• Sun. Dec 3rd, 2023

China’s Xiaomi is betting big on retail stores in India amid competition from Samsung

China’s Xiaomi is betting big on retail stores in India amid competition from Samsung
  • Xiaomi, one of the leading phone brands in India, has lost market share
  • Company plans to increase retail-store sales – Xiaomi exec
  • Xiaomi to hire more store promoters to attract customers
  • The Indian agency’s Xiaomi assets have frozen a major challenge

NEW DELHI, July 16 (Reuters) – China’s Xiaomi ( 1810.HK ) will focus on increasing sales in India from retail outlets after years of betting big on e-commerce, its Indian president said. It trailed South Korea’s Samsung ( 005930.KS ).

E-commerce sales in India by Amazon ( AMZN.O ), Walmart ( WMT.N ) and Flipkart have surged in recent years, helping Xiaomi and others expand in one of the world’s fastest-growing markets with 600 million smartphone users.

But while 44% of smartphone sales in India are now online, the brick-and-mortar segment remains the big game and Xiaomi expects it to grow further.

“Our offline market position is much lower than online,” Muralikrishnan B, Xiaomi’s India head, said in an interview on Friday. “Offline you have other competitors that are doing fairly well and have a larger market share.”

Data from Hong Kong-based Counterpoint Research showed that 34% of Xiaomi’s India unit sales this year came from retail stores, while the rest came through websites, which have long been its dominant sales generator. In contrast, Samsung gets 57% of its sales from stores.

Xiaomi plans to expand its store network beyond the current 18,000 and partner more with phone vendors to offer other products, such as more low-end Xiaomi TVs or security cameras, Muralikrishnan said.

Xiaomi found that some partner stores that put up bright orange branding outside the stores were displaying rival brands more prominently inside, which he said was a marketing issue the company was addressing.

Xiaomi’s offline push comes months after it lost its lead to Samsung, which now has a much larger portfolio of popular premium phones. The South Korean giant has a 20% market share in India, while Xiaomi, which has historically focused on budget phones, has 16%.

“Offline remains an important platform as India embraces the premiumization trend,” Counterpoint analyst Tarun Pathak said. “Consumers who spend more want the look and feel of a premium product.”

Xiaomi plans to hire more store promoters — salespeople who woo, pitch and sell phones to prospective buyers inside outlets. Muralikrishnan said the aim is to triple the number of promoters to 12,000 by the end of next year from the beginning of 2023.

Another major India challenge for Xiaomi is that a federal agency has frozen $673 million in bank assets since last year. The agency has accused Xiaomi of sending illegal money to foreign firms in the name of royalties. The company denies wrongdoing.

“We will remain confident… ultimately our position will be heard and validated,” Muralikrishnan said.

Reporting by Aditya Kalra; Additional reporting by Munsif Vengatil; Editing by William Mallard

Our standards: Thomson Reuters Trust Principles.

Aditya Kalra is Reuters India’s Company News Editor, overseeing business coverage and covering news for some of the world’s largest companies. He joined Reuters in 2008 and in recent years has written stories on the challenges and strategies of companies ranging from Amazon, Google and Walmart to Xiaomi, Starbucks and Reliance.

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