Hardware stores embrace layaway
Facing the prospects of a weak holiday selling season, many hardware stores are trying to boost sales the old-fashioned way: by offering a layaway plan.
This pay-as-you-go way of making purchases, made popular during the Great Depression, fell out of fashion with the rise of credit cards and instant gratification. But the credit crunch is giving Americans a new appreciation for a more responsible way of doing business.
“Customers are looking for ways to keep from using their credit cards, and a layaway program can certainly help,” said Jessica Bettencourt, general manager of Klem’s Ace Hardware in Spencer, Mass. “I believe this year customers will utilize the program more. We have already had around 10 layaways this fall, far above last year’s three or four.”
Bettencourt says layaway, which her store has been doing for at least 20 years, can be a win-win for the hardware store owner and customer. If the program is set up correctly, it takes little maintenance and is a value-added service the store can offer its customers. On the other side, when the customer comes into the store every two weeks to make a payment, the hope is that he or she will buy additional items during the visit.
The downside to a layaway program includes the extra effort required to store the merchandise on layaway and track the payments. Klem’s has an employee in charge of monitoring the program and making sure the payments are made. The layaway items — which range from apparel, shoes and housewares to larger-ticket items like pellet stoves, boats, and aquariums — are kept in a locked room with limited access and audited once a week during the holiday season. All holiday layaways are to be picked up one week before Christmas, a rule that is printed on the layaway slips and all signage.
Slavens True Value in Cortez, Colo., has been doing layaway for at least 22 years with a rule of 20 percent down and the item paid off in 90 days, according to store manager Karla Robson. She expects the program to be particularly popular this year, especially with major retailers like K-Mart advertising layaway plans.
“I feel it gives customers a chance to pay a little at a time when they have money, with no finance charges applied, such as with a regular charge account,” she said. “Plus, for big Christmas items, we ‘hide’ it here, so they don’t have to worry about where to keep the item.”
Bailey’s Lumber to close Gulfport store
Bailey’s Lumber and Supply is closing its Gulfport, Miss., store, but will remain headquartered in Gulfport, according to The Clarion-Ledger newspaper.
Bailey’s owner Woody Bailey said store employees in Gulfport will be offered jobs at Bailey’s stores in Bay St. Louis, Miss.; Ocean Springs, Miss.; Jackson, Miss.; Brandon, Miss.; or Meridian, Miss.
Bailey’s, which sells mainly to home builders and contractors, hopes to reopen the Gulfport store once the economy improves, Woody Bailey said.
LP announces cost-reduction measures
Louisiana-Pacific Corp., a leading supplier of engineered wood products and other building materials, has announced a plan to reduce its capital spending to $25 million a year for the next several years.
“LP is now in the midst of a right-sizing effort to reflect current business conditions,” said company CEO Rick Frost. For comparison’s sake, he noted that the capital spending for 2008 is expected to reach $170 million.
Among the planned actions are a 14 percent cut in the salaried workforce, approximately 200 positions. Flight operations have been shut down, research and development has been “put into hibernation,” and IT operations are now in “maintenance mode,” Frost said. Marketing and sales expenditures have been reduced, and salaries have been frozen.
Taken together, these initiatives should save Louisiana-Pacific between $30 and $35 million a year, Frost said.
Over the past several quarters, the Nashville, Tenn.-based company has also curtailed operations at four oriented strand board (OSB) mills and taken downtime at other production facilities.
On Nov. 4, Louisiana-Pacific reported a third-quarter loss of $100 million. Sales declined to $389.6 million from $472.5 million during the same period last year.