New Delhi The affordable smartphone segment is shrinking due to inflation, high cost and lack of parts, even with the expansion of the premium phone market, indicating that spending is being carried by rich Indians, while their poorer counterparts cut back. is of.
Prachir Singh, a senior research analyst, said, “Supply issues as well as moderation in consumer demand due to inflation and rising equipment prices have led to the decline in entry levels that brands are passing on to consumers due to rising input costs. ” Counterpoint Research.
It’s not just smartphones. Other high-price categories including cars have also shown a similar trend. One reason for this may be that wealthy Indians are more immune to challenges such as inflation, which affect the poor and middle class, who spend a lot of money on food and essentials.
“It’s unusual, but recently like other categories in India, it’s following the same trend. Luxury goods are selling well, while entry-level demand is waning. Getting richer and richer.” While the middle and poor are in trouble,” said Navkendar Singh, Associate Vice President, Device Research, IDC India, South Asia and ANZ.
For example, in the car market, sales of expensive cars have outperformed sales of cheap cars, amid rising lending rates and higher prices. According to a report by Crisil, the selling price of cars 10 lakh and above grew at 38% in FY12, while small cars grew a modest 7% in the same period.
Similarly, sales of premium smartphones—which cost . Is more than 40,000- a growth of 83 per cent in the June quarter from a year ago, while the market share of the affordable and entry-level segments is less. According to IDC, 8,000—a five percentage point drop from a year ago—to 17%. According to IDC, overall sales in the first half of the year fell 1% compared to the previous year, with no growth expected in the remaining half of the year.
“Ideally, all segments should de-grow if the market is shrinking and vice versa, but what we are seeing now is an unusual trend,” said Counterpoint’s Singh. The market shrank 5% sequentially due to inflationary headwinds, the researcher said.
According to industry executives, the demand for entry level and affordable segments, generally under the 10,000, nearly a quarter has fallen. Consumer products such as fast-moving consumer goods and electronics are becoming more expensive than last year, in addition to fuel prices far higher than last year resulting in increased cost of living for customers across the board .
“We have seen a 25% drop in demand for the affordable segment in the mobile phone space. This is why companies are sitting on the inventory pile,” said Vikas Jain, co-founder of Micromax, who has now forayed into connected devices under the World of Play brand.
Brands generally resort to discounts on existing models in terms of inventory pile-up to make room for new models, especially during the period when production ramps up to meet the festive season demand, which starts after August. However, with the tightening of the purse strings of consumers, discounts on online and offline platforms are expected to be far higher than in previous years.
“They (brands) have to clear the inventory, so there are bound to be huge discounts in prices to bring back (consumer) demand,” Jain said.
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