Xiaomi’s Strategic Shift: Prioritizing Retail Stores in India Amidst Sales Competition with Samsung
Xiaomi, a leading smartphone manufacturer, has recognized the need to strengthen its offline presence in India to revitalize its smartphone sales. While the company has established a significant presence in the Indian market through e-commerce channels, it aims to expand its reach by increasing its offline footprint. Currently, Xiaomi already has a presence in 18,000 offline stores across the country.
By expanding its offline distribution network, Xiaomi intends to cater to a broader customer base and improve its competitive position in India. The company aims to regain momentum and regain its position as one of the top smartphone brands in the country, especially in the face of stiff competition from rivals like Samsung.
The decision to focus on offline sales reflects Xiaomi’s strategy to tap into different market segments and cater to customers who prefer purchasing smartphones through traditional retail channels. With its extensive distribution network and a renewed focus on offline sales, Xiaomi aims to strengthen its market position and regain market share in the Indian smartphone market.
Muralikrishnan’s statement highlights the fact that Xiaomi’s market position in offline retail is currently weaker compared to its online sales. While Xiaomi has established a strong presence in the online market, the offline segment presents a different competitive landscape with other players performing well and holding larger market shares.
India is home to a significant number of smartphone users, with approximately 600 million individuals using smartphones. Despite the growth of online sales, a majority of smartphone purchases in India still occur through brick-and-mortar stores. Online sales account for only 44 percent of total smartphone sales in the country.
This presents a valuable opportunity for Xiaomi to tap into the offline market and expand its reach to a larger customer base. By focusing on strengthening its offline presence, Xiaomi aims to capitalize on the preference of many Indian consumers to purchase smartphones through physical retail stores. This strategic move aligns intending to regain market share and compete effectively against other established players in the offline space.
Counterpoint Research data indicates that 34 percent of Xiaomi’s sales in India this year have come from retail stores, while its competitor Samsung generates 57 percent of its sales from offline channels. Recognizing the potential in the offline market, Xiaomi plans to enhance its partnerships with phone vendors to offer a broader range of products, such as Xiaomi TVs and security cameras. This strategy allows Xiaomi to leverage its existing store network to drive sales of these additional offerings.
To strengthen its offline presence, Xiaomi intends to expand its store network beyond the existing 18,000 retail stores in India. In doing so, the company aims to address a marketing issue where some stores prominently display rival brands alongside Xiaomi products while using Xiaomi branding. By rectifying this situation, Xiaomi aims to enhance brand visibility and ensure a more consistent and focused marketing approach in its partner stores.
By increasing its focus on offline sales and expanding its store network, Xiaomi aims to regain momentum in the Indian smartphone market. This strategic shift allows the company to tap into the significant portion of Indian consumers who prefer to purchase smartphones through physical retail stores.
According to Counterpoint Research, Samsung has surpassed Xiaomi to become the leading smartphone brand in India, with a market share of 20 percent compared to Xiaomi’s 16 percent. Analyst Tarun Pathak highlights the importance of the offline channel in India, as consumers who are willing to spend more prefer the in-person experience and feel of premium products.
In response to this shift, Xiaomi’s India head has revealed plans to hire more store promoters. These salespeople play a crucial role in attracting customers, pitching products, and closing sales within retail outlets. Xiaomi aims to triple the number of promoters to 12,000 by the end of the next year, significantly increasing its in-store sales support compared to early 2023.
By expanding its team of store promoters, Xiaomi intends to enhance its presence and sales performance in brick-and-mortar stores. This strategy aligns with the growing importance of the offline market and the demand for personalized sales assistance, particularly for premium products.
