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Is layaway making a comeback—or has it simply been rebranded as “buy now, pay later”? In this episode of Is This Really a Thing?, Dean Paul Jarley sits down with Jim Adamczyk, Chief Strategy Officer at FAIRWINDS, to unpack the surprising history (and psychology) of delayed payments. From Christmas shopping in the 1970s to today’s Klarna and Affirm apps, they explore why consumers keep returning to installment plans, what it means for financial health, and whether AI could reshape how we manage spending and debt.
Featured Guests
- Jim Adamczyk – Chief Strategy Officer, FAIRWINDS
Episode Transcription
Paul Jarley: If you’re as old as I am, you know, things come back around. Today, we’re going to talk about an old classic: layaway. Is it back? Is it hiding under a different name? Should you really put your lunch on layaway? Or buy now, pay later. To help me figure this out, I’m joined in this episode by Jim Adamczyk. Jim is a UCF alum, a member of our College of Business Hall of Fame and is the current Chief Strategy Officer at FAIRWINDS. We recorded this podcast live in front of 100-plus students in The EXCHANGE, and we’re bringing it to you now. Listen in.
This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, Is This Really a Thing? Onto our show.
So when I was a kid, my mother spent half of her annual income on Christmas. I’m not kidding. We grew up with relatively modest means, and so she would start shopping in June for Christmas. And the family didn’t have a huge amount of money, so she would buy things on what was called layaway. Basically, you went in and you picked out your item and you gave it to the store and you promised to pay for it before you would pick it up and you had to agree to a schedule. And I was driving somewhere a couple of weeks ago and I was listening to the radio and I think it was Burlington Coat Factory was talking about their layaway program. Literally, I hadn’t heard about layaway in probably 40 years. And so today Jim and I are going to talk about layaway, what it was, how it differs from Buy Now Pay Later, or rent to own things that many of you might see, why it’s on the comeback and what might replace it after that. So thanks for joining us today, Jim.
Jim Adamczyk: Always happy to be here.
Paul Jarley: What is layaway? Had you ever experienced layaway?
Jim Adamczyk: When I was in high school, I was dating somebody and I remember there was a Montgomery Ward in Altamonte Springs and I put a present on layaway. And by the time I got the layaway, I was no longer with the person anymore, so my first experience was: layaway is not great.
Paul Jarley: Just so you understand kind of the world we’re living in at that time, people didn’t have credit cards, people didn’t have debit cards.
Jim Adamczyk: The main way to pay for it was cash. You took cash out and you went to the store and buy it, but if you didn’t have the cash, your primary means of credit was layaway. And it’s not really credit in the sense that you don’t have the item, so you’re kind of saving each month. It’s like a savings plan to end up eventually buying something. It’s almost like delayed gratification in a world of instant gratification today.
Paul Jarley: Right? And if you missed a payment, the retailer put the product back on the shelf.
Jim Adamczyk: And so the retailers had to have an entire inventory management system to keep track of all the different items that were on layaway, the customers that had them on layaway and then the payment plans that were in place to pay for those items as well.
Paul Jarley: And there would be late penalties, right? I think if you –
Jim Adamczyk: Usually you had to put a percent of the item down upfront, 10, 20%, and then if you were late, kind of like a credit card or a loan today, they would charge you a fee on the late payment. And then if you didn’t actually pay it off or you’d stop paying, they would put it back and they would keep your money pretty much.
Paul Jarley: So fast forwarding a little bit, if you did that today and you missed a payment and they put it back, would it impact your credit score?
Jim Adamczyk: On layaway today, there’s no impact. It’s not credit. So the big difference with layaway is that you don’t own the item yet. You’re almost saving towards, and ended up eventually getting it, so it’s not credit. Whereas today if you buy on a credit card or you buy now with those buy now pay later items, that’s credit. Someone is giving you the item before you actually have paid for it. That’s credit under any definition.
Paul Jarley: So mom was shopping in June, she didn’t really need the item until Christmas.
Jim Adamczyk: Right.
Paul Jarley: This is how this would work. And so she would make a payment on it for a few months so that she could have presents under the tree. That’s really how this developed. Let’s go to a couple of other similar kinds of programs, but in some ways different. How’s it different from rent to own?
