Smartphone market drops by 30.5% in top 50 cities of India

Impacted by demonetisation, smartphone sales across 50 leading Indian cities fell by 30.5 per cent month-on-month in November 2016 over October 2016. This downward trend is due to the demonetisation and resulting cash crunch along with the cyclically lean period after festive season in October, according to International Data Corporation's Monthly City Level Smartphone tracker.

''Demonetisation has impacted the smartphone market at almost all levels including the customer demand and stock movement in the distribution channels. The slowdown was seen across all city tiers, with a degrowth of 31.7 per cent in Tier 1 cities and 29.5 per cent in Tier 2, 3 & 4 cities in November 2016 over October 2016. There was a huge drop in inquiries and significantly reduced footfall at the retail. To counter this, mobile phone retailers together with micro finance companies started offering zero down payment options to stir sales,'' said Upasana Joshi, Senior Market Analyst at IDC India.

''Interestingly, the premium smartphone segment saw some growth during the weeks following demonetisation, wherein consumers were seen rushing to buy higher priced smartphones using the demonetised currency, with reports of these high priced models being sold at a premium,'' she added.

India-based vendors were hit the most due to demonetisation, with a drop of 37.2 per cent in November 2016 across Top 50 Cities of India as compared to China based vendors with 26.5 per cent drop and global vendors with 30.5 per cent drop over previous month.

Varun Singh, market analyst, IDC India, said, ''In the offline channel, while the Indian vendors were struggling, the Chinese vendors like Oppo and Vivo pulled in strong demand largely due to their strong hold on distribution and better partner incentive schemes and promotional activities during the slowdown''.

''However, IDC expects the impact of demonetisation to be transitory with the market expected to bounce back to normal levels by February 2017, Singh added.

Navkendar Singh, senior research manager, IDC India, said, ''The demonetisation came on the heels of a hit festival season in October, during which the smartphone industry is expected to have sold around a third of entire years' volume. Cash purchases make up a significant portion of these purchases in both online and offline channels, hence the impact seen was immediate and more in below $200 price range which still makes up a large portion of the market.''