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New Delhi: Smartphone brands plan to lower the prices of 4G devices by 10-20% this week, with retailers looking to clear excess inventories as the festive season draws to a close by the year-end.
Industry insiders said 4G smartphone inventories have almost doubled from last year, prompting price corrections and aggressive sales pitches by retailers. “4G share spiked in July-September quarter in the sub- ₹10,000 segment leading to overstocking as demand did not match supply. Hence, it is natural for channel and brands to cut prices to clear inventory and enter 2024 with a more palatable stock situation,” said Navkendar Singh, associate vice president, IDC India.
According to IDC data, 5G devices accounted for 60% of shipments in October and the trend is expected to continue, with new launches expected in the ₹10,000- 15,000 segment starting 2024.
The 5G models are dominated by this price range with over 25% share, followed by the ₹15,000- 20,000 category, while the majority of models are in the above- ₹30,000 segment. “We still have around 13 weeks of 4G inventory, which is more than double the normal. As 5G diffuses to lower price tier its difficult for the retailers to sell 4G phones,” said Tarun Pathak, research director at Counterpoint Research. The price correction is coming at a good time since 4G is expected to remain relevant in ₹7,000- ₹10,000 price segments for the next two quarters, he added.
In 2024, industry insiders expect a significant increase in the number of 5G models for brands’, surpassing current levels of 65%, which is likely to claim a larger share of retail space and consumer spending. However, if the 5G models are priced similarly to 4G phones, there is a risk of accumulating higher inventory which would be challenging to clear.
“Our research insights point to several different factors driving this trend, including the need to clear the existing OEM inventory of 4G smartphones, the rising popularity and the intensifying competition in the 5G market next year,” Amit Sharma, analyst for industry intelligence group, CyberMedia Research, said.
Offline sellers said the shift in price is due to increased sale of 5G phones, priced equivalently to 4G devices, which led to surplus 4G devices. “With 4G phones priced lower, and finance schemes offering better deals, sales of 4G phones have improved,” said a senior executive seeking anonymity.
The executive added that offline retailers have sought for higher margins on the 4G stock with them from brands, which would encourage them to push out the stocks. “This would lead to more business for retailers but also better brand push towards consumers towards the end of the quarter, which is otherwise a period that sees tepid sales,” he added.
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Published: 13 Dec 2023, 10:32 PM IST
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