The Old Layaway Plan is Back

Toys R Us Adds Layaway For Big-Ticket Items (MSNBC)

Kmart Layway PlanA staple of retail promotions from the mid-1900s is making a comeback thanks to a down economy.? The layaway payment plan is really a pricing strategy retailers use to lock a customers into a product even if the customer currently does not have the cash or sufficient credit to buy right away.?

In some promotions the retailer allows the customer to pay a small amount over time (i.e., installments) before picking up the product and in other cases the retailer will hold the product until the customer comes with the entire amount.? Several retailers have found good response to this approach including Kmart (discussed here) and Toys R Us.

Retailers who have introduced the programs see them as a way to keep customers buying in a time of tight credit and other economic problems. Toys R Us CEO Gerald Storch said his company’s customers were requesting a layaway program.

What are the advantages and disadvantages for offering layaway on a hot selling toy?

Image by Holcombe of Hidalgo