Sunday, January 9, 2011

Plastic Cards – Increasing consumption at Foodcourts

After getting into my Cab, I realised that I hadn’t collected the refund for the prepaid card I had bought at the Foodcourt a while ago. I quickly pulled out the bills to check the redemption and validity – to my surprise, the card had a validity of 365 days from the date of last usage! I realised I would be visiting Delhi atleast 6 times in this span and I would end up at DLF Promenade once again, the  upmarket mall in South Delhi which is the latest darling of shoppers in Delhi. Peacefully, I proceeded towards the airport. This was two months ago. During early Dec., I was in Chennai along with my colleague, the Head of Operations at the Express Avenue, the shocker landmark for Chennai’s conservative shoppers. Cafe Coffee Day operates three cafes within the mall, one each on the first, second & third floors almost on the same latitude. The Foodcourt here also has a plastic card which can be used at all the F&B outlets. Two weeks ago, I was with my childhood friend and both our family members to catch up the newest Kamal Hassan starrer at PVR Cinemas located within Ampa mall in North Chennai. We were just in time for the movie and decided to have a quick grub at the foodcourt (although I insisted people around that we could pick up something within the CCD inside the Cinema!). The place was jam-packed, a Friday evening, with people filled on almost every chair available. Though we were in a hurry, my friend chose to fill in more than what we had anticipated to consume. He said it could be useful during his next visit. Yesterday, I was at Mani Square, an upmarket Mall which opened a few months ago in Kolkata for a quick bite. When I approached the local food counter of Kolkata (Chinese), the guy smiled at me knowing I was a first timer and guided me to the prepaid card counter. Even the KFC doesn’t accept cash and I had to use the card for my favourite Mojito Crusher.


So, what’s with this prepaid card everywhere?

As Organized Retail is evolving and is in different stages of maturity across the cities, Mall developers have come to realise that there is no point proposing sky-high rentals as this would not just be a deterrent for serious players if not forcing them to move out sooner than later, but also have the wrong ones within the mall. So, more than two-thirds of mall developers now charge a Minimum Guarantee or a Revenue Share (on Sales) whichever is higher and to ensure that actual sales are reported, especially at the Foodcourt, they maintain a centralized counter. Customers must first fill currency of whatever denomination they wish to (subject to a minimum, which is usually Rs. 100 and includes a refundable security deposit of Rs. 25) and could then redeem it at any of the outlets in the foodcourt. Needless to say, the balance could be redeemed as and when they feel so. The POS is attached to a central server which records sales on real-time basis. The mall developer or the Foodcourt operator charges a small fee from each of the players for managing the connectivity and maintenance. Even Mumbai and Delhi airports follow the same philosophy to record actual sales.


So, how does it help & whom?

Retailers are immensely benefited as customers do not think too much while they are ordering using a prepaid card; since the card is loaded and there is no cash transaction (and thereby no need to tender exact change), they do not keep track of the exact spends. Also, there is a huge scope of upselling as customers are not really looking at the value of each product versus the money they pay. It helps customers as it simplifies the payment process. Usually when families visit a foodcourt, each member would have their own preferences. Thereby, the same card could be used across various outlets and counters. There is no need to carry cash since the main counter usually accepts Credit Cards. For students who frequent the mall and for employees of Corporates who work close by, it could be a boon as they may load currency in advance and keep using it through the month. It helps the mall developer to keep track of what’s happening across players – it can monitor sales regularly and promote those who are not attracting too many customers. Indeed, it is a win-win-win approach. But it does have its own drawbacks. Since there are too many choices, customers could keep moving and hence Retailers may be losing some of the customers, especially when there are long queues. When there are multiple members in the group, they may have to stand in Q at each counter which may deter them to use the card actively across counters. Over a period of time, if the process gets complicated for whatever reason, customers may avoid such places which may have an adverse effect on the whole area, which in turn would affect the Mall Developer.


All said, I guess this is the way forward to maximise consumption. Once the card is loaded, and usually there would be some residue left every time, shoppers would keep returning to the particular Foodcourt, thereby driving footfalls into the Mall. This plastic card would certainly change the way people consume, just a matter of time till this phenomenon spreads across the country. Given that we sell more prepaid mobile calling cards than postpaid ones, and given Indian consumer’s love to spend cautiously, I am quite sure this would spread like wild fire over time and may even form part of monthly budgets. It is also a great tool for parents to fill in the card and give it to kids instead of pocket-money and a great alternative to add-on credit cards. Soon, many F&B Brands could have such cards that could be used across their chain of stores. Well, these are not just my wishful thinking. I am sure somewhere someone is working on this and very soon, one of my columns would be discussing it. Look forward to.