Cash’s Again King in Re­tail World

Some re­tail­ers ex­pect cash deal­ings to re­turn to pre-de­mon­eti­sa­tion lev­els of 40-50% once cap on withdrawals is re­moved

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Sa­gar Malviya & Wri­tankar Mukher­jee

Mum­bai | Kolkata: Cash may still prove the king in post-de­mon­eti­sa­tion In­dia. Con­sumers are in­creas­ingly opt­ing for cash pay­ments as liq­uid­ity im­proves in the market, and some big re­tail­ers now ex­pect cash trans­ac­tions to grad­u­ally re­turn to pre-Novem­ber 8 lev­els in a cou­ple of months.

Re­tail­ers in­clud­ing Shop­pers Stop, Fu­ture Group, Life­style In­ter­na­tional, Spencer’s and Max said 20-30% of their to­tal sales in Jan­uary were paid for in cash, a sig­nif­i­cant jump from a mea­gre 5-8% cash trans­ac­tions in Novem­ber-De­cem­ber when dele­gal­i­sa­tion of old .₹ 500, .₹ 1,000 cur­rency notes led to a se­vere liq­uid cash crunch in the sys­tem.

Some of these re­tail­ers now ex­pect cash trans­ac­tions to re­turn to pre­de­mon­eti­sa­tion lev­els of 40-50% af­ter the cap on cash with­drawn is com­pletely re­moved on March13, some­what negat­ing the gov­ern­ment’s ef­forts to push dig­i­tal pay­ment. “From the trend that we have seen over the past three months, we ex­pect per­cent­age of cash trans­ac­tions to con­tinue to rise for the next few months as re-mon­eti­sa­tion takes place,” said Shash­wat Goenka, sec­tor head (Spencer’s Re­tail) at RP San­jiv Goenka Group. “Over time, we ex­pect it to sta­bilise at about 50%,” he said. Cash pay­ments at hy­per­mar­ket chain Spencer’s have in­creased from 11% of over­all sales in Novem­ber to 25% in De­cem­ber, and 37% now.

For on­line fash­ion re­tail­ers Jabong and Myn­tra, cash trans­ac­tions, or ‘cash on de­liv­ery’, is al­ready back to nor­mal at 60-70% af­ter fall­ing to about 10% in the af­ter­math of de­mon­eti­sa­tion.

“At Jabong, we had our best ever sales in Jan­uary due to re­turn of cash in the hands of con­sumers and dis­counts,” said Rahul Taneja, chief busi­ness of­fi­cer at the firm. “The real pickup of cash trans­ac­tions started af­ter the third week of Jan­uary and the av­er­age ticket size has gone up by17-18%,” he said.

But not all re­tail­ers are see­ing sim­i­lar trend.


Mar­keters of higher value prod­ucts such as white goods and smart­phones said cash pay­ments now ac­count for less than 10% of their to­tal trans­ac­tions. While this is ex­pected to in­crease sig­nif­i­cantly when con­sumers have more liq­uid cash in hand, re­tail­ers don’t ex­pect it to rise to old lev­els.

“We do not ex­pect cash will ever be­come that big any­more since con­sumers are now get­ting ac­cus­tomed to dig­i­tal pay­ments,” said Sub­ha­sish Mo­hanty, di­rec­tor at mo­bile phone re­tail chain Hotspot. “How­ever, fi­nance com­po­nent is grow­ing sig­nif­i­cantly and will con­tinue to do so,” he said.

Cash com­po­nent in to­tal sales of

the Spice Mo­bil­ity-owned re­tailer had dipped to 4% in De­cem­ber and Jan­uary from 40% in pre-de­mon­eti­sa­tion days, Mo­hanty said. Spice runs 200 Hotspot stores, apart from man­ag­ing 225 stores of UniverCell and Mo­bil­iti World.

Vi­nay Bha­tia, CEO for loy­alty and an­a­lyt­ics at the coun­try’s top re­tailer Fu­ture Group, also be­lieves cash trans­ac­tions will not re­turn to old lev­els be­cause other pay­ment modes are pick­ing up. “As con­sumers are get­ting more

com­fort­able with cards, we see the cash per­cent­age set­tling down to around 35-40%,” he said. Cash trans­ac­tion dur­ing ‘Big Bazaar Sabse Saste Din’ sale in Jan­uary had in­creased up to 40% af­ter fall­ing to 10% in Novem­ber-De­cem­ber. Pre-de­mon­eti­sa­tion, as much as 50% of trans­ac­tions in Big Bazaar out­lets were paid in cash.

About 1.2 crore In­di­ans started us­ing dig­i­tal wal­lets in the week af­ter with­drawal of .₹ 500 and .₹ 1,000 notes, ac­cord­ing to a re­port by Nielsen. Mo­bile pay­ments surged to its high­est ever reach at 70% dur­ing that pe­riod, it said.

The rush for wal­lets helped Fu­ture Group’s own Fu­ture Pay Wal­lets to cross 1.2 mil­lion down­loads within four months of its launch.

How­ever, as avail­abil­ity of cash grad­u­ally im­proved with new .₹ 2,000 and .₹ 500 notes com­ing into the sys­tem, con­sumers started deal­ing more and more in cash.

Share of cash trans­ac­tions in de­part­ment chains Shop­pers Stop and Life­style has in­creased to 2225% now af­ter fall­ing to 5-7% two months ago. “While we ex­pect an in­creased cash trans­ac­tion once the cap (on with­drawal) is re­moved, we are still un­cer­tain in terms on whether cash pur­chase could at­tract ad­di­tional tax for some prod­ucts,” said Govind Shrikhande, MD at Shop­pers Stop.

The RBI on Wed­nes­day said it will in­crease weekly cash with­drawal limit from sav­ings ac­counts to .₹ 50,000 from .₹ 24,000 now ef­fec­tive Fe­bru­ary 20, and re­move all re­stric­tions on March13.

Cash trans­ac­tions at value fash­ion re­tailer Max Re­tail has im­proved to 20% af­ter fall­ing to 10% in Novem­ber and De­cem­ber. Vas­anth Ku­mar, ex­ec­u­tive di­rec­tor at the firm, ex­pects it to grow closer to pre-de­mon­eti­sa­tion days’ lev­els of 30% in com­ing weeks.

At Ama­zon In­dia, too, cash on de­liv­ery mode of trans­ac­tions has not yet reached the same level. How­ever, Ama­zon’s vice pres­i­dent (pay­ments) Sri­ra­man Ja­gan­nathan said the ef­fects of de­mon­eti­sa­tion have sta­bilised. Ama­zon has in­creased by four times the num­ber of card-swip­ing ma­chines used to pro­vide ‘card on de­liv­ery’ ser­vice to its cus­tomers.

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