Sunday, October 01, 2006

Putting Aside Prudence

Despite what you may think of them Wal-Mart has always offered its customers value for their hard earned dollars, allowing them to maximise their purchasing power. Even tho they aren't the "Buy American" store they once were, due to customer demand and the nature of the markets Wal-Mart has always been customer friendly. This is about to change, tho. Wal-Mart has announced that they are ending the practice of "layaway" which the chain has offered since its 1962 founding and are going to start offering credit terms instead.

I remember my folks using the layaway system for holiday shopping when we were kids. Why did they choose to use it? So that our family did not accrue any more debt than necessary for non-essentials. It allowed us to stretch our family budget a lot farther and still purchase the "necessary" holiday gifts (as determined by my mother) for all parties. We accrued no debt using this system and neither did other people who used it. That is now at an end, as Wal-Mart ushers in a new class of lower income debtors. People who truly cannot afford to assume credit card debt will now be welcomed with open arms by Wal-Mart's underwriters. This is not a good thing on any level.

Layaway programs foster fiscal responsibility and monetary prudence for people who normally would not be considered for credit cards, due to their income limitations or who are smart enough to eschew the assumption of unsecured credit card debt. Now Wal-Mart, like so many other retailers is adding another layer to our already burgeoning national debt problem. I will not be overly surprised to see a great number of credit defaults amongst people using this method for their holiday shopping. People who previously could only afford to purchase a limited number of items within a set price range will suddenly see an expensive cornucopia of items that were previously outside their grasp.

The time is coming, aided by events such as this when we will likely see ourselves in the same predicament that Great Britain now finds itself in, if indeed we're not already there. The low income segments of our population can ill afford to have unsecured credit dangled in front of them in such a fashion. While it is obviously not the place of businesses to hold the hands of their customers in such a situation, it does no great service to those same customers to place them in a situation where they become slaves to debt. A good customer is a lifetime project, not someone you use until the money dries up. Good customer service sometimes means not offering something to your customers, especially those who can afford that "service" the least.

Thanks to Kevin for the tip on the Brits!

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