The upstairs layaway loft in the Kmart in Pleasant Hill is a holding place for batches of children's clothes, mountain bikes or three-drawer dressers someone can't buy all at once. On one side of the room, bundles of merchandise are stored in bins lining the wall. The rest of the space has racks of plastic bags filled with goods hanging like ripe fruit on a tree. The room is only partly filled now, but in the month to come, it will be packed with goods that will be wrapped and placed under someone's Christmas tree -- as long as they are paid for and picked up by Dec. 12. Kmart, which requires a 25 percent down payment and a $5 fee, is one of the last national retailers to offer layaway for most of the items it sells. Other retailers include jewelry stores and the online retailer Lay-away.com. Sears offers layaway for select items such as jewelry and large appliances. Wal-Mart, on the other hand, recently announced plans to end its layaway program by mid-December. "Demand for layaway service has declined steadily as consumers turn to other options," said Pat Curran, executive vice president of store operations for Wal-Mart, in a statement. Christine Caspillo has seen the shift firsthand. She has worked at the Kmart in Pleasant Hill for more than seven years and spent most of that time in the store's layaway department. She remembers when the layaway counter was busy year round with customers coming and going on a daily basis.

Bob Larson/Contra Costa Times K-Mart employee Christine Caspillo helps customer Barbara Hayes with her layaway at the K-Mart store in Pleasant Hill. More photos

Now, busy periods happen only around back-to-school or the winter holidays. The counter, burrowed in the back of the store near the men's department, sits idle most days, with its gray Dutch doors swinging open only when a customer asks.

When asked whether layaway has changed, Caspillo says it isn't what it used to be.

"It was really, really busy," Caspillo said. "I guess people have less money and they spend less."

Or, as experts explained, people would rather use credit cards because buy now and pay later has become far more appealing than the buy-over-time model.

"Layaway is something of the past; it's one of those things that has seen its day and it's over," said Britt Beemer, president and chief executive of America's Research Group based in Charleston, S.C. "As charge cards become more popular, there's no reason for layaway."

Kmart disagrees.

After Wal-Mart announced its plans to ax layaway at its stores, Kmart made a statement reaffirming its "commitment to layaway," a service it has offered for close to 40 years.

"We are proud to offer a wide variety of products to customers with very diverse needs," said Don Germano, a Kmart senior vice president, in the statement. "With the holidays approaching, Kmart wants shoppers to know that we think it is especially important that this service be available."

On top of the 25 percent down payment, Kmart charges a $5 service fee for using layaway and requires that items be paid for within eight weeks. There is also a $5 cancellation fee. Customers who have made payments and later cancel the service can receive a refund for their payments minus the service and cancellation fees.

Barbara Hayes of Concord lost $10 out of $40 worth of payments she made on a bicycle for her son after he decided he didn't want it.

She put the bike on layaway because she didn't have enough money to buy it at the time and didn't want to use credit.

"I usually pay cash," Hayes said. "I don't have any credit cards. I'm better off without them."

The practice of paying cash is becoming less and less common. People are more comfortable with using credit and going into debt than in years past, said Brad Stroh, co-chief executive of Freedom Financial Network, a San Mateo-based debt counseling firm.

"We're always much bigger advocates of buying what you can afford today," Stroh said. "A much better scenario is to save up and buy something."

Using layaway is free at Lay-away.com, where about 95 percent of the goods sold are appliances and electronics. Robert Holland started the site about three years ago after struggling with poor credit and savings habits as a college student at Illinois State University.

He said layaway has a stigma of being a tool for low-income consumers with bad credit, but it can be a useful tool for consumers who use credit cards. Often, shoppers spend above their means simply because they have the credit limit to do so.

"With a credit card, you can say, 'I'll just pay if off later,' and then you never pay it off and three years later, you are still paying the interest on it," Holland said. "With layaway, you're not going to get the product until you pay for it, so it's more likely you're going to stay within your budget."

Stroh also pointed out that the United States has a negative savings rate, which means people are spending more than they are saving.

"Whenever you're buying a good today, think, can you afford it and what is the lifetime cost of that item?" he said. "How many hours do you have to work to pay it off?"

Blanca Torres covers retail and consumer issues. Reach her at 925-943-8263 or btorres@cctimes.com. Read her blog, Shop Talk, at cctextra.com/blogs/shoptalk.

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