Offline retailers peg recovery on providing EMI options for consumers

BENGALURU: Offline retailers are pegging their recovery, while trying to boost sales, on digital EMI solutions as they look to provide easier financing and payment options to customers.

A survey by consumer financing startup Zestmoney and point-of-sale provider Pine Labs found that 72% of retailers were promoting EMI schemes during lockdown at outlets for large-ticket items, including electronics. These also comprised large electronic retailers in tier 1 and 2 cities, which started opening their offline stores during Unlock 1.0.

Digital EMI is EMI-based credit which is issued to customers through digital modes of credit card, debit card as well as through credit apps.

“EMIs are doing good but the skew is towards credit cards rather than NBFCs. Challenges are, however, on waiting time for customers and staffing for the NBFC,” said Ritesh Ghosal, chief marketing officer, Croma-Infiniti Retail, which has 169 stores in the country.

Demand for laptops, phones, kitchen appliances has shot up over the last one month, with households buying white goods as they spend longer hours at home, said Ghosal.

According to the report, 94% of surveyed merchants feel digital self-serve EMI solutions will help them in these difficult times, and are willing to assist customers in availing EMI options themselves.

About 85% of the retailers surveyed had NBFC finance agents before the lockdown, the report states.

"Financing options via NBFC's is down slightly—right now there is a restriction on the number of people you can take in the stores—normally even customers are preferring to pay by credit card or by cash, because paper finance will take at least half an hour extra and customers want less contact," Nilesh Gupta, managing director at electronics retailer Vijay Sales.

At the same time, banks have also increased their threshold for approvals, with approval rates not high as earlier, added Gupta.

“Self-serve EMI models are coming through as a trend, especially when covid-19 brings social distancing limitations at offline stores. Retailers are starting to understand that, and there is a substantial growth in monthly digital EMI credit disbursements at offline stores, considering they can’t accommodate agents from traditional NBFCs,” said Lizzie Chapman, CEO and co-founder, ZestMoney.

With malls continuing to be shut, demand for digital EMI solutions has largely picked around neighbourhood stores.

“We are seeing a growth for EMI-based credit in neighbourhood stores which continue to have higher footfalls. Tier 2 volumes for EMI-based credit have jumped back to pre-covid levels,” said Chapman.

Retailers in malls reported a 77% year-on-year dip in business in the last 15 days June, while those in high streets saw sales decline 62%, according to findings of a survey by Retailers' Association of India.

The same survey said that while most categories such as—apparel, fast food, footwear, accessories—reported a slump of 50-70% in sales between 15 June and 30 June, business for retailers of consumer electronics was fell only 19%.

The current situation has also led players to discover an omni-channel strategy, allowing users to avail EMIs through both online and offline purchase.

“We think EMI-credit providers will focus on omni-channel strategies, focussing both online and offline channels. This is an inflection point for digital credit which will also see solutions like UPI-based credit or QR-based credit,” Chapman added.