The evening of November 08, 2016 shall remain in the memories of Indians at least for the next two decades. No doubt, the move is historical and would be one of the corner stone towards curbing corruption and making India a cashless economy. A move that not only rocked the routine of people across strata but was it something that everybody had to make a hue and cry about? Was it something that can have greater repercussions going forward? Or was it a short term change that we need to address? The answer is not yet known. But, what was the effect of demonetisation for the retail malls? Let’s look at it in a phased manner.
Impact in first 2-3days post announcement:
The move towards demonetizing INR 500 and INR 1000 notes was a sudden jerk to the Indian consumer. Initially due to lack of proper information and procedures in the evening of November 08, 2016 the focus of regular shopping suddenly shifted to buying luxury items for getting rid of the higher currency notes that were announced to be demonetized. In the next 2-3days, consumers focused on spending more on meeting their daily requirements than shopping and entertainment. Most of the retail malls witnessed drop in footfalls, retailers witnessed drop in sales whereas cinema halls experienced lower occupancy rates due to the sudden action by RBI.
Impact posts the initial 2-3days:
The liquidity crunch was only for the first few days. Shopping activity started showing signs of improvement and was returning back towards normalcy within a week. When it comes to malls, one has to admit the fact that majority of the shopping, leisure and entertainment activity is done by cards as the target audience visiting malls are leisure conscious customers. The leisure conscious consumer seeks multiple activities in less time and to save time they prefer more of card transactions that paying by cash. Having said that, stating that retail malls didn’t witness any jerk once the demonetization was announced would be untrue. Malls and retailers had to lure customers back for increasing footfalls and sales. But things turned around quickly. Especially with the wedding season kicking in and initiatives by mall as well as retailers to engage consumers through teaser offers, free parking offer and limited sales helped in bring back the crowd.
In fact consumers who relied on mom and pop shops turned towards malls for doing card transactions since they found difficulty in making payments in cash. Households who were looking for alternatives found their way out in malls and hypermarkets that promoted use of cashless transactions.
The move has started influencing consumers to turn towards plastic money. The brighter side is that use of plastic money would help in providing better consumer insights and spending patterns which would help malls and retailers in increasing their focus towards targeting marketing and consumer connect initiatives with maximum efficacy. In the long term, the demonetization is expected to be a positive one as it has lured new consumers to try malls and would increase in creating more loyal customers. In short, demonetization which is helping in De-‘Cash’etization has lead to ‘Mall’etization.
The article has been pen down by Sunil Shroff, CEO, Viviana Mall.