Years ago, retailers had a great system for selling their products that made it possible for people to purchase without over extending themselves and accumulating an overwhelming burden of debt. It was simply called "a layaway plan" and it worked very well for both the consumer and the retailer.
As the economy evolved, many people moved away from putting things on layaway. Instead, with the ease of purchasing clothing and big ticket items with credit cards, they charged them. This negated the need for layaway plans.
Although some retailers kept their layaway polices in place, they stopped advertising them. Other retailers decided that layaways were too cumbersome and abolished layaways altogether. But with so many people feeling the affects of the current recession, layaway plans are coming back to the forefront of how retailers and their customers are doing business.
What is a layaway plan?
•A layaway plan is an agreement between a store and a customer that allows the customer to make an initial deposit on goods and then the store holds them until the customer pays for them in full over a set period of time.
•If the customer doesn't pay as agreed, the goods are returned to the store's inventory. A fee is charged to the customer and the balance of the customer's money may be refunded to them in accordance with the store's layaway policies.
•The concept of layaway is simple. The deposit is based on a percentage of the total price and the schedule of payments is worked out between the store and the consumer.
At one time, putting things on layaway was quite a common practice because consumers didn't have credit cards at their disposal. The rise and popularity of store credit and major credit cards made layaway options almost obsolete in many stores, although some stores still carried on the practice, especially for big ticket items such as stoves, refrigerators, washers and dryers and certain other items.
The great advantage to purchasing items on layaway is that there are little or no fees involved. It makes purchases less expensive than charging them on a credit card and carrying a balance with high interest rates. Layaways are good for the retailer because the customer makes an agreement to buy the item, and if they don't, the retailer still makes a fee on the transaction and can still resale the product. It makes good economic sense for both the customer and the retailer.
Stores that offer layaway plans have to have additional storage space. Such plans may not work for smaller retail establishments. It also requires someone to keep track of payments and products that have to be stored in the store or at another location.
You will begin seeing more and more stores advertising layaway plans in the near future. Some stores that already have layaway plans are Burlington Coat Factory, Kmart, TJ Maxx, Fashion Bug, and Big Lots!.
As the economy slows, stores are increasingly looking for new ways to get people to shop and spend their money. Those stores that offer layaway plans may start attracting customers away from stores that don't, thereby forcing other stores to eventually follow suit.
Layaways are a great way to purchase items that you need when you can't afford to pay cash or charge them on a credit card.