Time on their side
Facing the prospects of a weak holiday selling season, many hardware stores are trying to boost sales the old-fashioned way: by offering a layaway plan.
This pay-as-you-go way of making purchases, made popular during the Great Depression, fell out of fashion with the rise of credit cards and instant gratification. But the credit crunch is giving Americans a new appreciation for a more responsible way of doing business.
“Customers are looking for ways to keep from using their credit cards, and a layaway program can certainly help,” said Jessica Bettencourt, general manager of Klem’s Ace Hardware in Spencer, Mass. “I believe this year customers will utilize the program more. We have already had around 10 layaways this fall, far above last year’s three or four.”
Bettencourt says layaway, which her store has been doing for at least 20 years, can be a win-win for the hardware store owner and customer. If the program is set up correctly, it takes little maintenance and is a value-added service the store can offer its customers. On the other side, when the customer comes into the store every two weeks to make a payment, the hope is that he or she will buy additional items during the visit.
The downside to a layaway program includes the extra effort required to store the merchandise on layaway and track the payments.
Klem’s has an employee in charge of monitoring the program and making sure the payments are made. The layaway items—which range from apparel, shoes and housewares to larger ticket items like pellet stoves, boats and aquariums—are kept in a locked room with limited access and audited once a week during the holiday season. All holiday layaways are to be picked up one week before Christmas, a rule that is printed on the layaway slips and all signage.
“The reason for this is twofold: we have a chance to sell any merchandise before the holiday, and we have a time cushion in case of any mishaps,” said Bettencourt, whose store processed about 30 layaways last holiday season. “I believe we had two layaways abandoned last year. We make sure to contact them several times before putting away the merchandise and usually hold it an extra day or two past the ‘final’ date.
Bob Brame, owner of Cadiz Do it Best Hardware in Cadiz, Ky., said he decided in early October to start a layaway program this year and sold product the first week. The town’s largest plant, called Johnson Controls, recently announced it was laying off 700 people, he said. “In a community of 14,000, that’s a major blow. We felt that [layaway] would be something that would benefit sales this Christmas.”
Yet it’s not enough to offer layaway, according to Brame. You have to let the customer know it’s available. Cadiz Do it Best is talking about it in radio ads and advertising it on signage inside and outside the store—including banners that read “Layaway Available” and “Layaway for Christmas.” The program is geared to get items out of the store by Dec. 12, so products can still be sold if they’re not picked up.
“People are going to be more conservative this year, and I believe [they] want to pay as they go instead of putting it on a credit card that might get out of hand,” Brame said.
Jan and Liz Rupinski, owners of Anco Home Center/Ace Hardware in Villas, N.J., are also offering a layaway plan for the first time. They believe it is another service that will set their store apart and stimulate additional sales this holiday season.
“With the credit crunch so much in the news, I believe consumers will be thinking of ways to avoid using credit cards to buy holiday purchases,” Jan Rupinski said.
Slavens True Value in Cortez, Colo., has been doing layaway for at least 22 years with a rule of 20 percent down and the item paid off in 90 days, according to store manager Karla Robson. She expects the program to be particularly popular this year, especially with major retailers like Kmart advertising layaway plans.
“I feel it gives customers a chance to pay a little at a time when they have money, with no finance charges applied, such as with a regular charge account,” she said. “Plus, for big Christmas items, we ‘hide’ it here, so they don’t have to worry about where to keep the item.”