exchange offers, combo packs and other EMI schemes (not on credit cards). “The festival season is big for us. We hope consumers would find the offers compelling,” said Nilesh Gupta, CEO of Vijay Sales. The company is looking to offset the 15-20% drop in sales in the immediate two weeks after the ban on the 0% interest scheme.
However, some retailers feel consumers’ appetite is way too large. Retail baron Kishore Biyani noted that while the clampdown on the 0% interest scheme is “anti-consumption”, it will not have much impact on consumer spending during the festivals. Shoppers Stop’s managing director Govind Shrikhande said that banning the 0% interest on EMI will lead to consumers getting apprehensive, but only initially. “With the festival season coming up, we do not see consumption being affected over the next few months,” he said.
“The ban will have a short-term effect, but in the long-term, it won’t affect sales,” Vijay Sales’ Gupta said.
eZone’s Malhotra believes that RBI’s move will bring more transparency into the system, but foresees a drop in sales over the next four weeks as consumers get accustomed to the absence of the 0% interest scheme. However, he believes that the festival season may still be able to offset the lull in the beginning. “There will be some fall in the number of transactions, but that would be less than 15%,” he said.
Some retailers are adopting a wait-and-watch policy, hoping that the ban would not impact consumers’ propensity to purchase. Ajit Joshi, CEO of Infiniti Retail that runs the Croma chain of electronics stores, said, “We will have to wait and watch the impact of this decision on the consumers and the retailers.”
“While only 25% of consumer durable secondary sale is through consumer finance; in auto secondary sale, it is 75-80%. Hence, the impact is more on automobiles,” said Deba Ghoshal, head-marketing, Unitary Product Business Group, Voltas.
The Samsung spokesperson said such EMI schemes contribute a double-digit sales proportion, adding it is difficult to maintain the sanctity of RBI’s order as newer schemes will try to make purchases more affordable.