Sheetal Nair, a 27-year-old Pune resident works for an MNC and was addicted to shopping – both online and offline. She used to shop during stock clearance sales and exchange offers at retail stores, and was lured by the discounts that were announced.
She would end up shopping for Rs 20,000 to Rs 25,000. This was way beyond her repaying capacity, but she continued shopping throughout the year in 2019. She converted the repayment dues to equated monthly instalments on credit card. In January 2020, total amount due on her credit card was Rs 80,000. Sheetal was stunned at the outstanding credit card dues on account of her impulsive shopping habits. “I had a misconception that shopping during such mega sales with discount schemes/vouchers, etc. is a practical method to save money. But, I have learnt the hard way that the reality is harsh,” she says.
Many youngsters are known to fall into such traps. To avoid getting into such a mess, you must be aware of how discounts work and also develop financial discipline.
Decoding the shopping offers
In March 2019, Sheetal noticed a full-page advertisement of Big Bazaar’s – The Great Xchange offer. The major attraction was one could exchange old stuff at an attractive value and earn discount coupons to shop from the Big Bazaar outlets. Immediately, she decided to gather old newspapers, footwear, clothes, mattress, etc. On exchanging these old stuffs at a Big Bazaar outlet, she earned a discount coupon worth Rs 5,000. Unaware of the terms and conditions for redeeming this discount coupon, she did the shopping of clothes for equivalent amount at the store. At the billing counter, she was surprised to learn that the discount coupon was worth only Rs 250 and that she had to pay the balance! That wasn’t all. From her purchases, new clothing collections were excluded from the scheme.
For redeeming the discount coupon at the billing counter, she understood that the purchase value of the products must be five times the value of the coupon to be redeemed while shopping for clothes, footwear, sports goods, toys, kitchenware products, etc.
These discount vouchers have too many terms and conditions and are best avoided. Anuj Kakkar, Partner at financial advisory firm, Vriddhi Advisors explains, “To redeem these discount vouchers, you need to shop for five to ten times the value of discount voucher. The retailer also sets a cap on the maximum value you can redeem using a voucher.”
During stock clearance or festive season sale, there are retail outlets and online portals that advertise discounts of 20-30 per cent. The catch here is that such offers are applicable only on the entire shopping value in excess of Rs 5,000. Mrin Agarwal, financial educator and founder of Finsafe India says, “Such discount offers seems good only in promotions, but the truth is that the buyer ends with bulk shopping of clothes which are not required.”
Many sales schemes are not genuine. Some of the retail shops and e-commerce websites hike the prices and then offer these products on sale, with supposedly heavy discounts. Kakkar says, “These are artificial discounts created by retail stores and e-commerce websites.”
‘Holi’ and ‘Gudi Padwa’ festivals fall this month. So, similar shopping offers will be rolled out soon by retailers and e-commerce websites. Be aware of all gimmicks when you shop this festive season.
Millennials who have just started working shouldn’t get carried away and spend beyond their incomes. The first thing you must cultivate is the habit of saving before spending. Pay off your non-discretionary expenses, including rent, monthly grocery bills, loans if any, etc. Then, start a systematic investment plan (SIP) in mutual funds or some suitable investment. Tanvi Goyal, Financial planner and Founder of financial advisory firm Wealth Aware says, “Track the cash-flows on a monthly basis. This will help you understand the loopholes in your monthly cash-flow, budget and spending habits.”
You shouldn’t get influenced by the spending patterns of peers or other friends. You must know how much you can afford.
Says Goyal, “Shopping schemes or offers genuinely don’t provide any monetary benefit to consumers. These are psychological tricks from retail vendors and play with human behaviour.”