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Xiaomi eyes rural market in India, to open 500 Mi stores

This is the first time any brand is setting up exclusive stores in rural India at such a scale.

twitter-logo BusinessToday.In   New Delhi     Last Updated: August 27, 2018  | 15:57 IST
Xiaomi eyes rural market in India, to open 500 Mi stores

Xiaomi, currently India's second-largest smartphone seller, had introduced India to the concept of flash online sales after its 2014 debut. Then, in 2017, the Chinese giant changed its strategy, switched focus to offline retail. Earlier this year, it overthrew Samsung from the top slot. It is now reportedly planning to stir up the retail market further.

According to The Economic Times, in a global first, Xiaomi is planning to establish exclusive outlets in new formats in India. Not to be outdone, its compatriot brand Huawei nurses similar plans for the country.

The company spokesperson told the daily that Xiaomi is setting up thousands of dedicated stores in rural locations - from around 500 Mi Stores by the end of this year, the brand hopes to scale up to "a few thousand" by next year in order to maintain its growth pace. The maker of Redmi and Mi smartphones and televisions, will be opening the franchisee-owned stores in taluk-level areas.

This is the first time any brand is setting up exclusive stores in rural India at such a scale. And that's good news for not just Indian consumers but also the economy since the move will reportedly generate more than 5,000 jobs in such areas.

Xiaomi's share of online sales dropped to 70 per cent last month - down from 95 per cent till Jan 2017 - courtesy a six-fold increase in offline sales. This fresh retail push will change the balance further.

Citing experts, the report added that this development could further stifle Indian smartphone brands that are surviving on sales in rural markets and intensify competition with Samsung. It will also pose a big challenge to Reliance Retail. The latter currently is a major player in the rural markets thanks to its small Jio stores that also sell mobile phones and electronics.

"In many cities where we have become number one, we have 30-40 per cent share in offline. We can extend this to 100-150 cities and even lakhs of villages. That is when we will achieve the true potential of offline retail," Manu Jain, Managing Director of Xiaomi India, told Business Today a month ago.

The company's offline ambitions, in fact, go far beyond mobile phones. "Smartphone is what we are famous for, but we have a much bigger pool of products," said Jain, rattling off categories ranging from scooters and shoes to air/water purifiers and laptops. "Even refrigerators and possibly air-conditioners. Why not? We are an Internet company. Anything that can be a smart-connected device, we want to be there," he had added.

Meanwhile, Huawei, the world's second largest smartphone maker after Samsung as per US-based researcher IDC, too is reportedly ready to spread its wings in the offline segment. Executives told the daily that the brand will set up 100 large franchise-owned exclusive stores in Indian cities for its Honor handsets, which are sold online globally.

The big question now is whether this move by the Chinese players to tap the untapped potential in tier 2 and beyond markets will prompt copycat moves among the other players in business.

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