Layaway’s Out, Theft’s In At ShopN’Shoppe

With credit cards on the outs these days, old-fashioned layaway plans are on a nostalgic comeback tour. Sears, Kmart, TJMAxx, and others are bringing back the layaway, usually charging a small fee and requiring that items on layaway be paid for in full within eight weeks. Unlike credit cards, layaway doesn’t allow the purchaser to take the item home prior to paying in full, but it also doesn’t cost anything in interest payments, and if you can’t complete the payments, you get your money back and the store simply returns the item to inventory. “It really became common during the Depression,” said Howard Fink, grandson of the founder of New Jersey’s Fink’s Department Stores, “The family story is my grandfather let customers pay off a $3 blanket at 25 cents a week. We never stopped layaways because people liked it.” In fact, this reporter’s family nearly owns one of those layaway blankets first put on layaway by a now long dead great aunt during the Great Depression.

Go Away Layaway. Some stores are not embracing layaway, though. It’s on the outs at Wal-Mart, with the wholesale giant ending its layaway programs back in late 2005. Wal-Mart’s upcoming rival, the Johnston family’s worldwide ShopN’Shoppe, never had layaway and, according to founder Alfred Johnston, “never shall we.” In a wide-ranging interview with this reporter, Mr. Johnston and executive vice president Pat McSwirly insisted that layaway and other common retail practices just don’t fit their business plan.

“Demand for layaway service has declined steadily as consumers turn to other options, such as downright theft.” said Mr. McSwirly . And theft, continues Mr. McSwirly, “although replete with debatable moral questions,” has its “upside for cost cutting at ShopN’Shoppe.” Theft has become so popular a customer choice during this economic downturn that ShopN’Shoppe decided to eliminate store security, thus saving on operating costs. “The customer comes first at ShopN’Shoppe,” says Alfred Johnston, scion of the family whose 1,200 ShopN’Shoppe stores worldwide have revolutionized the department store business. “And we’ve securitized our risk on theft through a variety of reliable credit default arrangements with the Federal Reserve.” In a very real way, Mr. McSwirly adds, “we’ve made theft pay, for the customer and for ShopN’Shoppe, and, too, it makes us a very real partner in the country’s response to the credit derivatives crisis.”

I asked the pair about their overall business plan, based primarily upon keeping costs per sale as low as is humanly possible. “After all, it is as a direct result of our cost savings measures over the years that we so reduced our costs that customer thievery no longer impacts our bottom line.”

A Whole Lot of Nothing. Mr. Johnston continued, “For example, we have no salespeople at all in our stores. Not a one. In a spirit of cooperation, we encourage our customers to assist each other.” At the huge ShopN’Shoppe outlet in Des Moines, Iowa, I witnessed this in action. It’s quite something to see too, as customers band together to find items without sales help or stores organized by sections or signage. Mr. McSwirly explained, “We also reduced costs by not placing items in specified sections of the store. When something comes in on a truck, we simply have them dump it in the store wherever there’s room.” In addition, although met at first by a controversial Surgeon General’s warning, ShopN’Shoppe also led the way in cost reduction by eliminating bathrooms. “Our Body Waste Committee found that traditional bathrooms are a cost nightmare,” Mr. Johnston observed. “All that flushing adds up financially. The committee found that most people can learn to ‘hold it’ for an adequate amount of time to complete their shopping, and those who cannot have learned the advantage of purchasing Depends which we now offer at the entrance of each store.”

Although they have reduced their human labor needs to an industry leading minimum, ShopN’Shoppe does employ a few workers per store and many more at the corporate managerial level to manage those few employees. As for ShopN’Shoppe’s labor relations, well, that is something they point to with pride, although others do not, including the Pope, who on numerous occasions has criticized management as “vicious inhuman rat bastard snotbags for whom Hell would be a minor penalty.” ShopN’Shoppe defends though, “Through basic capitalistic principles that we all revere, the ‘invisible hand’ guides us in cutting the costs expended to keep our employees barely alive, just enough to complete their working day, and still have the minimal amount of energy to return to work the next day.” Johnston also points to an internal study that indicated that, for 2008, employee deaths from attempted union membership had declined for the fifth straight year, and employee injuries requiring massive invasive surgery and new limbs had declined by a third to just over one-half of the work force. “As a result of these improving numbers, union organizers see no point in organizing our shoppes,” says Mr. McSwirly with a beaming countenance.

