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It's a 'Black Diwali' for small handset retailers, due to rampant online discounting

The organised trade are now joining hands with smaller retailers who say it’s going to be a “Black Diwali”.

, ET Bureau|
Updated: Oct 22, 2019, 05.16 PM IST
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The mobile retailer forum has said that smartphone brands should take a relook into their policies to protect the offline trade, which still accounts for over 63% of mobile phone sales in the country.
NEW DELHI: Large-format mobile phone retail chains are set to join the smaller brick and mortar stores in pressing brands for a level playing field with ecommerce channels. This widening protest is seen increasing pressure on companies to curb their segregated trade practices which tend to make online marketplaces the first stop for potential buyers.

The organised trade had stayed away from the agitation till now, but are now joining hands with smaller mom-and-pop handset retailers who say it’s going to be a “Black Diwali” festival this year with sales at their worst ever, largely affected by online retailers holding multiple sales where smartphone brands like Samsung, Oppo, Vivo, Xiaomi and Realme have exclusively launched their high-selling phones.

Players including Big C, UniverCell, Purvika and Sangeetha Mobiles, among others, are holding talks with the top smartphone brands, and are also set to write to them to extend the same benefits, deals, discounts and exclusive models being given to online marketplaces—such as Amazon and Flipkart—to retailers across offline trade, said senior executives in the industry.

“The issues are the same for all offline players, be it large or small… We cannot lose a customer that we’ve cultivated over the past so many years to online just because we don’t have a particular model that online does,” said a senior executive of one of the top handset retailers, requesting not to be named.

Another senior executive said that while written communications may be sent, the larger retailers have individually held meetings with the brands and raised the issues to seek a resolution.

“Large-format retail chains have the same pain areas… they’re also impacted. They are writing and escalating the issues with the brands,” said Arvinder Khurana, president of the All India Mobile Retailers Association (AIMRA). “We’re pinning our hopes on this week alone… although we don’t expect the demand to increase. Sales are down 30% compared with last year’s Diwali, whereas it should have been up 30% versus last year. It’s going to be a Black Diwali for us retailers.”

While retailer bodies have met the Competition Commission of India, government think tank Niti Aayog, and the Department for Promotion of Industry and Internal Trade (DPIIT), to raise the issue of exclusivity that brands are giving online retailers, the commerce ministry has said it will probe Amazon and Flipkart for alleged unfair trade practices such as predatory pricing.

AIMRA said the government should also look into brands during this exercise. “If the government is drafting some policies, they should also include in their purview the role of smartphone brands in giving out these offers or deals only to online retailers,” Khurana said.

The mobile retailer forum has said that smartphone brands should take a relook into their policies to protect the offline trade, which still accounts for over 63% of mobile phone sales in the country. With the absence of direct discounts from brands, offline traders say they are losing out on the opportunity to get more customers while online retailers are using their “dominant position” to take consumer share.

Brands such as Xiaomi, Realme and Samsung, on their end, have said they are evaluating the demand from retailers, and may extend the online-only benefits to offline retailers as well from 2020.

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