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smartphones: Mobiles could get cheaper this festive season as companies look to liquidate stock

Smartphone buyers could expect steep discounts and multiple rounds of sales offers on both ecommerce and offline channels in the upcoming festive season, market trackers and retailers said, as brands seek to liquidate bloating inventories spawned by quickening inflation and consequent lukewarm demand globally.

“The festive season in H2 2022 is expected to bring in some steep discounts in the Indian market. Online discount sales have increased in Q2 2022, and we expect a renewed push to it in the upcoming quarters,” said Rajeev Nair, senior analyst, Strategy Analytics that tracks consumer market trends.

Brands will seek to harness demand through the upcoming festive season to mitigate the revenue impact of the weak first half of the calendar year.

Abhilash Kumar, telecom analyst, Strategy Analytics, added that brands are also expected to launch lucrative EMI options for phones sold from their own websites or offline stores.

Deep discounting could be one way to clear built-up inventories.

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Offline retailers ET spoke with confirmed there is an inventory build-up, and smartphone brands have increased margins to offline retailers in June, reversing the recent trend of reduced channel share in revenue, to clear inventories. Higher margins to retailers would allow them to offer discounts on products even in the offline channels.

“Inventories have piled up, margins have been increased to dump the products with offline retailers as online channels have reduced their supply intake. So, the stocks stuck in the logistics pipeline are now being rerouted to offline channels with higher margins, and sometimes even with chargers for models that did not bundle one initially,” said Arvinder Khurana, president of All India Mobile Retailers Association.

Chinese handset companies have also accumulated inventories in their domestic market and have also been struggling to sell in Eastern Europe.

“The inventory could be anywhere between 50 and 80 million units,” said Sravan Kundojjala, director, Strategy Analytics. “It is possible that some units are being routed to the Indian market, but the situation will likely take time to resolve as the Indian market alone cannot absorb all those units.”

Samsung, which is the second largest smartphone brand in India, is reportedly stuck with 50 million units of unsold smartphones in distribution stocks globally. The company did not respond to ET’s queries.

Smartphone brands are also hoping for a bounce-back in the second half of the year after flattened growth arising out of low demand amid high inflation and increasing average selling prices. The second half of 2022 is expected to garner 58% of the total 181 million shipments forecast for the year, according to Counterpoint Research, indicating a 9% on year growth from H2 2021 that saw 57% of the total 168 million shipments being moved by brands.

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