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Offline retail channel for smartphones expected to bounce back in 2021, say analysts


NEW DELHI: Theoffline retail channelis expected to bounce back in 2021 to an extent, driven by the smaller towns and cities, and contribute some 60% tosmartphone sales, as major brands such as Xiaomi and Realme double down on expanding their offline presence, say market trackers.

Growth in the online channel has jumped in the last three years – growing from 38.4% share in 2018, to 41.7% in 2019 and is estimated to be 45% in 2020. In fact, it outperformed the offline sales in the month of October, crossing 51% for the first time, according to data from IDC.

But, analysts at Counterpoint and CyberMedia Research are forecasting the offline retail channel to again dominate the market with a 60:40 distribution, as major brands such as Xiaomi and Realme expand their offline presence. IDC expects the same to be 55:45.

“2020 has been a peculiar year which forced consumers to make online purchases, but as things normalise, we expect consumers will again buy smartphones through a more trusted process from a nearby retailer offering a touch-and-feel experience of the product,” said Shilpi Jain, research analyst at Counterpoint.

She added that besides Vivo, which is already offline-heavy, other volume brands such as Xiaomi and Realme are focused on expanding their offline presence in 2021 with similar discounts and offers in both channels.

India’s top brand Xiaomi said it plans to expand its footprint to reach the smaller towns and grow its offline business.

“At Mi India, offline is one of the most strategic and fastest growing business. If we just look at the pre-COVID numbers, we witnessed a 30% y-o-y growth in our retail network (Q1 2019 to Q1 2020). Today offline contributes to approx. 50% of our business and we aim to give equal importance to all platforms,” said Muralikrishanan B, COO, Mi India.

Realme said it will open a few flagship stores and expand to 300-500 Realme exclusive smart stores in 2021.

“Our offline channel constitutes 30% of our businesses and we will look forward to the growth of both our online and offline channel business in the coming year. We offer parity between our mainline and online channel partners and have always made sure that there is product availability to our retailers on both online and mainline platforms on the same day itself,” Realme spokesperson said.

In the coming year, you will be able to see realme’s promoters, demos, offline branding and other retailing support going deeper, he added.

Vivo, the top brand in offline, is aiming to add 130 exclusive stores next year which would take its total count to 650 stores by 2021 end.

Analysts expect, going forward, smartphone demand will come from the next set of emerging towns and cities with huge untapped potential in the up-country geographies having a large feature phone base.

According to a report by research firm IDC, in October, 25% of the market sat in top tier cities, namely New Delhi, Mumbai, Bengaluru, Chennai, and Kolkata. The leading 50 cities of India accounted for 55% demand nationally.

“With the smartphone market still concentrated around the leading 50-70 cities of India, the industry must address the untapped potential in the lower tier cities with affordable entry-level offerings to offset the large feature phone base and ensure steady year-over-year organic growth in upcoming years,” said Upasana Joshi, Associate Research Manager, Client Devices, IDC India.

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