In 2023, China’s Xiaomi bets bigger on India retail stores amid Samsung huge rivalry

In 2023, China’s Xiaomi bets bigger on India retail stores amid Samsung rivalry

Xiaomi, the Chinese multinational electronics company, is shifting its focus towards boosting sales through retail outlets in India, according to the company’s India president. This strategic move comes after years of heavily relying on e-commerce channels to drive its smartphone sales.

It aims to regain momentum in the Indian smartphone market, where it has faced increasing competition from Samsung, a prominent player from South Korea. Recognizing the evolving dynamics of the Indian market, plans to tap into the potential of traditional retail channels to revive its smartphone sales.

The company’s India president emphasized the importance of strengthening its presence in physical stores, aiming to leverage the wide reach and consumer trust associated with offline retail outlets. By expanding its retail network and engaging with local retailers, Xiaomi aims to enhance its brand visibility and accessibility, ultimately bolstering its sales performance.

This strategic shift aligns with it’s broader objective to regain its market share in India’s highly competitive smartphone landscape. By diversifying its sales channels and adopting a multi-channel approach that combines e-commerce and retail, seeks to cater to the diverse preferences of Indian consumers.

The company aims to provide a seamless and holistic buying experience, whether customers choose to shop online or visit brick-and-mortar stores. The Indian smartphone market holds immense growth potential, and it is keen on leveraging this opportunity to regain its position as a leading smartphone brand.

With a renewed focus on retail sales, the company aims to strengthen its relationships with local retailers, improve customer engagement, and offer a wider range of products to meet the evolving needs of Indian consumers.

Xiaomi’s shift towards retail outlets in India reflects its adaptability and responsiveness to market dynamics. By aligning its strategies with local market conditions and consumer preferences, the company aims to revitalize its smartphone sales, increase its market share, and position itself as a formidable player in the Indian smartphone industry once again.

In recent years, the e-commerce sales in India, driven by platforms like Amazon and Walmart’s Flipkart, have experienced a significant surge. This growth has played a pivotal role in facilitating the expansion of companies like Xiaomi in one of the world’s fastest-growing smartphone markets, which boasts a user base of approximately 600 million.

Although online sales have gained prominence, accounting for 44 percent of India’s smartphone sales, the brick-and-mortar segment continues to be a significant player. along with other industry players, recognizes the immense potential for further growth in the offline retail space.

Despite the rise of e-commerce, the traditional brick-and-mortar retail segment remains influential in India. This is particularly true for smartphones, as consumers often prefer the experience of physically interacting with devices and seeking assistance from knowledgeable staff before making a purchase. Additionally, offline retail offers a wider reach, especially in smaller towns and rural areas where e-commerce penetration may still be limited.

It anticipates that the brick-and-mortar segment will continue to expand, fueled by factors such as increasing smartphone adoption, rising consumer demand, and the development of retail infrastructure across the country. By focusing on strengthening its presence in physical stores, it aims to tap into this growth potential and cater to the diverse preferences of Indian consumers.

Recognizing the significance of offline retail, it is committed to collaborating with local retailers, expanding its retail network, and enhancing the overall customer experience. By bolstering its offline presence, the company aims to provide a seamless and convenient buying experience to consumers who prefer brick-and-mortar stores.

While e-commerce sales have been instrumental in it’s growth in India, the company acknowledges the larger role played by traditional retail channels. By maintaining a balanced approach that encompasses both online and offline sales, it aims to cater to the diverse needs and preferences of Indian consumers. This strategic focus on the brick-and-mortar segment aligns with the company’s goal of capturing a larger market share and solidifying its position as a leading smartphone brand in India’s dynamic and rapidly evolving market.

According to Muralikrishnan B., the head of Xiaomi India, the company’s market position in offline retail is considerably lower compared to its online presence. It recognizes that offline retail is a highly competitive space, where other players have executed well and achieved a larger market share.

Data from Counterpoint Research reveals that only 34 percent of it’s unit sales in India this year have come from retail stores, while the majority of sales have been generated through online platforms, which have traditionally been Xiaomi’s primary sales channel. In contrast, Samsung, one of Xiaomi’s key competitors, derives 57 percent of its sales from brick-and-mortar retail stores.

To paraphrase, it’s India head acknowledges that the company’s performance in offline retail lags behind its online sales. It faces strong competition from other players in the offline market, who have achieved greater success and market share.

The data from Counterpoint Research indicates that a significant portion of Xiaomi’s sales in India still comes from online channels, with offline retail accounting for a smaller share. In comparison, Samsung has a larger presence in physical stores, with a greater proportion of its sales occurring through brick-and-mortar retail.

It plans to expand its store network beyond the current 18,000 and increasingly partner with phone vendors to offer other products, such as TVs or security cameras, where Muralikrishnan said competition is less intense.

According to Muralikrishnan B., Xiaomi has observed that some partner stores, despite displaying Xiaomi’s bright orange branding outside their shops, tend to prioritize rival brands more prominently inside. This is seen as a marketing issue that Xiaomi intends to address.

It’s decision to emphasize offline retail comes after it lost its leadership position to Samsung, which has a larger portfolio of premium smartphones that are currently in demand. Samsung currently holds a 20 percent market share in India, while Xiaomi, which has historically focused on budget phones, holds 16 percent.

Counterpoint analyst Tarun Pathak stated that offline retail continues to be a crucial platform as India embraces the trend of premiumization. Consumers who are willing to spend more on smartphones often value the physical experience and perception of owning a premium product.

Muralikrishnan B. stated that Xiaomi plans to increase the number of store promoters, salespeople who engage and sell phones to potential customers within retail outlets. The company aims to triple the count to 12,000 promoters by the end of the following year, compared to the levels seen in early 2023.

Another significant challenge faced by Xiaomi in India is the freeze on its bank assets, amounting to $673 million, imposed by a federal agency since last year. The agency alleges that Xiaomi made illicit remittances to foreign entities under the guise of royalties. However, Xiaomi denies any wrongdoing.

Muralikrishnan expressed confidence that Xiaomi’s position will eventually be acknowledged and validated.