The Indian government's move to demonetise high-value bills late last year has been one of India’s most disruptive policy measures and remains a much debated topic even three months after the announcement. But as a leader in the food retail business, we found it to be a welcome move, given the upside we are seeing.
One of the greatest benefits of the demonetisation has been the fillip it has given to digital transactions. Before November 8, our cash to cards/net-banking ratio was 60:40. Post-demonetisation, we saw a complete reversal. This ratio moved to 15:85 with a sharp increase in the use of mobile wallets and net banking, with cash dropping to 15 percent.
This quick adoption of digital payment methods has played out across the organised retail sector. According to India Ratings and Research (Ind-Ra), the share of cash transactions dipped to 20 percent from about 50-60 percent, with a concomitant surge in the use of digital wallets.
As per Nielsen’s report ‘Demonetisation: The Nielsen View’, around 1.2 crore additional customers were added in a single week to the number of Indians using digital wallets. The reach of mobile payments increased by six percent in the week of the announcement and peaked at the highest ever reach of 70 percent.
In the metros, it would have taken people from different socio-economic classifications at least 3-5 years to adopt digital payment methods. The demonetisation fast-tracked the cash-to-digital transformation in a matter of months, which has also opened more avenues for organised retail players. The reforms listed out in the recent Union Budget, including introduction of Aadhaar Pay, Bharat Interface for Money (BHIM) app, and BharatNet, are expected to add further impetus to Digital India and also increase transparency and accountability.
The Ind-Ra report asserts that the cash crunch post-demonetisation triggered a shift to organised retail. People explored alternatives such as shops in malls, Godrej Nature’s Basket stores or other organised retailers to purchase basic items, which led to increased footfalls across the sector.
At Godrej Nature’s Basket, we saw the benefits at different levels:
The last 100 days reveal an interesting trend for us: we saw an average increase of 15 percent in our online orders. This trend has been continuing and we have seen one of our best Q3 in terms of the top line. We are seeing very optimistic double digit growths on our number of transactions and the year-on-year growth is over 10-12 percent in-store, which is quite healthy for retail.
The last 100 days have had their own set of challenges — there was a lot of stress on employees initially, with instances of credit card machines malfunctioning and customers facing discomfort trying to get change. However, processes were streamlined and we managed to overcome the hurdles.
The demonetisation has been a bold move and while it has had its ups and downs, it bodes well for the organised retail sector overall. Growing acceptance and use of digital payment methods is just one aspect of the story. The 100-day-period forced people to revisit organised retail and we were able to deliver the experience the right way, which is a very positive sign. This has led to a new set of customers who now appreciate the value and services that an organised retailer offers.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)