Author(s): Raghu Gopal
Last week, Xiaomi launched its first physical retail store in India and the company has outlined plans to open 100 such stores in India during the next two years. The first store will open to the public on 20 May and will be a "one-stop shop" for all of Xiaomi's products. It will be located in Bengaluru (Bangalore), and will soon be joined by Mi Home stores in Delhi, Mumbai, Hyderabad and Chennai.
Until now, Xiaomi smartphones were only available online in India. The company pioneered the online flash sales model for smartphones, and earned a notorious reputation for running out of stock, leaving many fans yearning for a Mi handset.
The coming chain of Mi Home stores is a part of Xiaomi's strategy of expanding its presence in India. An online-only strategy makes it impossible for people to experience the phones before making a purchase.
Currently, Xiaomi is constrained by Indian regulations concerning foreign companies having a physical retail presence in the country. Although its first stores will be run through a partner, Xiaomi said it has applied for the relevant licence to be able to operate them. The smartphone maker is in a similar predicament as Apple, which is awaiting permission from Indian authorities to open retail stores — a move that will almost certainly increase Apple's market share in the country.
Success in India is essential for Xiaomi. Rivals, particularly in China, have been able to outmanoeuvre Xiaomi's strategy of bringing highly specified devices at a punchy price to market. In particular, Xiaomi, once nicknamed "the Apple of China", has been facing stiff competition from Chinese brands Huawei, Oppo and Vivo. Xiaomi has been keen to expand internationally to make up for its loss of sales in China. Last week, it announced entry into Mexico, potentially as a precursor to an expansion into the US market.
Xiaomi has had some success in budget-conscious countries such as India — it is now a credible competitor to Samsung in the Indian market when it comes to smartphones. It's clear Xiaomi wants to build on this success through a strategy of adjusting its offering and channel approach in local markets. In India, to reach deep into the market, it has come to the conclusion that it needs to have storefronts. It's a laudable move from Mi, but ultimately it will be consumers that decide its success.