There is a significant difference between how Xiaomi and most of its competitors do business. While the latter rely upon stores and franchise for sales, Xiaomi has traditionally used the web to market and sell its products. The company has a significant on the web, including exclusive partnerships with some of the largest e-commerce portals. In what is being seen as a departure from the norm though, Xiaomi is planning to open 1,000 retail stores by 2020.
After entering the market in 2011, Xiaomi cause a serious upheaval with its high-end smartphones that were known for being pocket friendly and were also able to wash off the stigma of being non-durable, that until then, was often associated with Chinese phones in other markets. Thanks to massive sales in markets such as China and India, Xiaomi pushed its way to become China’s top smartphone brand in 2014 and 2015.
However, competition has now caught on and its becoming difficult for the company to retain its crown. With manufacturers like Huawei, Oppo and OnePlus launching their own lines of affordable and feature loaded devices, Xiaomi is hard pressed to maintain its level of sales solely through online portals. Increasing saturation in the smartphone market may also have a hand in slowing down sales.
Regardless of the reasons, the company is looking for ways to boost sales. The company has now hit upon the idea of opening brick and mortar shops to increase sales. Towards that, the company is going ahead with a new strategy of opening hundreds of retail stores across china every year. It has now set its sights upon a pretty ambitious end goal of having 1,000 retail stores by 2020.
The physical stores are also likely to host other products from Xiaomi’s portfolio, including home appliances, rice cookers and perhaps even drones.
Speaking on the topic to Tech in Asia, a Xiaomi spokesperson said,
As Xiaomi matures as a company, and as the Xiaomi branding has grown to become a household name in China, we recognized a fantastic opportunity to start expanding our Mi Home outlets. We are therefore converting these Mi Home outlets into retail stores, and we will be opening even more Mi Home stores – aiming for 60 by the end of this year.
The company is probably hoping that the move will let it counter competition, most notable Huawei, which has been pushing Xiaomi back and has almost 11,000 stores spread across China. Wheather or not it will work though, is another matter. Xiaomi is able to launch devices at affordable rates because its margins are pretty thin. The company thus relys more on bulk sales for a good looking fiscal report.
However, considering that the company is being pushed back of late, opening retail stores may not be a matter of choice anymore, but a necessary move. Sure, it will cost the Chinese company a significant amount of money to open and operate hundreds of retail stores, however, they may also help the company convert more of the “Still deliberating about purchasing a Xiaomi smartphone” kind of customers. It will also serve to build up Xiaomi’s brand image across the country and allow it to project its products in a better light and reach a greater audience — particularly those who still prefer to purchase stuff after first watching it in action before their eyes.
If the strategy proves to be successful in China, we can expect Xiaomi to follow up with Brick and Mortar stores across other countries, where its devices are sold as well.