Retailers/brands see surge in buying with plastic money

Is India heading towards a cashless economy? With a rising number of consumers preferring to use their debit/credit cards instead of money to buy even daily necessities, plastic money seems to be overtaking cash in India’s modern retail stores. While, it means good news for the Reserve Bank

of India to keep a check and control over fake currency and black money, rising debt levels among consumers’ could be reason to worry.

However, country’s leading retail chains are happy with the new trend, since they are witnessing a spurt in shopping with an increasing number of customers opting to pay by card. E-commerce boom too had led to a rise in credit/debit card shopping though preference is given to cash on delivery option.

Retailers ride on the credit tide

Most of the country’s retail chains and brands including Future Group, Shoppers Stop, Spencer’s Retail, Wills Lifestyle, John Players, Woodland among others, have seen credit and debit card payments consistently exceed cash this year, reflecting a change in urban consumer’s behaviour. For instance, Shoppers Stop department store chain and Future Retail’s Central and Brand Factory fashion outlets claim sales by card now account for almost 55 percent of the total, whereas shoe and apparel retailer Woodland has seen payments through plastic money account for almost 52 percent of the total transactions.

Experts have attributed the adoption of plastic money to a rise in young shoppers, an increasing share of working women, easier and large credit availability as well as rise in impulse shopping. RBI data showed that the country’s debit card user base was 331 million at the end of the last fiscal year; the credit card base was 19.5 million people. Card use has been growing at around 30 percent per year.

It is obvious that consumers tend to spend more when buying through credit and debit cards. A recent Assocham study showed, in Chennai, 30 percent shoppers buy daily products online, and this could rise to 40-45 percent this year, in Kolkata nearly 15-20 percent shoppers buy daily products online, and this could rise to 25-30 percent this year, in Bangalore its 20-25 percent and this could rise to 40-45 percent this year. Non-metros like Lucknow ranks high in online shopping, followed by Jaipur, Dehradun, Nashik and Trichy and top reasons for buying online, include safety, time, convenience, variety, discounts and comparisons.

Rising debt and shopping in slow economy

Though the economy is sluggish and consumer sentiment is low amid high inflation, electronic cards — debit, credit and pre-paid cards are posting robust growth. Credit card spends (in value terms) have more than doubled to Rs 1.23 lakh crores despite a dip in the number of credit cards between 2007-08 and 2012-13, debit card spends (in value) have risen six times to Rs 74,400 crores during the period.

On a positive side, experts point out that the successful adoption of plastic money in modern retail is surely encouraging small, stores to install card swipe machines. With smart money, is organized retail heading for a smart future ahead… only time will tell.