Talk:Layaway

Advantages to Layaway
What advantages are there to layaway? The customer pays in installments but does not receive the item until all payments have been made - how does this differ from simply saving and purchasing the item at once? The item is received at the same time and without any layaway fees or inconvenience for the merchant. What advantages does layaway have that would make it more appealing than simply saving for the item? 216.36.186.2 (talk) 16:04, 23 May 2008 (UTC)
 * People that don't have the discipline to save on their own might benefit by having a 'bill to pay' which forces them to 'save' for what they want. I agree, not the best plan, but some people probably need something like that to make them commit.--24.181.231.46 (talk) 01:59, 1 June 2008 (UTC)


 * Another reason has to do with availability. If you layaway the item the store has guaranteed that it is available (indeed there is one put away for the buyer).  Lay-by was very common in Australia when I was a child and IIRC many stores did not charge any fee for the lay-by service.  Even when a fee was levied it was small.  I also know that some parents in Australia used lay-by to hide away Christmas presents before the big day.  Robert Brockway (talk) 20:56, 20 July 2008 (UTC)


 * I wonder if, now that credit has nearly ruined the US, we might start encouraging layaway as a safer alternative.. maybe remove the 'fees' this article discusses. —Preceding unsigned comment added by 75.73.70.113 (talk) 00:30, 17 October 2008 (UTC)


 * Funny you mention that. I came to this article after reading an article about Kmart promoting their layaway service due to the weaker economy. Regarding the original question, perhaps layaway allows low-income people to buy a product that's on sale, even though they don't yet have the money. Other than that, I could never understand why anyone would use a store's layaway service. --JHP (talk) 02:24, 23 October 2008 (UTC)

From a business prospective: First of all, there is VERY LITTLE academic published knowlegde about this subject. As far as we could find there is none on Financial ratio effects of layaway. Probably because layaway is a dirty term. If the customer defaults after 30 days, by law, you must return it to the customer OR report it as "found unclaimed money" and turn it over to the government in the United States. However most business keep these funds as income in a Layaway Defaults Income account when a customer misses a deadline for the next payment.

Working at a large multi store retailer we under took a project to determine the effect our layaway program has on our inventory turnover. After much data mining and warehouse review and calculations. Ideas began to set in. This s the most basic of the concepts we discovered:

1) you can assume 100% of the inventory on the layaway shelves will be sold. (Layaway default rate when money is NOT returned to a customer is VERY LOW) 2) This means cost of Goods = Avg Inventory in the layaway shelves. 3) The time on the shelves is = Avg time in Layaway. (These schedules are predetermined by product price by the stores and getting an avg time in layaway should be quite simple by getting the avg price of an item sold from layaway)

Because avg inventory = cost of goods sold the INVENTORY Turnover for a layaway program = 12/Avg scheduled layawy pmt plan length. i.e. For a company whos avg layaway plan spans 3 months the INV turnover is 4.

This concept is simple when it is explained but wow! Did it take an around the back to reach the elbow approach to make it click.

(There were debates about if it wasn't in Layaway would the product have sold faster than the avg turnover thus reducing your normal turnover etc.... But two side to that sword as well. We found our answers but it costs allot of time and money to find it. Good luck finding yours!) 12.234.4.210 (talk) 14:21, 10 March 2010 (UTC)

Just some free thinking, here, no evidence:


 * Layaways ensure that a customer has a rare or limited product reserved.
 * Layaways are a hedge against price boosting.
 * Layaways might have tax advantages in some situations??
 * Companies are willing to give good prices for layaways, because they tend to commit the customer, even when the customer can't afford the product.
 * A marketing cousin of mine said, "The purpose of marketing is to create a view in the customer's mind of how well a product will work in their lifestyle. Without that, the product is returned." On layaway, there's plenty of time to dream about uses of that new product.
 * Layaways aren't workable for some people, particularly, they just get confused with the options, and don't realize that for them, there's no advantage. Piano non troppo (talk) 19:27, 10 March 2010 (UTC)

Globalise
I've never heard of this in the UK. Where is "layaway" used other than the US and Canada? – Fayenatic (talk) 17:44, 21 December 2011 (UTC)

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