About 40 per cent of Canadians said they plan on scaling back their holiday spending, according to a Deloitte research survey. (Canadian Press)

Sears Holdings has announced plans to bring back the layaway in a bid to help financially squeezed consumers in the U.S. during the holiday season.

The department store will make the payment plan available beginning Sunday. Under the plan, the retailer holds items for buyers who put down deposits. Shoppers who are unable to pay for the merchandise during the set time period must pay a cancellation fee.

But Sears Canada has no plans to introduce the layaway option. However, at certain times of the year, consumers can get an interest-free, equal-billing payment plan.

Vincent Power, a spokesman for Sears Canada, said the equal-billing plan allows consumers to take possession of the item right away while paying for the product in instalments over a number of years.

"Since the economic slowdown began, in fact as early as the first week of September we started to think of ways we could help people stretch their household budgets," he said.

"This [program] tends to be popular with customers here, so what we've done in these times is just try to extend it."

Retailers in the U.S. first introduced the concept of layaway during the Great Depression when both credit and cash were in short supply.

George Rosenbaum, chair of the U.S.-based retail consulting firm Leo J. Shapiro and Associates, said he expects many consumers to rely on alternate payment programs this holiday season.

"This is a tool that people are going to use quite heavily this Christmas in those stores that have it available," he said.

"And then retailers will see whether this was a great thing they missed and whether they should install it next year."

Consumers scale back spending

The wobbly economy has many retailers concerned holiday shopping returns will be modest. A Consumer Reports survey found 76 per cent of U.S. shoppers surveyed plan to scale back their holiday spending this year.

Meanwhile, about 40 per cent of Canadians said they plan on scaling back their holiday spending, according to a Deloitte research survey released Wednesday.

"It may sound strange, but we view these results positively and believe that Canadian retail sales this year will be higher than last year," said Brent Houlden, national retail practice leader at Deloitte.

"But Canadian retailers will have to work hard to earn that holiday spend, as consumers will be scanning for value and hunting for bargains."

The Deloitte survey, conducted from Sept. 29 to Oct. 9, included a sample of 2,847 individuals and had a margin of error of plus or minus five percentage points.

With files from the Associated Press and the Canadian Press