Smartphone maker, Xiaomi, opens its first brick-and-mortar retail store in Beijing Friday. In addition to selling products ranging from handsets to home appliances, the store also offers face-to-face fast repairs.
The retail store, like its other 21 locations owned and operated by Xiaomi, is included as a part of Xiaomi’s ‘Mi Family’. With an area of 380 sq. meter (4180 sq. ft.), the store is the largest of its kind and has the longest opening hours. The other Mi Family stores only offer customer support and do not engage in retail sales.
The store, judging from photos circulating online, has drawn inspiration from the Apple Store in terms of its concept and design. It also features a glass exterior, wooden display tables, and has employees clad in red T-shirts reminiscent of the Apple store employees ‘Genius’ outfit.
Experts told Sina Tech that Xiaomi’s new offline retail presence is an answer to a slowdown in sales and increasingly fierce competition.
Xiaomi has stayed largely online since it was founded in 2005. Its products could only be bought on its official website, from telecom carriers and through two authorized offline resellers. Lei Jun, chairman and founder, even asserted on Weibo last June that Xiaomi had no physical store, and that any Xiaomi phone sold at a self-proclaimed Xiaomi store would be a knockoff.
Xiaomi has also become known for its so-called “hunger-inducing” tactic, which involves intentionally limiting supplies to make products harder to get and thereby working up consumer appetites. Many of its past launches have seen the first batch of products snapped up in a matter of hours or even minutes. Customers routinely have to wait weeks to obtain Xiaomi products.
In an interview with the China Securities Journal back in March 2013, Chairman Lei Jun admitted resorting to this tactic, saying that being cash-strapped, Xiaomi needed to raise cash from flash sales before it had enough money to pay suppliers to manufacture more units.
Yet on recent occasions, Xiaomi has repeatedly denied the allegation, citing supply disruption and low output as reasons.
Winning more users is getting harder for Xiaomi, China’s smartphone market is crowded with a dozen other brands, including Huawei, Lenovo, Meizu, Coolpad, ZTE and Smartisan. With a large variety to choose from – many of them much cheaper and not necessarily inferior – even if Xiaomi phones are hip, people may not want to wait and instead may opt for competitor products.
Lin Bin, co-founder and president of Xiaomi, said the reason Xiaomi has decided to open a store-within-a-store rather than a boutique is to take advantage of the department store’s prime location and foot traffic to drive user growth. If it proves successful, they will work with more retailers, but Xiaomi’s main focus will remain in e-commerce.
The Apple Store has become a role model in generating impressive sales on a per-square-meter basis. Right now it has opened 21 stores in 11 Chinese cities and is about to open a dozen more. Kantar Worldpanel ComTech’s report in May said Apple’s iPhone held a 26.1 percent share of the Chinese smartphone market, 5.1 percentage points higher than Xiaomi in the first quarter.
On the other hand, as the Chinese smartphone market reaches saturation, Xiaomi is now eyeing less developed regions in China as new sources of growth and courting budget-conscious rural residents. Lin Bin said an offline retail store may be a good approach to break into the new frontier.
“The voices of naysayers against Xiaomi have never stopped,” Lin said, “But we have achieved satisfactory results nonetheless.”
(Photos are from Xiaomi’s Weibo account. The newly opened Xiaomi offline store locates in Beijing Modern Plaza.)