Diwali smartphone sales value zooms 40% for offline retailers, despite buying binge online

To be sure, e-commerce platforms, which account for 45 percent of total mobile phone sales in a calendar year, are set to report a marginal increase in volume sales year over year.

Around 35 million smartphones are likely to have been sold in this year's festive season, which ended with Diwali. Pathak said the share of the online channel is likely to be lower than 60 percent, compared to 65 percent in 2022 and 61 percent in 2023.

Offline retailers expanded the market both in terms of value and volume sales. Their share increased beyond 40 percent during the festive season, the highest in the last three years.

Counterpoint estimates slightly lower offline sales growth than AIMRA, with 15-18 percent year-on-year value growth and single-digit volume growth.

Despite the online channel’s dominance during the festive season, the offline channel remains the dominant channel, with around 55 percent of the overall smartphone sales taking place in the channel.

Pathak said that one of the reasons for retailers' growth this festive season was the low base last year. Second, retailers were able to secure good channel inventory this year and had better flexibility with the margins, especially with the slab schemes. “This further allowed them to go ahead with aggressive pricing, with some of them even matching online pricing.”

Market research firm TechInsights analyst Abhilash Kumar said retailers experienced a surge in momentum during the festive season sale with the onset of Navratri, which started after the Shradh season. “Being cognizant of the competitive online pricing during the festive period, retailers introduced compelling and innovative offerings to capture the market,” he said.

Large Format Retailers (LFRs) focused on card offers and cashback incentives, while smaller retailers offered assured gifts on smartphone purchases, extended warranties, and instant cashback.

Faisal Kawoosa, founder and analyst at TechArc, said this has been one such festive period where both online and offline has grown. While online saw growth mainly in value, offline posted growth in value and volume. “Factors like equal attention by all major brands on both the channels, which made fast-selling models available in both the channels, equal offers and discounts, are some of the factors that led to this balanced growth across channels. Also offline, modern trade is growing fast and brands are investing in and nurturing this trend,” he said.

The growth for mobile retailers comes despite issues with Samsung and the sub-brands of most Chinese smartphone companies.

Recently, mobile retailers called on the central government to ban Chinese-owned sub-brands like iQoo (owned by Vivo), Poco (owned by Xiaomi), and OnePlus (owned by Oppo) from operating in India. They cited concerns over anti-competitive practices that they claim result in financial losses for the government.

Retailers allege these brands continue to breach regulations by maintaining exclusive partnerships with e-commerce platforms and declining to distribute products through physical retail stores.

A recent report by the Competition Commission of India (CCI) also highlighted potential collusion between smartphone brands and e-commerce platforms, raising concerns about fair competition in the market.

“Our delegation will soon meet with the minister to advocate for prompt actions on the CCI Report's findings by the Indian watchdog CCI,” Lakhyani said.

As per mobile retailers, key players such as iPhone maker Apple offered appealing loan options and led the growth in the premium segment during the festive season. Chinese brands like Vivo, Oppo, Realme, and Xiaomi also brought offers in the offline space, including up to 10 percent cashback offers, an extended 10-month warranty, and a nominal Rs 10 down payment for loan purchases.

“These brands also rolled out lucky draws and other promotions to attract customers in the offline space. The strategic pricing strategies employed by these brands were instrumental in boosting sales during the festive season,” Lakhyani said. Mobile retailers noted that early sales primarily favoured online platforms, where exclusive Samsung deals, ample Motorola stock, and Xiaomi-owned Poco brand smartphones lured consumers away from brick-and-mortar stores.

“Despite these obstacles, consumers strongly preferred the mainline market, emphasising the importance of the hands-on shopping experience, personalised deals, flexible loan options, and enticing freebies provided by retailers,” Lakhyani said.

TechArc estimates that Reliance Digital has also emerged as a key offline enabler in the offline channel to drive growth.

“So far we only had Croma as a true national Large Format Retailer (LFR) chain for electronics, including smartphones. But now Reliance Digital has emerged an alternate option in the offline which has seen some great expansion over past couple of years,” Kawoosa added.