For now, the lockdowns in Mumbai and Delhi would hurt the premium segment of devices more, a segment that has been the fastest growing category—between 70% and 100%—for the past three quarters.
“We will fall short of 50% of our targets for April, and this is worrisome at a time when Apple products are immensely in demand,” a manager at an Apple store in South Delhi said. “Even in a non-festive month like April, we were selling 4-5 iPhones on weekdays and around 10-11 on weekends on average.”
Market tracker firms are wary of the economic impact on customers, which may not bring back demand of smartphones for another three-four months, or until the festive season, even if restrictions ease out.
Based on preliminary analysis of restrictions across India, Counterpoint has lowered its shipment forecast for the April-June quarter by 5 million, to 32-34 million shipments.
“We had already factored in the loss of shipments in Covid hotspots as of now, but the biggest setback would be a lockdown in Noida, which accounts for 60% smartphone production in India,” said Tarun Pathak, director of research at Counterpoint Research.
Offline smartphone retailers expect another round of job losses, inventory pile up and increased debt in 2021. There are close to 10,000 mom-and-pop mobile stores, besides 100-200 multi-brand retail outlets in Delhi.
“Delhi is one among the biggest cities for the smartphone market. We believe the lockdown impact will lurk beyond the six-day lockdown in offline stores due to piling inventory, increased operational debt besides there will be another round of job losses in the sector,” said Arvinder Khurana, national president, All-India Mobile Retailers Association.
“Fortunately, state governments are taking cognisance of the fact that e-commerce firms cannot deliver non-essentials. But these companies are lobbying hard for the government to allow delivery of mobile phones as essentials because that constitutes 50% of their topline.”
As it is, due to the global component shortage, brands are also finding it increasingly difficult to control the bill of materials of handsets and are set to increase prices by 10-15% for customers in the coming weeks. This may further hit demand of the lower spectrum of devices, priced below Rs 15,000, as customers delay purchases.
But Navkender Singh, research director at IDC India, was optimistic.
“Learnings from 2020 show that lockdown creates pent-up demand, which plays out in the later quarters,” said Singh. “We are still optimistic about a record-breaking second half of the year.”
This content was originally published here.