A few weeks ago I got pummeled on Twitter for questioning the need for layaway, which was being touted heavily at the time by Wal-Mart.
I was persuaded by arguments that layaway doesn’t make sense in an era of big box stories that seem to have an endless supply of goods from China. It’s less important today, for example, to secure an early partial purchase of that bike for Timmy at the neighborhood mom-and-pop sporting goods store. Just got to Wal-Mart when you have enough cash, and there will likely still be bikes available.
Some have also argued that layaway doesn’t make sense financially, given the fees Wal-Mart and other stores charge, as Cornell professor Louis Hyman explained last month in The New York Times:
At first glance, the return of layaway makes sense. Fewer lower-income shoppers have access to the sort of credit they once did, and many can’t afford big purchases outright. And there is a moral appeal as well: customers paying layaway are effectively saving toward something, a reward they will receive only if they meet their goal, rather than paying off the debt on a purchase they have already made.
Nevertheless, as a financing option, layaway is decidedly worse than most credit cards. Imagine a mother going to Wal-Mart on Oct. 17 and buying $100 worth of Christmas toys. She makes a down payment of $10 and pays a $5 service fee. Over the next two months she pays off the rest. In effect, she is paying $5 in interest for a $90 loan for two months: the equivalent of a credit card with a 44 percent annual percentage rate, a level most of us would consider predatory.
He may be right, but that’s not really the point, which is that Wal-Mart knows its customers. If the retailer is buying national advertising to tout the return of layaway, people out in the country must be seeking it. There’s evidence of that, for example, in the phrases people enter into Google.
This line chart, created with Google Insights for Search, illustrates search volume since 2004 for the phrase “layaway.” It’s on the rise since the economic downturn, and it’s spiked this holiday season:
This map shows the states in which the search term is popular:
View larger versions of both visualizations here, and let me know if you find anything interesting in the search trends for other terms.