After a long wait, Apple is now getting ready to open its first retail store in India. The company has reportedly shortlisted a few locations for its first Apple retail store, and will finalize the list within a few weeks, according to a report from Bloomberg.
Prime location for Apple retail store
As can be expected, the Apple retail store would be located in a prime location, and a Bloomberg report notes that the U.S. company is considering “upscale sites in Mumbai” that would be at par with Fifth Avenue in New York, Regent Street in London or the Champs-Elysees in Paris.
Apple will soon file a formal application with the Indian government for the store. Apple is expected to open a few stores this year in prime locations in Mumbai, New Delhi and Bengaluru.
So far, the company has not been allowed to open an Apple retail store in India due to domestic manufacturing requirements. As per the Indian government’s requirement, a company must manufacture 30% if its products in the country. Apple was unable to meet this as almost all its production takes place in China.
However, over the last couple of years, the company has ramped up its production in India to meet the local production laws. Also, earlier this year, India relaxed some regulations as well, which in turn, is helping to expedite an Apple retail store opening in the country.
Apple, in collaboration with its supply chain partner Wistron, has been manufacturing the iPhone SE and iPhone 6 in India for the past few years. Now, it will be taking help from Foxconn to manufacture many more models in the country.
Apple is expected to come up with Made-in-India iPhone XR models sometime later this year. Foxconn is currently running quality tests for the iPhone XR models, and should soon start its mass production at its facility in Chennai.
Boosting local production not only helps Apple to open a retail store in the country, but also allows it to avoid heavy import taxes of up to 20%. This eventually results in a lower selling price, a big advantage in the price-sensitive Indian market.
India – very important market for Apple
Apple, so far, has struggled to make a mark in the Indian smartphone market, where Chinese brands such as Xiaomi and Vivo have made deep inroads with their less expensive but feature rich phones.
Apple, however, is determined to improve its position in the country especially after losing ground in China. Highlighting the importance of the Indian smartphone market, Apple CEO Tim Cook in the latest earnings report said that India is a “very important market” for Apple in the “long term.”
“It’s a challenging market in the short term, but we’re learning a lot. We plan on going in there with sort of all of our might,” Cook said.
Currently, Apple does not separately mention the revenue it earns from India, possibly because the percentage is too small. For the most recent quarter, Apple earned 44% of its revenue from the U.S. and about 18% from China. Revenue from India is clubbed under the rest of Asia-Pacific, which accounted for just 6%.
How Apple plans to win?
Apple badly needs a boost in India, which is the fastest growing smartphone market in the world. As per the Research firm Canalys, Apple’s first quarter shipment dropped by more than 75%, giving it just 1% market share in the country.
Additionally, as per the data from Counterpoint Research, Apple ranks 11th in the Indian market and sold less than a million iPhones during the first half of last year. In comparison, Xiaomi sold more than 19 million handsets during the same period.
“Its own retail store might be just what Apple requires to reinforce its premium image,” said Canalys’ analyst Rushabh Doshi, according to Livemint. “A store just before the next launch will be the perfect timing for Apple to restart its Indian growth story.”
Apart from setting up an Apple retail store, the company is also undertaking other measures to up its share in the country. For instance, Apple ran front-page newspaper ads last month announcing heavy discounts on the iPhone XR.
Moreover, the company is also focusing on other aspects, such as better retail deals with higher sales targets, maintaining a relationship with independent retailers, and improving apps and services aimed at Indian users.
During the earnings call, Cook acknowledged that the changes made to their India strategy are bearing positive results.