With families more cost conscious and budgets tight over the past few years, many retailers have tried numerous customer-friendly promotions to get a piece of the shopping budget. Among these promotions are integrated marketing campaigns across all available channels, paid shipping expenses, and this past holiday season favorite, layaway programs. Many big box retailers and chain stores have implemented layaway programs to help consumers fretting over additional debt, and worrying about maxing out credit cards. This is a good way to entice consumers who may have initially crossed items off their wish list because of price.
Layaway Campaign Success
One of the most highly talked about programs of the season was Walmart’s campaign which began on Oct. 17 and was available only for purchases of $50 or more on electronics and toys. “Each item had to be worth at least $15, and shoppers had to pay a $5 initiation fee, place 10 percent down, and pay off the debt by Dec. 16 or face a $10 cancellation fee,” says news site, ABC15. The payoff was a 1.8 percent increase in Walmart’s U.S. sales in the fourth quarter, according to Thomson Reuters, the best performance in the last 10 quarters, most of which saw a decline. Reuters reporter, Jessica Wohl, writes, “A key component to Walmart’s success during the recent holiday season was the well publicized return of layaways. The plan was so popular that Walmart parked more than 3,000 trailers outside many U.S. stores, in order to hold toys and electronics until shoppers finished paying and picked them up.”
In an effort to make the shopping experience fun and affordable once again, retailers are listening to customer requests, innovating for convenience, and testing out new promotional tactics. And before any indies think such a tactic wouldn’t work for them, they have to first consider the fact that layaway programs are customizable from start and end date, to products available, to required down payments. A layaway program can be made to fit your store and your customers’ needs. Creating a layaway plan can be the best service your store offers, but according to J.D. Associates, there are a few things to think about:
1) Make sure your retail POS system can track those committed items, so you have them in stock when your customers pick up their layaway.
2) Get a deposit. A percentage of the purchase price is often charged.
3) Make sure you have terms (30, 60 or 90 days), with payments every week or bi-weekly.
4) Are there restrictions on what can be placed on layaway? Put everything in writing. It’s your layaway agreement, and it must be clear to you, your staff and the consumer.
5) Will you charge a non-refundable service fee?
6) If the layaway changes in any way, a cancellation fee can be charged.
7) 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.
8) If you sell fine jewelry, you may want to extend the terms, as the items are far more expensive than most average inventory.
9) If you offer layaway as a convenience to your customers, promote it through in-store signage. You might also want to promote it on high-ticket items.
No one says your layaway plan needs to follow these guidelines or be a year round offer, but the word “layaway” has doubled in interest among U.S. shoppers, as they face the interest charges on their credit cards. Doubled interest might mean doubled sales.