Smaller towns and cities in India are turning out to be big markets for Apple. The US tech major now registers over 60% of its sales, particularly of iPhones, outside the Tier-I cities, industry experts and market trackers said.
Till a few years ago, tier-1 cities used to contribute 65-70% of the demand and supply for Apple.
The shift, experts said, started post the Covid-19 pandemic when "good" martphones became indispensable for consumers as thousands of people moved from big cities to their hometowns as companies resorted to work from home.
"Before the pandemic, Apple's focus was merely on Tier-I or maximum Tier-II markets through its premium resellers and broader regional distributors as bulk of the demand came from and was catered to tier-1 markets which was more than 65-70%," Neil Shah, vice president of Counterpoint Research, told ET.
But then, Apple diversified its channel strategy in 2019, increasing focus on ecommerce platforms as Indian consumers increasingly became comfortable buying even expensive products online as well as large-format retail outlets like Croma and Reliance Digital that helped it cater to more zip codes. The Cupertino-based technology giant also made its products more accessible by providing consumers easier access to credit with no-cost EMI options.
"With 2020 and onwards, we saw increasing demand for 'good' smartphones as smartphones became indispensable for consumers. And fast forward to 2023, when consumers are buying their third or fourth smartphones...we are seeing increasing demand for premium phones across the country and especially for iPhones," Shah said.
As per Counterpoint, 9 million iPhones that are expected to be sold in India in calendar 2023 and 60% of that sales would happen outside the tier-1 cities of Delhi, Mumbai, Kolkata, Bengaluru, Chennai, Hyderabad, Ahmedabad, and Pune.
Over the last few years, Apple has been doubling down on India as it looks to diversify its supply chain and reduce dependency on China amid increasing geopolitical risks and tensions. India is fast emerging as the company’s largest iPhone manufacturing hub outside of China. Apple’s three contract makers are beneficiaries of the smartphone production-linked incentive (PLI) scheme. The company is looking to produce Rs 1 lakh crore worth of iPhones locally in the current fiscal, catering to both local and export markets.
As per analysts, around 70% of the made-in-India iPhones are exported.
The company is believed to be passing the benefits of the PLI scheme to Indian consumers through selective promotions and developing its own retail footprint, industry executives said.
Apple has always been an aspirational brand and with easy accessibility due to the economic factors, there has been a surge in premium tech adoption among India’s burgeoning middle class, they said.
“Consumers, particularly in Tier II and III cities, are dedicating close to a whopping 143 hours annually shopping online for their next tech upgrade, fuelling a surge in premium device adoption,” said Prabhu Ram, head of industry intelligence group at CyberMedia Research. “Apple, with its enduring appeal, has thrived in this environment, expanding its retail footprint and offering seamless online experiences,” he said.
As per analysts, India is home to over 850 million mobile phone users and has the potential to have more than a billion smartphone users in the next five years.
“(The market) being mobile-first makes it even more important for players such as Apple,” said Tarun Pathak, research director at Counterpoint. “This is where the premium market has doubled in just two years and Apple has been the big beneficiary with its market share also tripling from 2% level before the pandemic to more than 6% at the end of 2023 in terms of volume share,” he said.
As per analysts, Apple has timed it right to expand its retail footprint in such a potential market where it can not only sell millions of iPhones every year but also manufacture them here and also cross-sell other Apple devices and services, bringing iPhone users into the Apple ecosystem with a top-notch retail experience.
By Kiran Rathee
https://economictimes.indiatimes.com/industry/cons-products/electronics/smaller-cities-a-big-market-for-apple-account-for-over-60-per-cent-of-sales-now/articleshow/106068851.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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