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smartphone import: rising inflation forces smartphone shipment forecasts to be drastically reduced in 2022

Smartphone shipment forecasts for 2022 are sharply reduced as inflation hits consumers’ wallets, hurting demand.

Counterpoint Research cut its estimate for 2022 to 10% year-on-year growth, down from 14% previously forecast. TechArc indeed expects a decline this year compared to the 152 million units shipped last year.

Navkendar Singh, research director at IDC India, said smartphone shipments were slowing, negatively impacted by record retail inflation. “We expect mid-single-digit growth this year, that too if there is a natural pick-up in demand in the second half of the year, if brands are able to generate demand in this period with offers and aggressive affordability programs.”

This slowdown in growth or decline is playing out in offline retail stores, more so than online e-commerce platforms, executives and analysts say.

While Amazon India’s smartphone business grew 30% in 2021, driven by smaller cities, as ET reported in May, offline retail store businesses fell 60-70%, learned ET after speaking with several retailers.

An industry body representing retailers said sharply rising operating costs and shrinking sales margins for smartphone brands have led to the closure of more than 50,000 stores in the past two years in India, with more than than 100 stores in Delhi alone. Covid-induced lockdowns have also played their part.

“Due to the high cost of extreme manufacturing competition and the high cost of chipsets, brands have been slashing retailer and distributor margins to offset the impending price hike,” Arvinder Khurana, chairman of All India, told ET. Mobile Retailers Association of India (AIMRA). . Khurana itself has had to close seven of its 11 stores since 2021.

From 12-14% pre-Covid, brand sales margins have fallen to 4-4.5% in 2022, several retailers have confirmed to ET. “Within this, there are discounts, MDR fees, operational costs leaving no profit for retailers,” Khurana added.

“Smartphone brands rebounded from Covid, posting record growth, but this growth was not driven by retail stores and mainline stores, but by e-commerce stores,” the Mumbai-based retailer said. , Anwar Ali, which had to close seven of its 10 stores in the last year, laying off more than 70 employees.

Ali saw a 30-40% drop in business after the shutdowns. “People who didn’t shop online started doing so during lockdown,” he said.