Apple plans first retail outlet to help revive Indian market

Apple has finalised a short list of locations for its first retail store in India.

The company is redoubling its efforts in the world’s fastest-growing smartphone market.

The iPhone giant has zeroed in on several upscale sites in Mumbai and plans to make a final decision in the next few weeks.

Apple has been prohibited from opening its own stores in India, because it doesn’t meet local sourcing requirements, but it is shifting manufacturing into the country and is in talks with the government about its retail expansion.

The iPhone maker has struggled to establish itself in India, where consumers have opted for less-expensive Chinese brands, such as Xiaomi and Vivo. But chief executive Tim Cook has vowed to improve in the fast-growing market, especially as Apple loses ground in China.

Manufacturing in India will also allow the company to sidestep 20% tariffs on imported phones, making its devices more competitive.

“India is a very important market in the long-term,” Mr Cook said, after the company’s earnings report last week. “It’s a challenging market in the short-term, but we’re learning a lot. We plan on going in there with sort of all of our might.”

Apple doesn’t break out its revenue from India, since it is such a minor part of the business. In the most recent quarter, the company generated 44% of revenue from the Americas and 18% from greater China. India is lumped in with the rest of Asia-Pacific, which, altogether, account for 6%.

Apple has tried to gain ground as India has eclipsed China as the fastest-growing smartphone market in the world.

One Apple veteran took over as country chief at the end of 2017, overhauling its strategy and replacing top sales executives. But with little sign of progress, a new country chief was named in November.

Still, Apple continues to flounder in India. Research firm Canalys estimates the company’s shipments fell by 75% in the first quarter of 2019, giving it only 1% of the country’s smartphone market. Now, Apple appears to be doing the difficult — and expensive — work of building a foundation for its business. Foxconn Technology, its most important manufacturing partner, is running quality tests for the iPhone XR series in India and plans to begin mass production at a facility in the suburbs of Chennai.

Older models are already assembled at a Wistron plant in Bangalore.

“Its own retail store might be just what Apple requires to reinforce its premium image,” said Rushabh Doshi, an analyst with Canalys.

“A store just before the next launch will be the perfect timing for Apple to restart its Indian growth story.”

he said.

It’s clear Mr Cook won’t give up against Chinese phone-makers.

Tim Cook
Tim Cook

Indeed, last month, Apple ran front-page newspaper ads, announcing sizable discounts on the latest iPhone XR. It rarely slashes prices on its latest models, but has offered a markdown of 17,000 rupees (€218) on its latest iPhone XR, bringing the price down to 59,900 rupees.

This week, online retailer Paytm Mall announced cash paybacks on a variety of iPhone models.

“The price cuts are definitely a step in the right direction,” said Mr Doshi.

Apple has a delicate balance to maintain: It needs to appeal to the cost-conscious Indian buyers, while ensuring that price drops do not dilute its premium image.

Bloomberg

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