The much talked about demonetisation finished its course of 50 days on December 31. Surprisingly, the public has held out patiently despite the hardships they have had to endure.
But amidst this entire hullabaloo, how has the consumer responded to shopping? And what are the implications for retailers? Let us break it down, point by point.
Manner of shopping
First, the manner of shopping has changed. People now buy either very small quantities of groceries or stock up substantially. The former happens when people lack adequate money. They tend to keep lower denomination currency with them for other items. The latter behaviour happens among those who use plastic money for their transactions.
The retailers, therefore, now need to get used to dealing with bulk purchases or small quantities — there is no in between. The stock keeping units — or SKUs — have to reflect this change, and companies need to pack product sizes accordingly.
Digital transaction
Second, the number of online / digital transactions has zoomed. One can find ‘Paytm’ service boards in unexpected corners. This means mobile commerce has facilitated shopping in a huge way.
Even public sector banks are now aggressively promoting their e-banking portals. The retailers therefore have to set up merchant accounts with payment gateways rapidly. Operations and IT departments of retailers need to prepare for this and train their staff to fulfil this market requirement.
Dip in luxury shopping
Third, shopping for luxury items has reduced significantly. Consumers prefer to use their money to buy essential items rather than high-end ones. This is evident in the lower number of footfalls seen in jewellery stores, high-end clothing chains, and other luxury shops. Retailers in these sectors have to strategise and think hard on how to arrive at alternative business streams in short to medium term.
Credit on the rise
Buying on credit too seems to be on the rise. With the introduction of the ₹2000 denomination, shoppers are now giving this amount to daily service providers such as laundry, vegetable sellers, milk sellers and the like. A running account is kept till such time the original amount is exhausted. And then the money is fed again.
This ensures something called ‘artificial loyalty’ among consumers to the extent that they stick to the same vendor for a period of time. It is artificial because once the situation changes, from a demonetisation point of view, one doesn’t know if the consumers will stick to the same retailers!
Affected sectors
Some sectors are more affected than others for obvious reasons. Both retailers and consumers alike are hoping that the situation will pass and things will soon be back to normal.
But beyond all these, the nature of shopping has definitely transformed. The joy associated with it has now turned into a chore and drudgery, especially for everyday items. There is a constant tension about having enough small denomination notes. Retailers who are able to accommodate this change are able to attract and retain consumers better.