NEW DELHI: While the market for luxury phones is growing, the inexpensive smartphone segment is contracting due to inflation, high input costs, and a lack of parts. This suggests that while poorer Indians are cutting back, spending by wealthy Indians is booming.
According to Prachir Singh, a senior research analyst at Counterpoint Research, “there is a reduction in entry tier due to supply concerns as well as a softening of consumer demand due to inflation and increased prices of devices that brands are passing on to consumers due to rising input costs.”
It goes beyond smartphones. Cars and other high-value categories have demonstrated a similar tendency. One explanation for this might be that wealthy Indians are less susceptible to problems like inflation, which usually affects the poor and middle class since they spend a larger percentage of their income on food and other necessities.
“This is odd, but it is following the same pattern as other categories in India recently. Luxury items are doing well, but demand for entry-level products is waning. According to Navkendar Singh, associate vice-president of devices research for IDC India, South Asia, and ANZ, “The rich are getting richer, while the middle class and the poor are suffering.
According to IDC, sales of high-end smartphones—those that cost over 40,000—have increased 83% year over year in the June quarter, while the market share of low-cost and entry-level segments—under 8,000—has decreased by five percentage points, falling to 17%. According to IDC, overall sales decreased 1% in the first half of this year compared to the same period last year, and no growth is predicted for the second half.
According to ideal circumstances, all market groups ought to contract and vice versa, but the current pattern, according to Counterpoint’s Singh, is exceptional. According to the researcher, inflationary headwinds caused the market to contract by 5% sequentially.
“In the mobile phone market, we’ve witnessed a 25% decline in demand in the cheap class. According to Vikas Jain, co-founder of Micromax, which has recently entered the connected device market under the World of Play brand, this is why businesses are sitting on inventory pile-ups.
To make room for newer models in the event of inventory buildups, brands frequently turn to discounts, particularly around this time when manufacturing is ramped up to satisfy the demand for the holiday season, which starts after August. Discounting on online and offline platforms is anticipated to be far higher than in prior years, despite consumers’ tighter pocketbook constraints.
Prices will inevitably be heavily discounted to rekindle consumer demand since they (brands) must clear stocks, continued Jain.
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