Civic Minds. And “Wall Street loves us,” says Mr. Johnston, “These cost savings benefit millions of shareholders, including,” he adds with a glint in his eye, “our own employees who benefit from the mandatory stock purchase pension plan.” Also, we encourage workers to plan their hourly earnings so that they qualify for government programs. After all, Mr. Johnston asserts, “in a real sense, our employees pay for these programs through their taxes, at least those who make enough to pay taxes, so why not use the very programs they pay for?” ShopN’Shoppe offers employees assistance in applying for Medicaid, food stamps, and other government programs that provide, for example, artificial limbs. Mr. McSwirly notes, with what looks like a tear welling in his eye, “We’re darn proud of this – what we call our ‘Cornucopia Program.’ It’s a civic duty we embrace: helping people take a direct role in their government when they use Medicaid to visit the hospital or food stamps to purchase foodstuffs.” Most of ShopN’Shoppe employees use Medicaid on a regular basis and often sleep in publicly financed parks.

Furthermore, as Mr. McSwirly points out,

“we go above and beyond in many areas. There is our positive impact on the disabled community. You see, our management dietitians learned that the caloric needs of an average worker can be radically reduced by hiring people of small stature and volume. And, in doing so, we also take pride in striking a blow for diminutive workers everywhere, who have suffered rank discrimination throughout history.”

Global Warming Not Welcome Here. Finally, as a way to positively impact the earth and environment, ShopN’Shoppe offers a financial bonus for those employees who stay “kid free for the environment.” Mr. McSwirly explained,

“This is an example of where ShopN’Shoppe helps the environment and realizes cost savings for shareholders. We realize that employees with kids desire higher pay, and kids, it is well known, cost a lot and pollute the environment. Our emphasis on zero growth is a ‘win-win for the world,’ we like to say.”

To handle those occasional unplanned births, ShopN’Shoppe provides a low cost adoption agency for employees who “slip up” but still want to take advantage of the “kid free” bonus. And Alfred Johnston says, “facilitating adoptions is also good.”

Goin’ Globalistic. Globalization is key to company growth. Most of the company’s employees are located in foreign locales, since, Mr. McSwirly observes, “it’s sad, but it just costs too much to keep American workers barely alive, even the illegals.” In addition, “Haiti and Sierra Leone are often considered ‘vacation destinations’ by American workers, so those fortunate enough to actually live and work there get a double benefit.” It’s true too, as their Science Advisor, Heinrich Himmel reported in a 2006 federally financed study: “the fresh sea air in the Dominican Republic, for example, has been shown to increase an employee’s health while reducing his or her caloric requirements.” Alfred Johnston adds, “Sun is free; food costs money!”

Rumblings from the Far Left. Another win-win for ShopN’Shoppe? Well, some disagree. The socialist leaning American Red Cross accuses ShopN’Shoppe of running nothing more than a worldwide “ShopN’SWEATShoppe.” McSwirly shakes with rage, “Yeah, so our workers sweat. Who doesn’t sweat in Haiti or remotest Africa? And what about the old-fashioned idea of ‘sweat equity,” huh?” The left leaning United Nations also doesn’t think very highly of the Johnston empire, but Mr. Johnston ignores their criticism and offers a cogent defense. “We keep people barely alive as well as any U.N. sponsored dictatorship in the world today! You hear that?” He goes on, showing real anger for the first time during this interview, “We are number one among the entire world’s dictatorial powers in measures of usable life span among our workers! They live longer, produce more, and have strong feelings of pride during their regrettably short periods of time on this earth. No one gives us any credit for that ‘pride value’ we add to their lives!”

The Final Vote. Leftie critics aside, the real measure of their success, of course, is that Wall Street loves them.

“With thousands of stores, they’re clearly too big to fail,” says NYSE analyst John Wadsworth, “and we streeters see that as a no risk investment. For Heaven’s sake, the chairman of the Federal Reserve shops there! President Bush just gave Alfred Johnston the Medal of Freedom. ShopN’Shoppe can condone outright theft among its customers and still turn a profit! What’s not to love?”

This reporter, for one, sees nothing to disagree with in that summary. And tonight, for my last minute holiday shopping, I’ll be donning my Depends underpants and heading to you know where . . .

And for counterpoint, the great Richie Havens’ Freedom, sung at Woodstock in July 1969, well before ShopN’Shoppe was even a twinkle in capitalism’s eye . . .