Sayantani Kar, Business Standard
Mumbai, June 12, 2013
Hypermarket chains are launching pre-paid cards to boost their brand’s stickiness. These are a mode of payment for consumers and often come with consumer benefits. However, experts say the benefits accrued to the retailer are why some of them have launched pre-paid cards in quick succession. For branded retail chains, such cards bring in ready cash and, even, repeat visits from the consumer.
Star Bazaar, the hypermarket chain of Tata’s retail arm, Trent Hypermarket, has launched its gift cum recharge card called ‘Easy Shop’. It will provide shoppers with a cashless payment option. Star Bazaar’s card, which is essentially a pre-paid card, comes after Future Group’s Big Bazaar had rolled out its prepaid card scheme called ‘Big Bazaar Profit Club’ this April.
Unlike the latter’s scheme which required users to pay Rs 10,000 and a one-time processing fee of Rs 100 upfront, the former’s prepaid cards entail no added charges and can be obtained for a minimum of Rs 250 and a maximum of Rs 49,999, with top-ups of Rs 50. Both are valid for a year.
However, Big Bazaar’s pre-paid card came with an additional Rs 2000, enabling the consumer to shop for Rs 12,000 in a year, having paid Rs 10,100 in all. Star Bazaar’s card, if bought or refilled for Rs 1,000, will get the user 2 per cent extra in an introductory offer.
Devangshu Dutta, the CEO of the retail consultancy, Third Eyesight, says, "Pre-paid cards drive upfront sales and yes, ready cash, for the retailer. It also ensures sustained stickiness with the brand, since the card-owner will be coming back to buy the card’s worth of product. If designed well, it can even ensure frequent visits by the consumer, increasing the chances of additional purchases by the same consumer." Dutta refers to Big Bazaar’s card which allows shoppers to claim no more than Rs 1,000 worth of products each month on the pre-paid card. If a shopper wants to buy more, she will have to shell out additional money.
The Easy Shop card from Star Bazaar can also be used during sales and discounts. Sushmita Paul, head of marketing, Star Bazaar, says, "We have kept the card flexible without too much of restrictions. Given the different spending patterns, we have not kept the minimum amount too high, even though the average ticket price at our stores can range from Rs 1,250-2,000. It can be used as a gift card too. The cashless nature ensures that people can even hand it over to their domestic help for shopping." The card can be used at any of the 14 Star Bazaar outlets across Mumbai, Bangalore, Ahmedabad, Chennai, Pune, Aurangabad, Surat and Kolhapur.
It will be marketed through print ads, the Internet and in-store promotions. Vijay Boppa, CEO and MD at Payback India, the loyalty programme brand, says, "Such pre-paid cards can be used to capture an opportunity that the existing payment tools could not. Used as gift cards, they can act as referrals. Whereas, loyalty cards are payment-agnostic, used to drive footfalls, repeat purchases and gather insights on marketing."
Even though Dutta points out that retailers share part of the interest they might be earning on the deposited cash, through consumer discounts, there are costs that they incur. Marketing and backend systems are some of the major cost centres for such schemes.