Big Retailers Push Layaway as Battle For Holiday Shopper Begins Early

(Retailer layaway story updated for announcement from Sears, Kmart of waiving layaway service fee)

NEW YORK ( MainStreet) -- Like two heavyweight prizefighters squaring off in the ring, Wal-Mart ( WMT) and Toys-R-Us are set to battle over an increasingly prized consumer category as the holiday season nears -- the "layaway" shopper.

It wasn't long ago that layaway was a fading cultural fad, right up there with the typewriter or the phonebook.

But the bleak economy has reawakened the layaway plan from a prolonged slumber, and consumers seem to be clamoring for layaway shopping options on a wider basis.

While few studies are available on the topic, it's enough to know that retailers who had long abandoned layaway programs, or who had downplayed layaway services, are now cranking them back up again. Besides Walmart and Toys-R-Us, Sears Holding ( SHLD), Kmart, and T.J. Maxx ( TJX) have all revived layaway services.

The layaway plans are also coming back as a way to encourage early holiday season shopping.

Here's a brief rundown on what major retailers have in store for layaway shoppers:

Walmart -- Cancelled since 2006, Walmart's layaway program re-emergences from September 16 to December 14. The retail giant is sweetening the pot by cutting its Christmas layaway plan fee from $15 to $5. Once the item is fully paid for, Walmart will give the consumer a $5 gift card.

Toys-R-Us -- The nation's largest toy retailer has already rolled out its holiday layaway plan, and it has a sweetener of its own. Toys-R-Us layaway is open now, and won't place service fees on layaway items ordered by October 31. The retailer wants 20% down on any layaway item; 50% paid within 45 days, and everything paid in full by December 16. Items ordered after October 31 comes with a $5 service fee. Sister store Babies-R-Us has the same layaway policy.

Kmart -- Kmart parent Sears had been charging a $5 fee to open a layaway account, but announced on Thursday that both Kmart and Sears locations will waive that fee, though still charge $10 if you cancel. You'll need to either pay $15 or 10% of the item purchase price to get rolling. Kmart wants consumers to pay up within eight weeks of ordering a layaway item. Sears has pretty much the same criteria, but will extend the timetable from eight weeks to 12 weeks for items that cost more than $400.

T.J. Maxx -- The discount clothier and home furnishings retailer doesn't offer layaway in all of its stores, but the ones that do provide a 30-day layaway program with a down payment of 10% of the total cost (or $10), as well as a $5 service fee. Don't expect to place jewelry or furniture items on layaway at T.J. Maxx.

Best Buy -- Best Buy wants more cash down on its layaway items (25% of the purchase price) than most stores, but their prices are higher, on average, than the retailers listed above. There's a 5% layaway service fee, which can add $50 to the cost of a $1,000 television. The retailer offers an eight-week and a 12-week layaway payment period.

Layaway plans are fine for consumers looking to spread payments out over the course of a month or two. But they can jack up the overall price of an item once you factor in service fees. Plus, you'll be out any cancellation fee if you change your mind.

As always in any consumer shopping experience, know the retailer's policy, and be prepared to finish what you start, payment-wise.

These days, stores want your layaway business. That's fine as long as you make sure those same retailers don't give you the business.

--By Brian O'Connell