoppers choosing to purchase items on layaway this holiday season. At the Kmart store in Petaluma, layaway shopping has increased 20 percent over the last year, said Steve Mills, general manager of the store.
"In these tough economic times, people need almost any avenue to get an edge on Christmas. I mean, I do it. I have five kids. I get a catalog, and they circle what they want, and I go shopping here," Mills said.
The concept of shopping for goods on layaway became popular during the Great Depression. Shoppers would make a down payment on an item like a couch or appliance, and then made steady payments, picking up the item when it was entirely paid off.
But participation in layaway programs faded in the 1990s, as access to credit cards grew and customers got a taste of instant gratification.
Now, with consumers feeling the impacts of the recession and banks placing more restrictions on credit, retailers are re-introducing layaway plans to satisfy customers' needs.
"People are having a lot more difficult time accessing credit," said Marie Kegel, a credit and housing counselor at Consumer Credit Counseling Service of San Francisco. "Even if consumers have credit available to them, I think there's been a shift in how we view credit. More people are trying to work against the previous mindset of &‘buy now, pay later,' and working toward a little more financial solvency."
Layaway sales at Sears Holdings, which owns Sears and Kmart, doubled between 2008, when the company launched a campaign advertising its layaway program, and 2010, said Salima Yala, vice president of layaway. Customers utilizing layaway cross a broad demographic spectrum, she said.
"Obviously there is the customer we would call under-banked, or the customer who has no access to credit," Yala said. "But we're also seeing customers who are banked, who have access to credit. They just prefer the planning aspect of layaway."
On Kmart's website, shoppers can order items on layaway that span the gamut from $3 glove sets to $400 flat-screen televisions. Virtually anything can be bought on layaway, except for food items because they expire, and chemicals that could be hazardous to place in storage.
Signs advertise the layaway option throughout the Kmart aisles. "Big dreams, small payments," one sign read. "High heels, low payments," read another.
For a layaway contract with an eight-week payment plan, Kmart charges a $5 fee to place an item or group of merchandise on hold. For items priced at $300 or more, a 12-week contract is available, with a fee of $10. The customer places a down payment of $15 or 10 percent on the eight-week contract, whichever is higher, or $30 or 10 percent on the 12-week contract.