Handset manufacturers to alter product portfolios and adopt a multi-channel route to beat the lull in sales
The smartphone market is abuzz after a brief period when smartphone manufacturers had to put launches on hold in view of the coronavirus pandemic. A clutch of new phones including Apple’s iPhone SE, Redmi Note 9 Pro, POCO X2, Samsung Galaxy M21, OnePlus 8, Xiaomi’s Mi 10 and Vivo V19, are now on sale.
While manufacturers have brought the market alive with launches across price bands, it is unclear if consumers will splurge on buying or upgrading their phones as planned at the beginning of the year. IDC India and Counterpoint Market Research estimate that the nearly 60-day break in smartphone sales could dent the market by more than 10%. According to Counterpoint, the smartphone market has seen a steep annual decline of 19% in March 2020. IDC findings state that the shipment of smartphones in Q1 2020 stood at 3.25 crore units, with y-o-y growth of 1.5%, as against 7% y-o-y growth in Q1 2019.
Pay cuts, rising unemployment, and an overall muted consumer sentiment are expected to impact discretionary spending. Analysts expect consumers to hold off purchases for three to six months.
The upper-mid segment smartphones, that attract consumers looking to upgrade their existing phones, could see fewer buyers this year. Premium smartphones are expected to be unaffected.
Navkendar Singh, research director, IDC India, says, “Consumers intending to buy phones under Rs 10,000 may not be very eager, and could delay purchasing one. The feature phone segment will suffer the most. However, phones in the Rs 10,000-25,000 segment may continue to sell. The total impact on the market could be around 12-13%.” IDC estimates that the shipment of feature phones is expected to dip by 50% to 7.5 crore in 2020, from 13 crore in 2019.
Nokia is already seeing the shift in sentiment. Sanmeet Kochhar, vice president, HMD Global, informs that after resuming online sales in May, Nokia 7.2, a mid-segment smartphone, emerged as the most selling smartphone, along with Nokia 3.2 and Nokia 2.3 — both of which are popular among ‘value seeking’ consumers. The company is selling all the three models at a discount of around Rs 1,000- Rs 3,000.
Tarun Pathak, associate director, Counterpoint Market Research, believes that this change in consumer spending could result in the average selling price for smartphones in India to drop in 2020. Industry estimates peg the average selling price of smartphones in India to be around Rs 13,000.
Companies may need to present a more affordable range of products for the prudent consumer. Xiaomi India’s MD, Manu Jain, who expects more purchases in the mid-segment category, said at a recent online press event that the company may alter its product portfolio in line with the conservative expenditure on smartphones.
The festive season, that coincides with the last quarter, could provide some much-needed impetus to smartphone sales. “The festive season is crucial as 30-40% of all smartphone sales take place during this period,” Pathak says.
During the lockdown, retailers stuck with inventory started using WhatsApp to promote their inventory and organise contactless delivery. About 60% of India’s smartphone sales happen offline. Despite the government allowing stores to reopen, smartphone makers expect fewer people to shop in stores.
Manufacturers, meanwhile, are creating their own omnichannel solutions. Xiaomi launched Mi Commerce which lets users contact the company on WhatsApp or login to the Mi Commerce web app to connect with the nearest retail store. Once a consumer expresses interest in a product, the retailer contacts the consumer and closes the loop.
“Unearthing the value of neighbourhood mom-and-pop shops in the value chain is key. The omnichannel solution gives retailers business without cannibalising share between channels, and displeasing offline channel partners,” Singh points out.
Vivo’s Smart Retail option enables consumers who are comfortable with the offline channel to speak with a neighbourhood retailer, and make a contactless purchase. “The facility which works as a lead generator of sorts has brought us 30,000 queries in just two weeks,” informs Nipun Marya, head, brand strategy, Vivo India.
Anticipating reduced in-store footfall, Oppo is preparing for “a phygital experience, which will offer uninterrupted customer experience across both worlds,” says Sumit Walia, VP, product and marketing, Oppo India.