Pam Norkett stood in line at a Kmart store last year more than three hours to pick up items placed on layaway.

The James Island resident and her husband, John, both working two jobs to make ends meet, plan to buy on the installment plan again this year for their two teenagers.

"Because of the economy, you can't afford to buy things outright," she said. "Layaway gives us a chance to pay for it over time."

For budget-conscious consumers such as the Norketts, some local and national retailers have carved out a niche as the economy sputters along.

Layaway made a huge comeback at merchants such as Kmart after financial markets crumbled in the fall of 2008. Last year, Toys R Us started offering the service on certain items, and Sears recently added appliances to the products on its layaway list.

"For them to expand their product categories, layaway is working very well for their customer base," said Ellen Davis, a vice president with the National Retail Federation, referring to Sears' decision.

Davis hasn't heard of any new major retailers adding the service, but she said those who offer layaway have told her it is very effective.

"Many shoppers are still behaving as if the economy is in a recession," Davis said. "Retailers are seeing similar behaviors to a year ago. Consumers are opening up their wallets more, but they are still cautious with their money and doing a lot of research before they pull the trigger. They are not making impulsive decisions."

Because of that, retailers are looking for as many ways as possible to adapt and increase sales, including continuing to offer layaway, she said.

Toys R Us, including its Babies R Us stores, is one of those retailers holding onto the service has the industry approaches the all-important holiday shopping season.

"We were pleased with the response from our customers, which is why we decided to extend it after the holiday season last year," said Toys R Us spokeswoman Jennifer Albano. "People are looking for alternate ways to budget their expenses instead of using credit cards."

Pros and cons

But layaway is not for everyone. Wal-Mart Stores Inc., the world's largest retailer, dropped it in 2006 as too costly.

Among the drawbacks: Layaway requires storage space, manpower to manage purchased items and the technology to keep up with it, Davis said.

Many retailers would rather dedicate their resources to floor displays so they can tap into the American consumer's desire for instant gratification via a credit card. But because of the deep recession, more customers are using cash and paying down debt.

Layaway offers a way to pay for holiday gifts and household needs without piling in on the plastic.

"By putting it on layaway, it takes away a little bit of the stress and anxiety that parents are feeling," Wonder Works toy shop owner Christine Osborne said. "We are securing the item for the customer. Many of those items are limited in what a business can get and store."

Because layaway comprises 25 percent of her holiday business, Osborne is expanding her West Ashley store to include more storage space for items set aside and paid for on installments. She's already put up signs that say, "Layaway starts Sept. 1."

Croghan's Jewel Box, a fixture on King Street in downtown Charleston, will offer layaway, too.

"We sell expensive jewelry, so it gives people a chance to work toward a goal of giving something a little bit more valuable," said store owner Mariana Hay.

Croghan's requires items to be picked up the week before Christmas and customers are called as a reminder, but Hay remembers a few times when she had to drive back to the shop on Dec. 24 to retrieve an item that somebody forgot.

Each retailer has its own down payment requirement, payment schedule and pickup policy.

For instance, Kmart and Sears require a nonrefundable $5 initiation fee, $15 deposit or 10 percent or 20 percent down of the total purchase, respectively, and layaway items must be paid in full in eight weeks.

Toy R Us requires a $10 service charge and 20 percent of the purchase; half must be paid within 45 days and full payment is due in three months.

Wonder Works shoppers must pay a third down on a minimum purchase of $75 and purchases must be picked up by Dec. 15.

Some stores charge a restocking fee if items aren't paid for, so it's a good idea for shoppers to know the retailer's policy before using layaway.

Resonating

The big winners in the layaway surge by far are Kmart and Sears, which are both owned by Sears Holdings Corp. They continued to offer layaway when other companies axed it as too expensive, though they had stopped promoting it heavily before the recession began.

Kmart touted it with great success in the fall of 2008, when the bottom fell out of the economy, and Sears jumped in last fall as the recession lingered.

For both stores, particularly Kmart, more than 3 million customers bought on layaway over the past two years, according to Salima Yala, divisional vice president of financial services with the layaway team at Sears Holdings. She declined to release what percentage of the company's business layaway provides, saying it was proprietary.

"It is really resonating with our customers," she said of the service. "It's a combination of the economic downturn and changes in the credit card industry. Customers feel there is no debt and no more strings. They are done and feel a sense of accomplishment. We are seeing great year-over-year increases in layaway sales."

Denise Armbruster at Citadel Mall's Sears store said layaway on washers and dryers has been the most popular since the department store chain expanded the service to appliances. Carefully labeled packages of back-to-school clothing and book bags also line the shelves in the store's layaway storage area.

"This will all be gone in a couple of weeks as school starts back," she said.

Pam Norkett, the James Island shopper who's taking advantage of layaway again this year, said she will start scouring the stores that offer the service in September and make her purchases the following month, since October has five Fridays and more pay periods for her and her husband.

"With the way things were last year, we want to do our shopping earlier," she said. "We don't want to wait again in a long line."

Reach Warren Wise at 937-5524 or wwise@postandcourier.com.