Retailers brace for holiday shortage of cellphones due to chip crisis, Telecom News, ET Telecom
Mumbai: Retailers are sourcing mobile phones like never before as they brace for a severe supply shortage as the holiday season approaches as chipset supplies continue to run out.
Some retailers have said they are extending their inventory rules from a 21-day period to a 30-day period.
As the overall handset supply is on the verge of shrinking, industry insiders expect offline stores to be hit harder than their online rivals as brands are seen pushing a large part of their stocks online.
“Both online and offline will face a supply problem due to the shortage of components, but more buyers will flock to e-commerce sites knowing that they may not have many options in the market. stores, ”said Navkendar Singh, Research Director, Client Devices and IPDS (Imaging, Printing and Document Solutions) at IDC India.
An industry executive who didn’t want to be named said: “You can go to a retail store and there’s a 60-70% chance that the model you want won’t be there but will be available online. “
Brands and retailers typically rely on the holiday season for one-third of their annual sales.
Supply chain issues may well detail their annual sales targets, industry experts have said. Currently, IDC expects single-digit growth in smartphone shipments for 2021, while some forecast stable growth in 2020.
A multi-brand retailer told ET it is recouping 30 days of inventory from the previous 21 days leading up to the holiday season, fearing it might not get more handsets, if needed, later.
Another retail chain has said Level II and III customers will be affected as larger brands will focus on subways through their own stores and larger outlets.
In India, the online and offline markets are almost on par, but Covid-19 has pushed customers towards online shopping, as evidenced by the growth of e-merchants in handsets in recent months.
Some brands that have launched new models haven’t even released to offline retailers yet, industry insiders have said.
“Specially, brands like Xiaomi have a business practice of giving new launches and window period online exclusively, and due to the shortage, their new launches do not reach offline stores for long,” said Arvinder Khurana. , National President of the All India Mobile Retailers Association (AIMRA).
“Exclusive in-line deals with handset brands are another reason for this problem,” he said. “Samsung, Oppo, realme, (and) Mi (Xiaomi) are some of the brands that have been scarce in recent weeks and may be experiencing a shortage.”
However, Xiaomi refuted AIMRA’s claims and said the handset maker has maintained a “balanced focus” between online and offline channels.
The country’s leading player in the cell phone industry said its offline sales had “steadily increased” thanks to multiple initiatives. “We have maintained a healthy allocation of inventory management units (SKUs) in key value price segments,” said a spokesperson for Xiaomi.
The company said it was looking to stock up during this festival season. “As all industry players face supply issues due to the pandemic and component shortages, we are working with our partners to explore the best possible solutions,” the spokesperson said.
The other handset players did not respond to ET’s requests.
The conflict between online and offline channels becomes acute during the holiday season, which now often begins from August 15 (Independence Day) and continues through December.
Amazon and Flipkart did not respond to ET’s queries until press time on Wednesday.
Neil Shah, research analyst and partner at Counterpoint Research, believes that while both channels will experience a squeeze, for offline retailers the difficulty is more due to online delivery being accompanied by “free delivery”. risk”.
“Delivery to e-commerce channels on the brand side is higher because cellphone manufacturers have realized that customer reach is better and profitable during the pandemic,” he said.
The global semiconductor shortage has impacted electronics, smartphones and the automotive industry and, experts say, could continue until 2022, leading to higher prices and shortages in the supply chain. ‘supply.