According to International Data Corporation’s (IDC) Monthly City Level Smartphone tracker, smartphone sales within the leading 50 cities of India fell by a whopping 30.5 percent month on month in Nov 2016 over Oct 2016.This downward trend can be attributed to demonetization and resulting cash crunch along with the cyclically lean period after festive season in Oct.
According to Upasana Joshi, Senior Market Analyst, IDC India, “Demonetization has impacted the smartphone market at almost all levels including the customer demand and stock movement in the distribution channels. The slowdown was seen across all city tiers, with a de growth of 31.7 percent in Tier 1 cities and 29.5 percent in Tier 2,3 & 4 cities in Nov 2016 over Oct 2016. There was a huge drop in inquiries and significantly reduced footfall at the retail. To counter this, mobile phone retailers together with micro finance companies started offering zero down payment options to stir sales”
“Interestingly, the premium smartphone segment saw some growth during the weeks following demonetization, wherein consumers were seen rushing to buy higher priced smartphones using the demonetized currency, with reports of these high priced models being sold at a premium. “adds Joshi.
India based vendors were hit the most due to demonetization, with a drop of 37.2 percent in Nov 2016 across Top 50 Cities of India as compared to China based vendors with 26.5 percent drop and Global vendors with 30.5 percent drop over previous month.
Varun Singh, Market Analyst, IDC India says “In the offline channel, while the Indian vendors were struggling, the Chinese vendors like Oppo& Vivo pulled in strong demand largely due to their strong hold on distribution and better partner incentive schemes and promotional activities during the slowdown.,”
“However, IDC expects the impact of demonetization to be transitory with the market expected to bounce back to normal levels by Feb 2017. adds Singh.
Navkendar Singh, Senior Research Manager, IDC India says “The demonetization came on the heels of a hit festival season in Oct, during which the smartphone industry is expected to have sold around a third of entire years’ volume. Cash purchases make up a significant portion of these purchases in both online and offline channels, hence the impact seen was immediate and more in below $200 price range which still makes up a large portion of the market.”
China Based Vendors: Market share of China based vendors has increased to 42.6 percent in in Tier-I cities from 38.7 percent market share in Oct 2016. Also, they have extended their market presence in Tier-II and beyond with a marginal increase in the market share. In addition to seasonal decline and impact of demonetization in Nov, China based vendor’s market share improved sequentially owing of their high decibel marketing, increased credit line to distributors and efficient channel management. Heavy investments in training and developing In-shop promoter programme by Oppo and Vivo have helped these vendors to sustain with lower decline in relative to other vendors.
India Based Vendors: Market share of India based vendors are continuing in decline across the tiers in Nov 2016. India based vendors are finding it difficult to compete with the aggressive China based vendors due to shrinking spends in their marketing and the absence of good product assortment.
Global Vendors: Market share of Global vendors changed marginally by (+ -) 1 percent across tiers but overall their share remained flat in Nov’16. Global vendors especially led by Samsung were able to withstand the aggressive China based vendors due to their good distributor coverage and penetration in the Indian market. They also still enjoy good brand value among the consumers in Tier-II cities and beyond.
