India online store first, retail outlet next: Apple

Eager to see customers at its first India retail store, Apple on Thursday declared India its next growth hub -- first by launching an exclusive online store and then its branded retail outlet later -- as the Narendra Modi cabinet eased the 30 per cent local sourcing norm in single-brand retail (SBRT).

The Cupertino-based iPhone maker said it appreciates the support and hard work done by Prime Minister Narendra Modi who is aiming to make India one of the world's greatest economies.

"We love our customers in India and we're eager to serve them online and in-store with the same experience and care that Apple customers around the world enjoy," Apple said in a statement.

"We appreciate the support and hard work by Prime Minister Modi and his team to make this possible and we look forward to one day welcoming customers to India's first Apple retail store," the company added.

Indian users will soon be able to buy Apple devices from the company's own online store, along with offers and discounts as an when the company brings those to the table.

Apple said it will take some time to announce its first branded store in the country.

"It will take us some time to get our plans underway and we'll have more to announce at a future date," the company noted.

Commerce Minister Piyush Goyal told reporters on Wednesday that "it has been decided that all procurements made from India by the SBRT entity for that single brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported".

"Further, the current cap of considering exports for 5 years only is proposed to be removed, to give an impetus to exports," he added.

Apple CEO Tim Cook, who believes India is a very important market in the long-term, has always emphasised on the company's plans to open its branded stores in the country.

"We would like to place retail stores there. And we are working with the government to seek approval to do that. And so, we plan on going in there with sort of all of our might," Cook said recently.

According to industry analysts, the relaxation of local sourcing norms will not only provide the necessary growth stimulus for the Indian economy but also enable the country to potentially attract the likes of Apple which saw double-digit growth in the company's fiscal 2019 third quarter.

Online as a channel is more relevant in India than any other country in the world.

"Apple tasted success in the India online segment couple of years ago when almost two fifth of total sales were from online channel before they started to focus more towards offline operations," Tarun Pathak, Associate Director at Counterpoint Research, told IANS.

"Although marketplace model is more popular and likely to stay the same, having branded online presence can surely have another medium of targeting customers as it gives you more control on product and offerings," Pathak added.

In the second quarter this year (April-June period), Apple had 1.2 per cent market share in India.

"The single-brand retail reforms are a shot in the arm for Apple, on the heels of its recent push for increased local manufacturing. The reforms will support Apple in gaining a stronger footing in the fastest-growing smartphone market in the world," Prabhu Ram, Head, Industry Intelligence Group (IIG), CyberMedia Research (CMR), told IANS.

"Given the economic slowdown in China, India now provides Apple with a much-needed window of opportunity to ramp up and improve its performance," he added.

Apple iPhone shipments grew 19 per cent (YoY) in India in its last reported quarter, according to Counterpoint Research.

Riding on heavy promotional offers especially on iPhone XR, Apple regained top position in the premium smartphone segment in India in the second quarter (Q2) this year.

According to the International Data Corporation (IDC), in the premium ($500 or Rs 35,000 and above) segment, Apple bettered Samsung for the leadership position with an overall share of 41.2 per cent in 2Q19.

"Apple's portfolio up till last quarter (1Q19) was driven mostly by old generation models (the non-X series) -- making almost 70 per cent of total shipments," Upasana Joshi, Associate Research Manager, Client Devices, IDC India, told IANS.

With the price drop, she said, the entire trend shifted, with iPhone XR alone contributing to more than 55 per cent of total Apple shipments in 2Q19.

The return of Apple in India comes at a time when the company is reportedly set to manufacture top-end iPhone XS and iPhone XR smartphones, courtesy its supplier Foxconn in the country.

Apple in April started the assembling of iPhone 7 at its supplier Wistron's facility in Bengaluru.