1. Fighting the cash crunch: One sector at a time

Fighting the cash crunch: One sector at a time

The move to eliminate high-value currency notes has seen impact across sectors. After retail, jewellery and real estate, the media industry is also getting bruised by the demonetisation drive.

Published: December 6, 2016 6:01 AM

The move to eliminate high-value currency notes has seen impact across sectors. After retail, jewellery and real estate, the media industry is also getting bruised by the demonetisation drive. About R600-700 crore worth of advertising could be deferred or cancelled in the next four-six weeks across media. Even as consumers and businesses adjust to the new reality and lack of liquidity, BrandWagon speaks to industry experts across sectors to gauge the impact.

TV and print will be impacted the most : Anita Nayyar, CEO, Havas Media Group India and SA

Demonetisation has had an impact on the overall ad spends and client behaviour. We are witnessing clients and brands go slow with their campaigns; while some that can be postponed are also happening. We see almost a 20-25% drop in spends during November-December. Although it is short term, by when will it get revised is the question. Any category where there is a cash transaction including FMCG, retail, consumer durables and automobiles, is getting affected with the demonetisation drive but they are looking at alternative means as well. In terms of the medium, TV and print will be impacted the most but we cannot ascertain yet how much of the print impact will get offset by BFSI clients and companies like Paytm, MobiKwik, with banks advertising heavily during this period. Since FMCG throngs TV, the impact will be in sheer money. This is a time when spends would be getting diverted to digital, but we aren’t seeing any examples of that as yet. Among the other mediums that are getting impacted, out-of-home and radio are suffering a bit too. Two months seem unlikely for the situation to stabilise and we will have to wait and see what happens after this period is over.

Life insurance is largely unaffected : Sanjay Tripathy, Senior EVP & Head — marketing, analytics, digital & e-commerce, HDFC Life

Demonetisation may lead to a temporary cash crunch and impact businesses like FMCG in the short term. However, our business is based largely on cheque and bank transactions, and will not be impacted much. HDFC Life has remained unaffected by demonetisation — both in terms of brand spend as well as business. For a few days, people’s focus was on the cash exchange and deposit/withdrawal, and hence slightly lesser focus on buying investment products. However, with large deposits now in banks, people will start looking at investing the money and hence, our business should eventually pick up. The short-term impact is a definite prioritisation in spends across consumer segments. Availability of cash defines consumption and certain sectors will show less growth. However, banking services like e-transfers and payments are picking up. Hence, advertising too is being driven by these assumptions. There has been an increase in advertising of banking/payment services and decrease in FMCG and real estate for now. Demonetisation has changed the mood for the consumer spending at an overall level, but life insurance as a business has remained largely unaffected.

Definite increase in cashless transactions: Jamshed Daboo, MD, Trent Hypermarket

Our business has remained largely unaffected. There has been an increase in transactions through debit, credit cards and food coupons. However, during this phase, it was important for us to offer convenience to our customers. We realised many of them are stranded on essential commodities so we decided to accept cheque-based payments and also offered them pre-paid cards. We feel that customers will be seeking more value from their purchases. One of our initiatives was to source economical lines of key fresh fruit and vegetables. We recently sourced country tomatoes at R5/kg for the weekend and received an  excellent response.

FMCG will bounce back faster than others: Ashish Sehgal, COO, Zee Unimedia

Demonetisation will have a small-term impact on the industry, but in the long-term, I don’t see it affecting the business. It will be felt across mediums rather than just one or two mediums seeing a severe impact. Take heavy advertisers on TV like FMCG — the category has been hit in terms of sales, but it will bounce back faster than any other category because people are not going to stop bathing or eating. Other brands in the auto or real estate space usually sell their products on print and create a ‘brand’ through TV. These categories might not commit to advertising heavily now but as cash gets back in the hands of the consumer, they will bounce back. One can still see full front-page ads in print even today. In some cases, marketers will try to capture people’s refreshed mindset once the market gets over this phase and try to lure them with newer campaigns or heavy advertising. So, by the end of December, things should get back in shape. As for broadcast, most properties are launched with sold inventories. For new properties  launching, some might delay them by a month or so. Whatever losses the business is making now, it can be rectified by February-March.

Significant change in customer behaviour : Vinay Bhatia, CEO, loyalty and analytics, Future Group

Post demonetisation, we have seen a 10 times jump in the number of people registering on our wallet FuturePay. Transactions on the wallet have also gone up by 12 to 13 times post the November 8 announcement of eliminating high value currency notes. While the FuturePay wallet is only a month-and-half old, we are witnessing significant change in both customer profile and customer behaviour, apart from increase in transactions. It is not easy to change customer behaviour overnight as it is a time-taking process. However, demonetisation and other changes in the ecosystem  have expedited it.


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