Commuters watch videos on their mobile phones as they travel in a suburban train in Mumbai, India, April 2, 2016. With smartphone sales booming and India preparing for nationwide 4G Internet access, India's film and TV industry hopes the ease of tapping your phone for the latest release will generate profits at last, overcoming the problems of woefully few cinemas and rampant piracy. Picture taken April 2, 2016. REUTERS/Shailesh Andrade - RTSDS09

Commuters watch videos on their mobile phones as they travel in a suburban train in Mumbai, India, April 2, 2016. With smartphone sales booming and India preparing for nationwide 4G Internet access, India’s film and TV industry hopes the ease of tapping your phone for the latest release will generate profits at last, overcoming the problems of woefully few cinemas and rampant piracy. Picture taken April 2, 2016. REUTERS/Shailesh Andrade – RTSDS09

Analysts are expecting the offline smartphone retail outlets to make a comeback in 2021.

The rebound in offline sales of smartphones is expected to be led by Tier 2 cities across the country.

“The smartphone market in India continues to be predominantly offline. The market conditions in 2020 were such that it drove the online retail contribution to greater heights. However, as we step into the neo normal, we believe the offline retail market will rebound, and account for 60 percent of the smartphone sales in India,” said Prabhu Ram, Head-Industry Intelligence Group (IIG), CyberMedia Research (CMR).

“Our assessment is based on the fact that aspirational India, across Tier-II cities and beyond, is still relatively under-penetrated, and offers significant headroom for growth. In the post-pandemic future, consumers in these markets are seeking to connect with the fledgling digital economy via smartphones. This consumer demand will fuel the offline market going forward,” he said.

According to an International Data Corporation (IDC) report published in December 2020, the online sales accounted for 51 percent of overall sales of smartphones in October, growing 53 percent year -on- year (YoY).

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The report had also noted that the offline channel, especially in smaller towns and cities, witnessed a healthy 33 percent YoY growth.

“Online channel in the past years has picked up significant pace, with always aggressive e-tailers offering attractive affordability schemes, cashback/buyback offers in comparison to the offline channel/retail counters which has been rather muted for a while now. This stickiness to buy online, increased further in 2020, as many consumers on the fringe also opted for online purchases owing to consciousness of stepping out, convenience of doorstep deliveries and cashless transactions etc,” said Upasana Joshi, Associate Research Manager, Client Devices, IDC India.

She added that the shift in channel preference cannot be permanent in nature, as offline continues to be relevant and is expected to bounce back in 2021. In fact, during the festive 4Q20, there were increased retail walk-ins, as markets opened completely driven by offline consumer purchases.

“For any brand to sustain in long term, omnichannel presence is essential, since offline counters continue to dominate majority markets. IDC believes that in 2021, the otherwise online heavy brands will re-focus on building strong footholds in the retail space, along with sustained online play, to have strong growth,” said Joshi.

Commenting on the market dynamics for 2021, Prachir Singh, Senior Research Analyst, Counterpoint Research, said: “In 2021, the offline retail outlets can account for 54-55 percent of the smartphone sales.”

The recovery in offline sales will not be driven alone by tier II and tier III cities. The sale of premium segment smartphones in tier I cities will contribute towards the offline outlet comeback, Singh said.

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He also said while the online channels received momentum in 2020 triggered on the back of COVID-19 pandemic, increased retail walk-ins were witnessed during the festive season.

Canalys Research Analyst, Varun Kannan, said: “The share of online channels has been drastically increasing over the last couple of years and the coronavirus had only accelerated it, however, gradual comeback of the offline retail outlets can be expected in 2021.”

Kannan also said Xiaomi is focussing on expanding its offline retail presence through mini vans in tier II cities which could stimulate the offline channel comeback.





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