Understanding customer behavior in the current economic environment is very difficult, says Realme’s Madhav Sheth, Retail News, ET Retail

New Delhi: Smartphone prices will increase by 8-10% in FY23, according to Madhav Sheth, CEO of Realme India, Vice President of Realme and President of Realme International Business Group. In an interaction with ETRetail, Sheth talks about Realme’s performance over the past fiscal year, the impact of inflation, the company’s 5G strategy, its non-smartphone business and expansion plans. retail. Excerpts edited below:


How would you analyze Realme’s performance over the last fiscal year?

Last year, I predicted that the smartphone makers in position one, two, three in India would be very close to each other and that’s what happened. In 2018, when we entered, there was a huge gap between the holders of the number one and two positions. Player number one was 35-40% and number two was 17-18%.

I think the major players should not have a market share difference of more than 5%. And that is how the industry will take shape. Realme bought differentiation in this industry and today ensures that consumers get various smartphone options at all possible prices.

What supports brand growth?

Understanding the customer behavior pattern after 12 months on what they will buy in the current economic environment is very difficult. And we did that fantastically well.

How have component shortage and supply chain concerns played out in recent quarters?

Supply chain issues and component shortages have eased much better. The reason for this is that we are seeing a decline in consumer demand compared to last second quarter. Until the first quarter, we saw low supply, high demand. However, from the second quarter, we saw the supply at the same level as in the first quarter, but the demand fell.

Indeed, consumer buying habits have changed for many reasons. These include the reopening of schools due to which people who bought multiple devices last year are trying to use them now, coupled with longer replacement cycles of 18-26 months.

Things are changing globally and we need to find and give consumers reasons to upgrade to a new phone at a particular price point.

What is your view on price increases and its impact on the smartphone industry?

Inflation is hitting all over the world. Due to fluctuations in the dollar and inflationary pressures, commodity prices are sure to go up. At the same time, consumer shopping habits are also changing.

We try to stick to a particular price point, which is difficult. Due to inflationary pressures and the dollar, the cost of components has increased significantly. It will therefore be difficult to keep the same price and offer the same features. We try to absorb as much as possible, but over a period of time we will see higher prices.

The industry as a whole could see an 8-10% increase in smartphone prices by FY23.

Can you share Realme’s strategy for 5G and its non-smartphone segment.

About 5G phones

5G is very important and we have already invested more than 90% of our resources in 5G. This means that we focus on building lightweight, beautifully designed and capable phones at different price points. R&D is key for us and we invest heavily in it. Our goal is to build affordable 5G phones for the masses.

About Realme’s non-smartphone business

In our non-smartphone segment, we launched many categories. We have adapted the 1+5+T strategy, where smartphones are the hub, 5 represents the ecosystem player which includes 5 main categories – tablet, laptop, TV, audio and wearables, and T is the ecosystem tech-life products that include lights, robot vacuums and more.

Our main focus will be 1+5, i.e. the first layer of the ecosystem, which includes direct connectivity to smartphones via laptop, tablets, TVs, audios and wearable devices. This will be the next phase of growth in India, where you will connect these 5 devices with your smartphone and have an interconnected game with each other.

The non-smartphone segment currently contributes around 10% of the overall business. We expect it to increase by around 25%.

Realme planned to open 1,000 exclusive stores in India by the end of 2022. How close are you to this goal?

We already have 300 stores. But we are slowing down our expansion a bit right now because the market is risky. We recently opened a flagship store in Ahmedabad. We probably need to revise our targets from 1,000 stores to 500 this year, but we have nothing planned yet. Looking at the outlook for the economy, we will plan our subsequent course of action.