17 April, 2009

Driving Retail sales using ATMs!!

Its public knowledge that effective 01 April 2009, the Reserve Bank of India has mandated that cash withdrawals from an ATM, regardless of which bank one has his/her account with, are free of any additional charges. This means, if an individual has a Debit Card from Bank A, and wishes to withdraw her money using the ATM of Bank B, then she wouldn’t be charged Rs. 15 or Rs. 20 (1USD = INR 50) which she was being charged earlier. That’s great news. Especially for those who have their accounts with smaller Banks – those Banks who have smaller ATM networks. All the more in Tier II towns. And ofcourse, my favourites – the villages and rural areas.

So, what?

Well. I see this as a huge opportunity for Retailers. It’s already quite common to see ATMs in non-banking locations such as Petrol Bunks, Airports, Railway Stations, Malls and Supermarkets. These ATMs which are today much more sleek and compact than their older cousins (including in-built CCTV cameras that are as small as shirt buttons), could easily be fit into smaller areas. Till now, many retail formats haven’t sensed the usability and importance of these ATMs. To begin with, its additional rent to the lessor or landlord.

If buying bread-milk-eggs could bring customers regularly into supermarkets, then why not ATMs! Look at a scenario – In India, on an average, we withdraw enough cash to last for a week or so. According to latest estimates, about 40-45% of its Sales transactions in Organized Retail are made using Debit and Credit Cards. Which means, there is a huge opportunity to attract those who use cash – from buying convenience products to luxury goods. A strong reason why ATMs must be encouraged across various Retail formats – most importantly at Hypermarkets and Supermarkets.

In today’s economic slowdown, the biggest hit format happens to be Supermarkets. With most categories seeing less than 60% “fill-rates” due to various reasons, many SKUs being unavailable (partially) through the year and hardly any major difference among the various “brands” of grocery retailers, those who have an ATM will certainly see more walk-ins. Needless to say, there would be something or the other that they may want to pick-up and there you see – higher conversions! And yes, users visit ATMs not just to withdraw cash – today, banks offer many other services, such Cheque-Drop Boxes, Tele-banking, internet banking, details about new and existing products and services such as personal loans, home loans, insurance, etc. Many reasons why users keep visiting ATMs.

Other areas where I see advantages for Retailers – since most ATMs prefer to have a Security Guard posted 24/7/365, the Retailer and the Bank could share the cost. The ATM Booths could have fliers of Offers and Promotions at the Retail Store, thereby informing ATM users about what’s the latest in the store. Retailers could use the banks’ existing database and send them mailers (by post/email). In return, the Retailer could pick on a random basis, an ATM user over the past month and gift a voucher! Consumers who use a particular banks’ ATM/Debit cards could get special offers – Savings (Read: discounts) on products that they shop. Wow. And many more.

When most Retail formats have seen a 20-30% dip in their footfalls today, this could be a great way to bring more people even near or outside the Retail Stores. And yes, as I always believe in, its consumption that drives growth. Always.  

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