If you are wondering how to set up a layaway program we got just the perfect solution for you.
Your POS system’s layaway program allows your customers to buy items using installment payments, either layaway or prepaid. The feature is perfect for retailers who want to provide additional payment flexibility.
What is Layaway?
Some customers prefer to buy for purchases using cash, credit cards, or debit cards. Others would rather make payments toward a bigger purchase. Layaway is an easy way for a client to pay towards an item they want from you in installments instead of all at once.
These programs first became popular during the Great Depression. At that time, it was important for people to be able to make purchases a little at a time. As use of credit cards became more prominent, layaway lost its appeal. Come the Great Recession of 2008, and we were faced with a consumer credit crisis. Thus, layaway became popular again.
Layaway is good for consumers because they can make major, interest-free purchases when they do not have cash on hand. It’s also good for merchants who can help the community and gain a following of loyal customers.
Layaway programs are a good way to retain customers, foster consumer loyalty, and drive store traffic. Your customers will be less likely to pass up a chance to buy a handbag or bracelet they’ve had their heart set on when they know that they can put products on layaway. There’s plenty of things you need to know if you decide to introduce a layaway program into your business to ensure a seamless process from deposit to pick up.
Your customers can make payments on any register in store, giving you and your team the opportunity to engage with them more often and build brand loyalty. Your Retail POS system can enable flexible payments that are interest free to boot. They prepay on items and pick up only when these have been paid out in full, letting you manage your inventory.
You can use your POS systems’ Smart Transaction option to track payments and generate customer balance reports. Accounting is made simple by viewing customer payment history.
As a merchant, it’s only natural to wonder if there any compliance laws you need to be aware of. There were no federal laws specifically governing layaways at the end of 2017, but as you know, legislation is always being changed and updated. Stay on the current by checking the FTC Business site every few months.
You may also be wondering if you can charge restocking or cancellation fees. It is possible to set the terms, which include a cancelation fee and an initial setup fee. You can also set rules on the upfront deposit in a percentage or dollar amount.
On the POS screen, you can see all customer history and generate balance reports on STS to see what the prepaid deposits total for financial reporting purposes.
If you’re wondering what layaway data should be on the initial transaction, you need to share at least the layaway or cancellation fees on this. You also need to include information about any minimum payments on scheduled dates and your refund and cancellation policy. You need to include information on where the product is if in stock. If it is not in stock, you need to inform when it will be ordered and expected date of arrival. Check state laws for any requirements.
A lot of national retailers currently offer layaways. These include Sears, Best Buy, Kmart, Toys R Us, T.J. Maxx, Kay Jewelers, Fashion Bug, Victoria’s Secret, AJ Wright, and Walmart (some stores still offer jewelry layaway). Burlington Coat Factory and Marshalls also offer it. Some multi-store retailers offer this option only in selected stores.
Choosing a Layaway Program for your Store
If you’ve never even thought about a layaway program for your store, now is the time. This came as a surprise to us, but some high-end women’s shops have a layaway program. This way, their shoppers have an opportunity for their shoppers to make a big purchase without wondering if the store will still have that item when they have enough money to buy it. It’s also a good way to get popular gifts. For these and other reasons, layaway is making a comeback, and it’s bigger than ever.
Buyers are becoming more grounded, thinking more about budgeting and planning than before the economic slowdown. Many are kicking their credit cards to the curb with the realization of just how much money credit card companies are making on their late payments.
Creating a layaway plan for your store: Factors to consider
Get a deposit. This is usually charged as a percentage of the purchase price. Make sure your retail POS system can track those products so when your customers pick up their layaway, they are in stock. Also make sure you have terms (a month, two months, or more) with payments twice a week or less often. Decide whether you will charge a non-refundable service fee.
Think about whether there are any restrictions on what you can place on layaway. Everything should be put down in writing. This way, the terms will be clear to you, your employees, and the consumer.
Make sure you can charge a fee if they change the layaway in any way. Extend terms on fine jewelry and other expensive items. Do not give cash refunds. Any returns should be converted to store credit or a gift card. It should be easy to track whatever you do. This is easiest to achieve through a retail POS solution.
Promote layaway through in store signs as a convenience and on high-ticket items.
A lot of consumers love layaway because they consider themselves good with money. Layaway is simply a win-win scenario. A layaway program will give your customers what they need and want if it is well-thought-out and written down to avoid nasty surprises. You’ll make sales and profit as long as you’re willing to provide the administration necessary.