Buying "on layaway" is making a comeback. As reported by The Wall Street Journal, the Depression-era retail practice of letting shoppers put items away while they pay for them a little at a time is coming back in fashion. Analysts cite our rough economy, which has limited people's access to credit. Kmart has even made layaway the focus of a national ad campaign as it gears up for the all-important holiday season. An online company, eLayaway.com, allows customers to use layaway to purchase products from various retailers, and also offers its services as a payment method on other web sites.
Matt's View
Most layaway plans are not free. Stores typically charge a fee for putting merchandise on hold and require an upfront cancellation fee in case you don't finish paying for the item. It would be far better to create your own layaway program, putting money earmarked for gifts into a separate savings account where it can earn interest until you have enough to pay cash for the item.
One other point about the upcoming holidays. A lot of people are feeling some financial pain or uncertainty right now. But that doesn't have to put a damper on your holidays. Earlier this year I worked with the market research firm Synovate to ask people what they wish they had done more or less of during the 2007 holiday season. The answers, contained in a news release titled Holiday Regrets
, can help all of us have a more meaningful, less financially taxing celebration this year.
Some of the best insights about shopping smart come from marketers. The trick is to learn their strategies for separating us from our money, and then play defense. That was the focus of a great post on the Get Rich Slowly
blog, which reviewed the book, "Why We Buy." For example, retailers do what they can to keep shoppers in their stores as long as possible. They know that the longer a person stays, the more likely they are to buy. So, our best approach is to shop with a specific purpose in mind, spending as little time in stores as possible. Marketers don't offer baskets and carts just for our convenience, but because they know we'll buy more if we use one. So, if you're going in the store for just a few items, take a pass on the cart or basket. Lastly, research shows that the more interaction between shopper and employee, the higher the average sale. So, seek the assistance of a store employee only if absolutely necessary.
Matt's View
I used to have a day job that required my attendance at various marketing conferences. And I found myself doing the same thing as this blogger--trying to turn marketer insights into shopper insights. I remember hearing a marketing professor going on and on about his research that showed why "value" size packages are good for manufacturers and retailers. While shoppers perceive that they are getting a good deal, the marketing prof found that when shoppers buy big packages they end up using a lot more product per usage occasion. One solution is to transfer some of the product to smaller containers when you get home so you always feel like you're about to run out.
A new study of Wal-Mart shoppers (and that's 9 out of 10 of us) shows that the economy is reshaping how we shop. As reported by USA TODAY, Wal-Mart has seen a double-digit decline in credit card use, a noticeable shift from the sale of discretionary products to necessary products, twice as many private label purchases, and less frequent store visits, in part so that shoppers don't have to spend so much on gasoline. Wal-Mart's CEO termed such shopping behavior changes "disturbing."
Matt's View
The company's motto is "Save money. Live better." But since it's "disturbing" when people spend smarter, maybe what they meant to say was "Save money, but don't get carried away."
What changes have you made
in response to the economy? We recently went from two cars to one. At 165,000 miles, my car finally broke down badly enough that the cost of repairs would have been prohibitive. So, we gave the car to a charity that fixes cars and then gives them to needy families. Since I work from home it hasn't been too much of a hardship and we're saving a few bucks. It has also made me question which trips are really necessary.
There was a funny post on the No Credit Needed blog showing a purchase decision flow chart
. It lays out the process of making a wise spending choice so logically that it'll make you laugh.
Matt's View
It reminded me of the Saturday Night Live skit called Don't Buy Stuff You Cannot Afford
, which may be the best personal finance video I've ever seen.
