The Hindu Business Line : Retailers ride high on easy EMIs

Mumbai, March 20 EMIs (Equated Monthly Instalments) and other financial schemes are increasingly becoming significant growth drivers for the sale of consumer durables, say retailers. Though cash payments remain the main source of income for the multi-brand consumer durables’ retailers, EMI sales have grown by close to 100 per cent on year-on-year basis.

E-Zone and Electronic Bazaar of Future Group registered a growth of more than 100 per cent in their electronic goods sales this year.

“Though our maximum sale is through the cash and card route, our finance schemes introduced by in-house Future Money, saw a growth of more than 100 per cent in sales from last year. Currently, about 10 per cent of customers opt for such schemes, but the number is definitely expected to grow,” said Mr Manoj Kumar, Chief Executive Officer, E-Zone and Electronic Bazaar.

Retailers are tying up with banks in order to provide attractive schemes to customers.

The growth rate on consumer durables through credit cards and EMI schemes is close to 60 to 70 per cent on a year-on-year basis, said Mr Parag Rao, Senior Vice-President (Head-Product and Portfolio Management Credit Cards), HDFC Bank. More than 10 to 12 per cent of total credit card spends come from the consumer durables segment, said senior bank officials.

“The presence of organised retailers has minimised the risk for banks that also benefit from the higher spends on cards,” said Mr Sachin Khandelwal, General Manager, Head-Cards Product Group, ICICI Bank.

EMI demand

VU Technologies, which runs four stores and plans 30 flagship stores, introduced the EMI scheme during Diwali last year due to demand from its young consumers.

“When we operated out of South Mumbai and Ahmedabad, we never felt the need to have EMI schemes as people made cash payments. But when we opened our store in Pune, young customers demanded EMI facilities and we had to introduce it,” said Ms Devita Saraf, Chief Executive Officer, VU.

At the launch of their seventeenth Croma store, in Mumbai, Mr Ajit Joshi, Chief Executive Officer and Managing Director, Infiniti Retail Ltd, said, “Our EMI sales have grown to more than 20 per cent as compared to 5-10 per cent two years ago.”

Such schemes enable consumers to purchase the product of their choice without worrying about the down payment as they can cough up the sum over a period of time. While some retailers like VU feel it is the younger generation of customers, which drive EMI sales, others like Pantaloons think that it is the aspirational class of consumers driving the demand.

POS scheme

ICICI Bank has tied up with Croma, Big Bazaar and Future Group among others for such schemes.

“We have put up specifically programmed point of sale terminals (POS) at the retail outlets which can provide such EMI plans to the customers. When a customer swipes his card on the POS he will be given the choice to go in for the EMI scheme and once he opts for it his payment will automatically get converted into an EMI mode,” said Mr Khandelwal.

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Retailers ride high on easy EMIs