The Hindu Business Line : Shoppers’ Stop to offer easy loan facilities for consumers

Mumbai, Sept. 24 This festival season Shoppers’ Stop is planning to create lower variants in its credit card-based buying options. Reducing its credit limits, the retail chain is looking at options that would not necessarily cater to big-ticket items at its stores.

Mr Govind Shrikhande, Chief Executive Officer, Shoppers’ Stop, told Business Line, “We are looking at giving credit at lower values and there would be new versions and models offered within our credit card facilities currently available.”

With intentions of increasing consumption at its stores, the retailing chain is planning to give credit between Rs 5,000 and Rs 10,000 for buying lower value items.

Having associated with Citibank for its co-branded card for the past three years, the credit facilities given so far have been restricted to big-ticket buys such as furniture especially during the festival season. Adds Mr Shrikhande, “All these years we have been offering credit to buy big-ticket items ranging from Rs 50,000 to Rs 80,000. But now we are looking at giving easy loans with lower interest rates.” The interest rates charged for these cheaper loans would range between 9 and 10 per cent of the principal amount.

Targeting the existing 1-lakh loyalty card members and credit card holders with its new credit offerings, the retailer expects to generate additional consumption this festive season. “We have been working on a new credit card model for the past two months and expect consumers to avail themselves of this benefit across categories,” says Mr Shrikhande.

Recently, the Future Group also decided to give credit to consumers through Future Money after tying up with its financing arm Future Capital. Mr Kishore Biyani, CEO, Future Group, said, “Through Future Money we are able to create a product that can increase consumption.” Besides, Reliance Retail as part of its hypermarket, has also launched a financial service division (Reliance Finance) to provide the consumers retail loans (at affordable EMIs) at the point of sale.

According to Mr Hemant B. Patel, Analyst at Enam Securities, “There has to be an entity which can fund such retailers. Most retailers have to seek partners such as an NBFC to raise funds for lending to their customers as they themselves would be having negative cash flows in the business. No retailer would like to delete its capital base to fund consumers at this stage.”

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