Layaway is a popular option for many retailers that want to sell more items to their customers. According to a recent survey, over ¾ of the people agreed that layaway was very important for large-ticket purchases. They liked this option because it allowed them to avoid borrowing money from credit cards, since the large purchase items could be paid off in installments.
What is Layaway?
Layaway is a program through which shoppers can reserve items that aren’t immediately available at the time of purchase, paying a set amount over a period of time until they pay off the item. If a customer fails to pay off the full price of an item by the end of the term, then it is usually either forfeited, and storage and other costs are incurred.
When deciding on a layaway plan, ensure you balance several factors. First, layaway duration should be proportional with storage needs. Next, the costs associated with layaway must also be considered: it could lead to losses in your margins. Lastly, consider allowing customers to place both sale items and non-sale items on layaway; but carefully consider that service fees may need to be collected. Overall, understand that there are state laws regulating these types of plans.
Why is offering Layaway beneficial?
Layaway programs provide customers with a unique option to shop—they can have what they want, when they want it. By providing layaway options, retailers are able to increase revenue and improve the overall customer experience. Let’s take a closer look at the benefits it offers:
- No Interest Charge
No interest charges make layaway cheaper than using a credit card. That is always the better option than swiping a card that has high interest rates, with a layaway option they can make smaller payments without paying extra.
- Flexible Payment Plans
Installments are a great alternative to offering a store credit card or credit plan because offering different payment options makes your business look generous and trustworthy.
- Builds Customer Loyalty
Since offering installment payments are attractive to consumers, it will help in your brand’s image as well as making your products more affordable for more people. Offering different types of promotions or incentives such as gifts with purchase to people who spend a certain amount or purchase a certain item at your store can also be a great way to boost your customers’ spending.
- Compete with today’s ‘Buy Now, Pay Later’ Programs
There are plenty of different online payment programs available in the last few years with fintech companies offering interest free payments with increased limits after customers pay on time after a certain amount of time which has been proven to be an effective method to increase sales for businesses. Offering your own payment plan is a great way to keep all of your profits instead of losing a percentage to third party payment companies.
In today’s economy, offering a layaway option can help your business stand out from the competition as well as provide your customers with more payment options.