Xiaomi is planning to launch company-owned stores in India after the government relaxed rules pertaining to single-brand retail stores. The Chinese electronics brand has 23 Mi Home stores across seven cities in India, but they are owned by franchisees and managed by Xiaomi.
Xiaomi had a phenomenal 2017 in India where it dethroned Samsung to become the major smartphone brand towards the end of fourth quarter and IDC says its shipments tripled year-over-year. At the launch of Redmi Note 5 in Delhi yesterday, Xiaomi claimed to have sold over 9.6 million units of its Redmi Note 4 smartphone last year.
Xiaomi is the leading smartphone brand in the online segment, but it is expanding itself into offline retail channels as well. IDC estimates Xiaomi to have sold more than 2 million units through its offline channels last year. The offline sale is mainly driven by offline expansion of its Mi stores and preferred retail partners.
Xiaomi is estimated to have closed 2017 with sales surpassing $2 billion due to strong demand for its Redmi series. The company has also expanded its offering to include Mi TV in India, and is now planning to further extend its reach with self-owned ‘Mi Home’ retail stores across major towns and cities.
“Yes, the relaxation of norms means that we can open our own stores in India. This will happen soon, as the year progresses,” Manu Jain, MD of Xiaomi India, told ToI. Jain added that the company is evaluating and studying the prospects of opening self-owned retail stores. “It now makes sense as automatic approval has come in. We do not need to go through government approvals before doing so.”
The Government of India relaxed single-brand retail norms allowing foreign players to set up their own stores in the country in January this year. The decision allows for 100 percent foreign direct investment (FDI) in single-brand retail channels as opposed to 49 percent FDI previously allowed by the government. The change in norms allows foreign entities to set up shops without government approval, and also eases local sourcing norms.
Xiaomi has grown to become a major smartphone brand in India mainly due to its aggressive pricing and strong visibility in the online retail space. However, the brand still lacks a distribution network as strong as Samsung in the offline segment. With the launch of Mi Home stores, and nearly 1,500 Mi preferred stores, Xiaomi has its presence in over 16 cities but all these stores are multi-brand stores.
Xiaomi was among the first brands to submit an application for opening self-owned retail stores in India. But it faced hurdles due to the 49 percent FDI norms prevailing at that time. Now, Xiaomi can set up its self-owned stores in India without government approval.
One of the major benefits for having self-owned stores would be a better management of supply chain and importantly, Xiaomi’s products won’t have to share space with any other competing brands. Also, Xiaomi needs its own stores as it expands its product offerings to include televisions which are purchased mostly via offline channels.