Jim Adamczyk: With rent to own, it’s a contract, so you’re entering into a contract to buy a particular item and you’re renting it for a period of time and you have the option to buy at the end. Most of these programs aren’t designed for the majority of consumers. They’re usually for consumers that typically don’t have a good track record of saving. And so unfortunately, the programs do target those that aren’t disciplined in our approach like rent to own or buy now pay later. And the buy now pay later, which is what everyone in here probably sees, and probably more than half of you have used it already, I would imagine based on –
Paul Jarley: Based on the number of apps.
Jim Adamczyk: the number of statistics out there. It is more of the payment in four. So you’ll get the item and then you’ll agree to four payments. So instead of paying $100 today, you’ll pay $25 over four weeks or six weeks is typically the cycle that you’d pay that over. That’s pretty much what has put layaway, away. Because buy now, pay later is prevalent in almost every transaction that you see today. And it’s pretty much a dominated small dollar purchases today.
Paul Jarley: Because that’s about instant gratification to your point.
Jim Adamczyk: Yeah, I mean the psychology behind it –
Paul Jarley: Exactly the opposite.
Jim Adamczyk: is really interesting. You have this bias for having something now because you feel like having it now. You over assume the importance of having the item now and you under assume the value that you have to pay over time and the benefit of that. It ends up hurting I think those of us that struggle with savings just in general.
Paul Jarley: And you end up paying more for it over the long haul than you could have just paid upfront?
Jim Adamczyk: I heard it described once as like a treadmill. You get on a treadmill of debt. Most people that use buy now pay later, 60% of consumers have at least two or more active buy now, pay later going at the same time.
Paul Jarley: I’ve noticed now it’s even on my credit card.
Jim Adamczyk: There’s three big firms that control the whole buy now pay later space, and one of the big ones, they want to replace credit cards in the banking system around credit. That’s their whole goal. The short-term buy now pay later does replace credit cards for small dollar purchases for a lot of people, and it works in a similar way like a credit card. If you pay it off when it’s due, there’s no interest on it. But, like credit cards, most people don’t pay those off every month. In fact, probably more than half of Americans with credit card balances don’t pay them off every month. And so buy now pay later unfortunately follows a similar cycle. It might seem like you don’t have to pay a hundred dollars now and it’s only $25 today, but the reality is more than 40% of people that are in that today have some late payment over that period of time.
Paul Jarley: Why do you think layaway might be making a comeback now? Inflation maybe?
Jim Adamczyk: Certainly the cost of goods has gone up and layaway is still a niche product I would say today because a lot of the bigger retailers have gone away from it and moved to the buy now pay later. I definitely know that there’s a couple out there that still do it like Burlington, you’d mentioned, Sears and some of the older traditional players. But the Walmart’s the Best Buy’s the Target’s, they’ve all moved to the bigger buy now pay later firms. And what they’ve seen is just an increase in sales when they move to it, and that’s part of the reason why.
Paul Jarley: Well, and plus the inventory management part of it, right? Of setting it aside and –
Jim Adamczyk: Just imagine you’re at Walmart and you’ve got to manage all of these layaway programs for different consumers and when they come get it and if they’re late, not late, it’s an entire inventory management system. Versus you move to a buy now pay later infrastructure and the consumer gets their product right away and they have to manage inventory and payments and late tracking. So that’s part of the reason why you’ve seen layaway go away.
Paul Jarley: And you don’t need to have a credit score, right to do buy now, pay later?
Jim Adamczyk: I think a lot of people think that buy now pay later is helping your credit score. It is not actively in a credit score today. But if you don’t pay that buy now pay later at some point, that could go to a collection agency which could show up on your credit report. So there’s no benefit to credit for buy now, pay later, but there could be a detriment to your credit for not paying buy now pay later. So I think it’s important that people understand that there’s some misinformation in there out there about whether or not buy now, pay later can actually help your credit today. Now I will say that there’s a couple of the bigger ones have started to send your data monthly to the credit bureau agencies, but they’re not including it in their scores today.
As a company that lends money, we want to know that information because we make decisions on your ability to repay debt. And so if you’re getting a car loan or a mortgage and you’ve got eight different buy now pay later plans out there, that impacts your ability to repay. And so I think you’ll see some movement probably from the larger institutions pushing to have this data readily available to them. I don’t know if it’s going to impact your credit score anytime soon from a positive perspective.
Paul Jarley: So FAIRWINDS is very big on financial freedom and being debt-free. So would you recommend layaway to anyone?
