eLayaway

Economic Crisis: Good News for Lay-By

(PRWEB) January 6, 2010 -- While the current economic crisis is bad news for most businesses, it has been good news for lay-by.

According to the Australian Retailers Association, sales of clothing and toys by lay-by rose by 10 per cent in the run up to Christmas, the highest jump since credit cards were introduced in the 1970s.

Lay-by has broadened its appeal for people who are actively looking for alternatives to credit. Currently with lay-by consumers pay for goods via an upfront deposit followed by regular repayments over a period of time. The goods are held by the retailer until the full price of the goods has been paid. Lay-by can also be used to save up for Christmas hampers and vouchers that can be redeemed at retail outlets.

"We estimate the Australian market for lay-by to be worth around $2bn and growing rapidly," said Mr Seremetis, CEO of Layby Services Australia.

"Our goal is to help more people discover the benefits of using lay-by by reinventing the process. Saving regularly is a good habit to get into. There is a goal to aim for and reward at the end. Unlike credit cards and loans, it avoids the risk of getting into debt."

Layby Services Australia was formed in August 2008 by entrepreneurs Terry Seremetis and Toby Poulson in partnership with NBC Capital Private Equity. Its first move was a management buy-in of Hamper King.

"You might have thought an economic meltdown was the worst possible time to launch a new business," says Mr Seremetis.

"Our experience has been the opposite. Talent is more accessible, premises easier to find, and everything's negotiable."

"We were very familiar with the Christmas hamper business and believed there were opportunities for consolidation based on innovation and superior service," says Mr Seremetis who together with CFO Toby Poulson are considered industry experts.

Sine taking over the reins Hamper King has more than doubled its revenue to $25m.

This week Layby Services completed its second acquisition in just eight months, purchasing the business assets of its smaller rival Mrs Christmas for an undisclosed sum.

The acquisition strengthens Hamper King's position as the up-and-coming challenger in the segment and the only major lay-by Christmas hamper provider that is Australian owned. The other two major players - Chrisco and Castle - have a New Zealand private company as their ultimate shareholder.

While its initial focus has been on the hamper market, Layby Services sees much larger opportunities.

In the USA traditional retailers like Sears and Kmart have reported increased sales via lay-by (or 'layaway' as it is known there). New entrants have also emerged, such as eLayaway™ which allows shoppers to buy products online and pay for them in regular instalments.

Mr Seremetis is guarded about Layby Services' intentions, other than to say that the company has been in discussions with a number of leading retailers.

However, he is optimistic about the resurgence of lay-by will not be a temporary blip, citing research by Colmar Brunton which suggests that many consumers are re-evaluating everything and that there will be a fundamental, not cyclical, shift in consumer sentiment. "We believe that many consumers, having splurged on credit are determined not to go back to their bad old ways, even when the good times eventually return."