Brands have also worked out a clearance sale for ageing stocks nearing end-of -life by taking permanent price cuts across general and online trade channels, retailers said.
Counterpoint Research analyst Shilpi Jain said summer discount sales are a way to clear out the stocks accumulated since the second half of last year and the first quarter of 2023, so as to prepare the ground to push fresh stocks ahead of the festive season.
“Channel partners remain cautious of picking up more stocks of smartphones. So, brands and channels are now trying to get rid of existing inventory, instead of focusing on new inventory,” she said. “Otherwise, it will have a large impact on the festive season sales.”
According to Jain, consumers have started to wait for the discount sales to purchase new smartphones. Channel partners have also picked up on this behaviour, which is why sales have become more frequent, she added.
“When I talked to ecommerce players recently, their whole team was busy preparing for these summer sales,” she said. “Such a thing was primarily observed during the festive season sales. So, it (summer sales) is quite big and important for them.”
Brands are keen to clear out inventory before the festive season in the second half of the year, market trackers said.
The festive season, which usually is from August to October, typically accounts for one-third of annual smartphone sales.
Brands are also hoping to cash in on consumer optimism around the Cricket World Cup to be held in India in October and November, and some key state elections followed by the union elections in 2024, experts said.
Despite all this, IDC India expects India’s smartphone market to at best stay flat year on year in 2023, following a 10% fall in 2022, plagued by continued weak demand for the high-volume, entry-level segment for the second straight year.
For now, smartphone brands are hoping to stimulate demand through big discounts.
It comes at a time when shipments to online channels have dropped significantly even as the share of offline channels grew.
Counterpoint Research said offline channels accounted for 56% shipments during the first quarter and is steadily growing.
TechArc’s Faisal Kawoosa attributed the increasing share of offline channels to increasing sales of premium handsets. While consumers do their research about the high-end devices online, most of them prefer to go to offline stores to get a touch and feel and get their queries answered before purchasing them from where they get the best deal, he said.
Many offline retailers that ET spoke with are apprehensive as the period of steep discounts approaches. This is because, they alleged, every time there is an online discount sale, brands tend to offer differential pricing in an attempt to drive higher volumes.
In a recent note, All India Mobile Retailers Association had highlighted how brands are offering lower prices along with additional bundled offers in online channels, which it alleged is creating confusion among customers and weaning customers away from offline stores.
Counterpoint’s Jain said online channels have no choice but to sweeten the deal to clear out existing inventory.
( Originally published on May 04, 2023 )