Amid competition from Samsung, China's Xiaomi is betting big on Indian retail stores.

By Aditi Kalara

NEW DELHI (Reuters) – After years of betting big on e-commerce, China’s Xiaomi will focus on boosting its Indian sales from retail stores, India’s president said, as the company tries to revive smartphone sales after falling behind South Korea’s Samsung.

E-commerce sales in India through Amazon and Walmart’s Flipkart have surged in recent years, helping Xiaomi and others expand in one of its fastest-growing markets, with 600 million smartphone users.

But with 44 percent of Indian smartphone sales being online, the brick-and-mortar segment remains the biggest game and Xiaomi expects it to grow further.

“Our offline market is significantly smaller than online,” Xiaomi India head Muralikrishnan B said in an interview on Friday. “You have other competitors offline that are doing reasonably well and have a large market share.”

About 34% of Xiaomi’s India unit sales this year came from retail stores, with the rest through sales generator websites, Hong Kong-based Counterpoint Research data showed. Samsung, on the other hand, gets 57% of its sales from stores.

Xiaomi plans to expand its store network beyond the current 18,000 and partner with phone providers to offer other products such as Xiaomi TVs or security cameras.

He added that some of Xiaomi’s partner stores that put the orange branding on the outside of the stores are showing competing brands more prominently, adding that it is a marketing issue that the company is looking into.

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

Counterpoint analyst Tarun Pathak said, “Offline continues to be a key platform as India embraces the premium trend. “Consumers who spend more want the look and feel of a premium product.”

Xiaomi plans to hire more in-store promoters – salespeople who woo, kiss and sell phones to buyers in the mall. From the start of the 2023 rankings, the number has tripled to 12,000 advertisers.

Another major challenge in India for Xiaomi is the federal agency’s freeze of $673 million in its bank assets since last year. The agency alleged that Xiaomi had illegally transferred money to foreign parties in the name of royalties. The company denies the fault.

Muralikrishnan said, “We remain confident … that eventually our position will be heard and vindicated.”

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

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