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.
“We estimate the Australian market for lay-by to be worth around $2 billion and growing rapidly,” said 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,” said Seremetis.
“Our experience has been the opposite. Talent is more accessible, premises easier to find, and everything’s negotiable.”
Since taking over the reins Hamper King has more than doubled its revenue to $25 million.
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.
While its initial focus has been on the hamper market, Layby Services sees much larger opportunities.
In the US 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.
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.”