Just like the economic downturn in the 1790s gave rise to potatoes as a staple in European diets, the current economic environment will push consumers to find new ways to meet their needs. In some cases, they may revive old fashion practices like buying products on layaway.
With the current tight credit market, consumers are increasingly using layaway to buy their products over time. So kudos to Kmart (and Sears), which is one of the few retailers that still has a layaway program. Here are some of the details about the Kmart program that I found on its Website:
- A Layaway contract is eight weeks.
- The Service Fee on all new Layaway contracts is $5.
- The Cancellation Fee on all new Layaway contracts is $10.
- The Service Fee plus Cancellation Fee, or 10% down payment (whichever is greater)
- The bi-weekly payment schedule for all new Layaway contracts is 25% of the original balance due.
- Layaway merchandise will be returned to stock seven (7) days after a missed payment.
My take: Companies need to look for opportunities like layaway to meet consumers’ shifting needs. But that doesn’t mean that all retailers should start layaway programs. As with any new program, you need to understand the needs and desires of your target customers. If they are likely to use layaway and you can develop an effective program, then it might make sense.
The bottom line: Look for new (or old) ways to meet shifting customer needs.