Apple Inc. (AAPL) To Open Franchise Shops In Smaller Indian Cities

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Apple Inc. (NASDAQ:AAPL) is gearing up to open exclusive stores in second-tier cities of India following its target of penetrating deeper in the country, and alluring the price sensitive market. According to a report from the Times of India, the iPhone maker is set to collaborate with the local distributors to create franchised stores, which would be in between a full-fledged flagship store and an authorized retailer shop.

Apple desperate to gain more in India

As of now, Apple Inc. (NASDAQ:AAPL) has not come out clearly on its plans for tier-two cities in India, but rumors of focusing on smaller cities have been doing the rounds since last October. The Times of India stated that it had a conversation with three of Apple’s trade partners, who are familiar with the plan.

Apple Inc. (NASDAQ:AAPL) distributor in India, Redington and Ingram Micro, are amongst the trade partners, who will assist the company to set the shops. In a recent meeting, the Cupertino based company informed its distributors and trade partners that it is planning to set up a 400-600 sq ft stores in neighbourhoods and some popular high street locations. The stores would offer consumers iPhone and iPads, entry level Mac computers and iPods.

“The company feels these products are also attractively priced over competitors such as Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and Sony Corporation (NYSE:SNE) (TYO:6758), and hence, being closer to the consumer will help to increase the conversion rate,” said an executive of one of the trade partners of Apple.

According to research firm IDC, Apple Inc. (NASDAQ:AAPL) is not amongst the top five smartphone brands in India, based on the number of shipments. Apple is focusing to penetrate deeper in the country for increased market share, and has also restarted the production of discounted model iPhone 4, for the first time in the company history, for India, Indonesia and Brazilian markets. Also, the company has launched a buyback scheme, and 18 month installment plan to surge the sales of the iPad Mini.

Strategy different from China

If rumors are to be believed then the strategy adopted by Apple Inc. (NASDAQ:AAPL) for India will be different from that in China, where Apple could only expand up to few official Apple stores in major cities to support the authorized resellers across the nation. By 2015, Apple plans to set up as much as 200 franchise stores across 50 cities throughout the country. These stores would generally have entry level products.

Apple Inc. (NASDAQ:AAPL) arch rival Google Inc (NASDAQ:GOOG) has set up a host of stores with local partners named Android Land, and another rival, Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) sells various devices through its Smartphones Café Chain.

Apple Inc. (NASDAQ:AAPL) did not comment anything on its strategies, and said that the company does not comment on the rumors and speculations.  Currents Technology Retail, a premium Apple reseller has already set up two stores in Kolkata and Panchkula in Haryana. However, not all the partners are accepting the plan as one of the top partners has decided to remain outside the plan because the profit margins on Apple are thin.

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