Layaway in the Consignment Store. Profit or Pain?

layaway in the consignment store

Layaway in the Consignment Store

“I really, really like this piece, but I don’t get paid until next Friday. I would love to get it before it’s gone. Do you have a layaway plan?” We hear some version of this question at least a couple times a week. After a few months in the consignment business, and after missing several large sales that could have been sold on short-term installment payments, we decided it was time to answer that question for ourselves. So in January of 2010, we instituted layaway in our furniture consignment store.

When implementing a policy for layaway in the consignment store, there are a few considerations that are important to remember.

1.) You are an agent between a seller and a buyer and your responsibility is to serve both parties well.
2.) During the layaway period, you will have to house the item either on your floor or in your stockroom. This will determine length of layaway period and whether you even have room to offer layaway as an option.
3.) You are responsible to payout your consignor in a timely manner and it is important to communicate clearly how long a consignor will have to wait for their portion of the layaway sale.

Agent Between Buyer and Seller

As an agent between two parties, your primary responsibility is to serve both the seller and buyer well. This means you do the best you can to maximize the return for the seller in a timely manner, while still giving the buyer the best deal you can to create happy buyers.

If layaway is right for your store, make sure to design policies that serve both parties well. Issues to consider as you determine your layaway policies include:

Down Payments

When determining your required down payment, consider an amount that will be non-refundable and that will motivate the buyer to finish out the layaway period so you will minimize defaults on layaways.

Consignor Payments

Clearly communicate in your registration procedures that larger items may be sold on layaway. Clarify with your consignor when she gets paid on paid-out layaways. Clear communication up front minimizes unhappy consignors on the back side.

Layaway-in-Progress Form

Communication is key, so when you have determined your layaway policies, it is important to design a layaway-in-progress form. This form includes all your policies, a list of items on layaway, a record of their payments and balance and a signature line for the buyer. (email me if you would like to see a copy of ours)

Storage and Care is Your Responsibility

This may be the first question to ask when determining if layaway is right for your shop. If you have a limited storage area you may not want to offer a layaway option. Remember that retail is all about sales per square foot. Anytime you have a square foot of your space occupied with a sold item, that square foot can’t produce new sales for you. Do you have an adequate place to safely store away layaway items? If not, you may not want to offer layaway.

Minimum Item Price for Layaway

If you determine that you do have room to safely house items, but still want to offer SOME layaways, I recommend only offering layaway on items over a certain price. This ensures that providing layaway is not costing you more than it is producing.

Length of Layaway

The length should be long enough to allow a buyer an adequate amount of time to make at least 2 payments and still short enough to pay out your consignors within a reasonable amount of time after the sale. Clearly communicate the date the layaway is in default and what will happen on that date. It is also important to be consistent and firm and treat every customer the same in regard to layaway. Having different standards for different customers (even if they are your favorite, and face it, we all have them) will create opportunities for mis-communication and problems for both your customers and consignors.

Length of layaway is another issue where space comes into play. Remember that if you are using your floor space to house layaways, you need to free that square footage up as soon as possible. This will help determine the length of time you are allowing an item to stay in your possession.


Yes, layaway has been a valuable tool in our belt for making sales that we otherwise may have missed. We have been able to make sales in the pre-markdown phase, just before an item got marked down 25%. This makes our consignors happy and leads to smiling buyers walking out the door knowing that they’ll be picking up that favorite china cabinet when that last payment is made.

Layaway can be a wonderful tool, but take some time to think it through. Also, please engage in the comments below the post to give us your take on layaway in the consignment store.

If it’s not right for your store, it may create more pain than it produces profit.

I have created a free infographic to help you prepare or refine your layaway program. Fill out the form below to get it for free.

  • kevinbeasley

    What experience have you had with layaway in your consignment store?