Jim Adamczyk: We are always a proponent of save now, buy later. Okay? It is so easy to open an account and most banks have a little budgeting tool or a budgeting program or even a budgeting like savings goals or something you can use and just start putting the money into the savings goal in your bank account until you get ready to buy the purchase and then go make the purchase. That’s our recommendation a hundred percent of the time. First, it’s buy cash. Second, if you need to buy it, save for it and then buy it with the cash you saved. One of the worst things you can do is put it on credit if you can’t pay it off.
Paul Jarley: And for people who can’t get credit cards right, it’s an option.
Jim Adamczyk: Absolutely, a hundred percent. It is an alternative for people that cannot get credit cards and typically people with no credit. A bigger lesson for me around layaway is the movement of it to buy now pay later. And the most important thing you can learn about buy now pay later is, it’s credit. You got to know all the rules that come around with buy now pay later are like credit rules and you want to manage it in a way that doesn’t put you in a bad position later on.
Paul Jarley: So this is really all about the importance of cashflow and knowing how to manage it. So what tips would you have for our students on how to manage their cashflow?
Jim Adamczyk: The most important thing you can do is one, have a budget. You should know some idea each month of how much money you have coming in and then you should have some idea of the expenses that you’re paying each month. And then once you have the budget, your next goal is to save $1,000 in an emergency account. Don’t touch that money for any reason whatsoever unless some emergency happens. And by emergency is not like all my friends are going somewhere and so I got to go with them on vacation, which is mistakes I’ve made when I was younger. Emergency is like my car broke down or I need books or something like that. Save that money for a real emergency. So now you have a budget, you have a thousand dollars saved. And then, then I think you think about layaway programs or if you need to actually own something. We don’t say buy now, pay later. We say save now, buy later. That’s our approach to this.
Paul Jarley: You know these numbers better than I do. What percentage of households don’t have a month’s worth of savings? It’s a frighteningly high number, I do remember that.
Jim Adamczyk: It’s anywhere between 50 and 60% of Americans cannot afford a $400 emergency expense, and it’s been that way for as long as I can remember, at least the last 10-to-15 years has not changed. And so the small decisions you make today can influence whether or not you’re part of that statistic or you’re not. Income does not matter a lot because even people that make over $100,000 a year, over 25 or 30% of them are still living paycheck-to-paycheck. The more money you make, the more money you spend is a reality in life. And so the most important thing you can do is spend less than you make.
Paul Jarley: So in today’s world, I got to ask this question. Can AI help you out here?
Jim Adamczyk: Man, I hope so. I’m looking forward to it.
Paul Jarley: A cashflow manager, an AI cashflow manager. Yeah, I think that’s coming.
Jim Adamczyk: There is a future around what AI can do for you, even around managing your money. Imagine that has access to your transactional spend across every platform that you have. It has access to your income coming in, it has access to every expense you’re making on a monthly basis. I see a future where AI is helping you decide what to do next and even telling you, don’t buy that. Or no, no, don’t do that. Do this and here’s how to do it. Or if you’re going to buy it, use this channel because you’re getting better rewards, it’s better behavioral science for you to do that, but it will be your little agent that follows you round and I believe that future is not far away.
Paul Jarley: Yeah. How far do you think, I know you guys are thinking about this and you’re not alone. I’m sure.
Jim Adamczyk: You can see use cases on YouTube and online today where you see people that are uploading all of their transaction data and they’re using it to help – I would never recommend that, by the way – but you can see how the AI is helping them identify and spend correctly. The challenge that most financials have today is most people don’t have just one account. They usually have multiple accounts. For AI to be effective, it needs to know everything happening.
Paul Jarley: That’s called open banking. There’s still some challenge. What are the main challenges with that?
Jim Adamczyk: The main challenges are all the banks having access to the API calls from all the different financial institutions data that’s out there. And then I think you can make a pretty accurate prediction of how you should manage your money. But in today’s world, and I imagine most of you’d say might have five or six different financial apps sitting on your phone, and so having access to that and having financial institutions trust that they can do that –
Paul Jarley: Because options for evil there as well, given what they would know about people and their spending habits?
Jim Adamczyk: You would have to essentially allow access to that. A scale that maybe most people aren’t comfortable with.
Paul Jarley: Yeah, maybe. I don’t know. Younger generation seems to give that away pretty quickly compared to –
Jim Adamczyk: Although I find myself giving away a lot of stuff too, as well as I get older. I want convenience. I think people, want convenience.
Paul Jarley: That’s right. People want convenience.
