BUY NOW, PAY LATER

Layby was a thing your mum did in the 90’s when she really wanted a Ralph Lauren skirt but also had to pay for your school camp and a Spice Girls themed birthday party. In the intervening years, layby has had a dip in popularity in retail, especially with fast fashion and Millennials gaining more significant power in terms of purchasing. Until suddenly it returned, with a host of new online platforms reworking the traditional method into a new business model, which offers more options for consumers and retailers.

The new version of layby - often seen as ‘Buy Now, Pay Later’ is exactly that; purchasing in instalments, with an initial down payment, and receiving the goods straight away. From then, the remaining payments are deducted from the purchaser’s bank account until the entire amount is paid off. For consumers, there is a credit check which determines the credit limit, and consumers need to be over 18. There are several systems which offer these services - Laybuy, Afterpay, Genoapay, and Partpay. On the consumer’s side, there is no interest and no additional cost (unless they do not meet payments when there is generally a late payment fee).

For retailers, there are many benefits claimed; namely that this technology and approach increases sales and basket size, and many of these companies have the statistics and testimonials to back this up. The risk to retailers is small - the company bears all the risk for unpaid accounts and fraud. Meanwhile, the retailer is paid in full within a few days (the speed of this differs based on the company), minus a small commission which takes into account the products which have been sold as a result of the credit facilities.

So does it make a difference to retailers? Apparel caught up with Katherine Lovelock, the Online Development Manager at Ruby, where Laybuy was launched at the same time as their Good Witch Pre-Spring collection. So far the system has been working well for Ruby, with between approximately 25 and 40 percent of their online orders utilising the Laybuy platform. “It was really good to launch it with the new season products, and see the reaction,” says Lovelock. “It’s excellent with our higher price point because it makes our clothing more accessible, especially for younger consumers who do make up a large part of the consumer base. Some of them are looking for a dress for a special occasion, like a school ball or a 21st birthday, so they are spending quite a bit of money. This just gives them more options for what can be quite a large purchase” explains Lovelock. While the capabilities have not been in place long enough to conclude much yet, they will be reviewed at the next quarter, and it will be decided then whether Ruby will continue with their existing in-store laybys (which work as traditional laybys) or if they introduce Laybuy in-store with the same functions as online. Lovelock was positive about their experience with Laybuy - “it works just like a normal sale, it’s easy to use, easy to refund and user-friendly. Platforms like these could definitely be a long-term innovation.”

In the age of fast-fashion, much has been made recently of consumers using fashion as instant gratification with many supporters of the slow-fashion movement claiming that consumers need to consume more mindfully. Credit platforms such as these raise the question of ethics - and whether the instant gratification associated with purchasing a garment for a portion of the price may lead to irresponsible financial behaviour, especially for younger consumers. “Our consumers still think about the purchase. Because it isn’t fast fashion, one instalment payment on a garment from Ruby might be higher than an entire garment from a fast fashion brand, so there is definitely still thought about the consequences” says Lovelock. “It’s something we will keep a close eye on though; we definitely do not want our customers to be in financial burden due to this. So far there has only been a positive reaction, but we are monitoring it to make sure there are no issues.”