The Return of the Layaway
The layaway concept dates back to the 1930's Great Depression when retailers gave customers a chance to buy items they would not have been able to afford otherwise. Kmart has had a layaway program for more than forty years. It was available to customers the day the store opened its doors for business or soon thereafter. I suspect it's been a profit center.
Here's a short list of national retailers who currently offer layaways (some multi-store retailers offer layaway, but only in selected stores, strangely enough): Sears, Kmart, Toys R Us, Best Buy, T.J. Maxx, Fashion Bug, Victoria's Secret, Kay Jewelers, Walmart (did away with layaway in 2006, but some stores offer jewelry layaway), Burlington Coat Factory, Marshalls and AJ Wright.
Have you considered a layaway program for your store? Surprisingly some high-end women's shops have a layaway program; it's an opportunity for their shoppers to make a major purchase without worrying if that 'must-have' item will be out-of-stock when they have the cash to buy it. It's also an easy way to grab popular gifts. Layaway is making a comeback and the reasons make sense.
The consumer is becoming more grounded, thinking more about planning and budgeting than before the economic slowdown. Many are realizing that credit card companies are making lots of money on their late payments; putting stuff on credit cards is falling out of fashion.
Creating a layaway plan can be the best service your store offers, but there are a few things
to think about:
- Make sure your retail POS system can track those committed items so you have them in stock when your customers pick up their layaway.
- Get a deposit. A percentage of the purchase price is often charged.
- Make sure you have terms (30, 60 or 90 days) with payments every week or bi-weekly.
- Are there restrictions on what can be placed on layaway? Put everything in writing--it's your 'layaway agreement'--and it'll be clear to you, your staff and the consumer.
- Will you charge a non-refundable service fee?
- If they change the layaway in any way, a 'cancellation fee' can be charged.
- No cash refunds should be given. Any returns should be converted to a gift card or store credit. Whatever you do, it should be easily tracked. That happens most effectively through a retail POS solution.
- If you sell fine jewelry, you may want to extend the terms as the items are far more expensive than most average inventory.
- If you offer layaway as a convenience to your customers, promote it thought in-store signage. You might also want to promote it on high-ticket items.
There are lots of consumers out there who consider themselves frugal and they love layaway; it's now very trendy to be thinking of your finances compared to just a few years ago when we were credit-card crazed. Make layaway into another twin-win situation. If you have your layaway program well-thought-out and in writing so there are no surprises--and you're willing to provide the administration necessary--a layaway program will give your customers what they want and need and, you'll make sales.
If you're a Microsoft Dynamics RMS or POS 2009 or Retail Pro user and want to know more about layaway, click here for some documentation on how to create a layaway in your retail POS.
If you have more questions send an email to: email@example.com
If you're researching POS software, here's a handy way to organize that research: POS Checklist.