Jim Adamczyk: Most of you’ll probably grow up in a world, or at least you’ll be in your professional world in the next five to 10 years where it’s going to be totally different than it is today, and you’ll have a tremendous opportunity to make more of an impact than people that have been in the industry for 10, 15, 20 years. Because you’re going to come in at the cusp of all this new tech coming in and you’re going to be able to teach people that have been there for 10, 15 years how to use it probably more effectively than they are using it today.
Paul Jarley: What other advice do you have for students before I open it up for questions?
Jim Adamczyk: Well, as it relates to layaway, my biggest advice is that it’s a better program than buy now, pay later because it’s delayed gratification and I think you feel better when you actually work to save for something and then you buy it. The behavioral science behind this will show that almost half of people that buy something now and they have to pay it later, they end up regretting the purchase, especially the bigger the purchase, the more regret happens. Think of all the stuff you bought over the last three or four months. Did I really need to buy that stuff? And if I didn’t buy it, I’d probably have this extra $500 sitting here. And so my advice really to everyone is have a budget, save a thousand dollars and plan for your spending, and I promise you’ll be in a much better position than most of your counterparts out there if you treat personal finance as the most important thing you do as you graduate.
Paul Jarley: I think the psychology around spending is really fascinating. I think it’s also true, and hardly none of you do this. How many of you have more than $20 of cash in your wallet right now? More than I would’ve guessed. How many of you have $50 of cash? I still think paying for things in cash and watching it disappear from your wallet is one of the strongest incentives not to spend money.
Jim Adamczyk: You know what’s funny, if you asked that question to all the 600 people that worked at FAIRWINDS, probably less than 10% of them would have had $20 in their wallet.
Paul Jarley: I’m stunned that about half of the students raised their hand.
Jim Adamczyk: That was pretty interesting. That is fascinating. Would’ve not predicted that that many would’ve raised their hand with $20. I don’t think I’ve had $20 in my pocket in six years.
Paul Jarley: Yeah, me too. Okay, so last question, Jim, do you think layaway will still a thing 10 years from now? Yes or no, and why?
Jim Adamczyk: I think layaway will be as much a thing as the flip cell phone, and I don’t know if I remember the flip cell phone. You remember the little Razor? Everyone wanted the Razor cell phone. There’s still some people that have it.
Paul Jarley: I know a few guys who do.
Jim Adamczyk: Yeah, that’s right.
Paul Jarley: They happen to be wealthy.
Jim Adamczyk: Yeah, that’s right. Yeah, they do. They don’t want all the tech on their phone.
Paul Jarley: Discipline buying.
Jim Adamczyk: Discipline buying. Yeah, it could make a comeback. I do think with artificial intelligence, though, layaway might change in the future. Maybe there’s a different way of looking at layaway that becomes more consumer friendly and hopefully puts people in a better position, not a worse position.
Paul Jarley: Well, thanks Jim. Always good to have you in The EXCHANGE.
[Audience clapping]
Paul Jarley: It’s my podcast, so I get to go last.
In a world of instant gratification, credit cards and buy now pay later programs pretty much ensure that Layaways heyday is behind it. But it isn’t dead either, in part because it offers a form of inclusiveness for people with modest incomes, difficulty saving and little access to credit. The real question for retailers is whether this boosts their sales enough to deal with the hassles of keeping track of the payments and reserving the goods. It very well might for the Burlington Coat Factory, but probably not for Bloomingdales.
In some ways, the biggest layaway plan of all is sitting right in front of my students. It’s a college degree. Think about it. You put money down semester after semester, making installments in time, effort, and tuition. You don’t get to take advantage of the degree until the very end, and if you stop partway, you don’t get the ultimate prize. A half a degree is no degree. Paying for the entire four years at the start of a college journey would price all but the wealthiest people out of the market. And it’s unlikely that an 18-year-old could get a loan for the entire amount, unless they were exceptionally gifted academically. Even the government isn’t going to take this deal and give you a loan.
So maybe that’s the lesson. Whether it’s a coat at Burlington or a college degree, layaway survives because it’s the only way some of us can afford the things that matter most. We live in a world of instant gratification, but some of life’s biggest rewards still require patience, persistence, and a long string of installment payments.
So what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. And be sure to follow us on social media to be alerted when our next episode airs. I’ll be joined by UCF’s own Carolyn Massiah and pet mom Amber Downs to learn if pet influencing is really a thing … and more importantly if my dog, Sneaky Pete, has a shot at becoming one of them. Special thanks to my new producer, Brent Meske, and the whole team at the Office of Outreach and Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.