Powered by

Home Business

Why Consumers Are Now Returning To Physical Stores To Buy Their Gadgets

A combination of factors is affecting this change — increasing price parity between online and offline channels, premiumisation, easier financing, and for some consumers, a simple course correction. 

By Anjali Palod
New Update
kn

Nilesh Sharma, a 54-year-old resident of Mumbai’s Lower Parel walked into a Croma store earlier this month with his two daughters to buy an iPhone for one of them. While they were confused between the iPhone 13 and the iPhone 14, a nearby salesperson quickly came to his aid. The salesperson explained the feature distinctions and recommended the iPhone 13 for Sharma's daughter.

“I have always preferred to buy gadgets and electronics from physical stores. I need to have a look and feel of the product, compare multiple products, and the suggestions of salespersons are also helpful,” Sharma told The Core. He eventually went home with the iPhone 13.

During the pandemic and the years leading up to it, there was a significant surge in online sales for gadgets and consumer electronics. By preference or necessity, consumers turned to online shopping for a wide range of items, including electronics, daily necessities, clothing, and even furniture. However, recent data indicates a shift in consumer and brand behaviour post-pandemic.

The share of e-commerce in total smartphone sales was 48-49% in 2021 and 2022 and dropped to 45% in 2023 according to data from Counterpoint Research. There is also a push from smartphone brands towards offline retail. India Data Corporation found that while offline channels had a 42.4% share in smartphone shipments in Q3 FY2022, it increased to 49.9% in Q3 FY2023. 

For smartwatches as well, overall shipment grew by 21% in Q3 2023, of which 69% was offline contribution. In this quarter, the online channels grew by just 13% year-on-year, while offline grew by 44%. “Main reason being phenomenal growth of Fastrack brand which is an offline-centric brand. The online-centric brands want to expand their offline channel presence to enhance the customer experience so that they can test the product before buying. Also, the brands’ target is to reach tier 3 and tier 4 cities through offline channels and promotions,” Anshika Jain, Senior Analyst at Counterpoint Technology Research told The Core.

“I bought a mobile phone during the pandemic but didn’t feel very confident even then. Now that I have a choice to see the product and test it out, I prefer doing that. There wasn’t much price difference either,” said 28-year-old Akhilesh Patil from Mumbai who recently bought a laptop from a physical store told The Core.  

A combination of factors is affecting this change — increasing price parity between online and offline channels, premiumisation, easier financing, and for some consumers, a simple course correction. 

Reducing Affinity For Online Retailers

During the pandemic, consumers were dependent on online channels for most purchases and the sales of online channels spiked during that time. However, a NeoGrowth study in 2022 which surveyed 3,000 shoppers and retailers across 25 cities in India found that only 10% of respondents preferred an ‘online-only’ experience, while the majority of them preferred shopping from physical stores or a combination of the two channels. 

As things return to normalcy, there has been a course correction as consumers have been increasingly showing a preference for physical stores for the purchase of consumer electronics and gadgets. 

“Trust is an important factor for me. I even visited a smaller mobile phone store that offered me a better deal, but I have heard about counterfeit and refurbished phones being sold as original online and by mobile shops also. So, I opted for a trusted chain. It’s a big purchase, after all,” said Smriti, who bought an iPhone 14 from Reliance Digital store in Mumbai. 

The NeoGrowth study found that 54% of shoppers preferred shopping in-store because of confidence in the quality and authenticity of the products and 49% said that their trust and familiarity with specific stores drove their purchase. Additionally, 45% enjoyed the in-store shopping experience.

“I bought a phone and some smaller gadgets online during the pandemic. But, it was only because I had no other option. The only times I might buy (gadgets) online, is if a certain colour or variant is not available,” Sharma said. 

Changing Price Points

Price is another consideration for many consumers. E-commerce platforms, especially during festive periods, offer steep discounts which makes buying electronics from physical stores less attractive. Platforms like Amazon and Flipkart, offer big discounts on these products under Amazon’s Great Indian Shopping Festival and Flipkart’s Big Billion Days sales. Physical retailers find it harder to match prices during that time. 

“When it's the festive period, we can’t match prices with online platforms. There is heavy discounting by e-commerce sellers across categories, like laptops, smartwatches, smartphones, and consumer electronics like TV, washing machines, and refrigerators,” a salesperson at a Kohinoor electronics store in Andheri, Mumbai told The Core.

However, the prices offered by companies on online platforms and in stores in non-festive periods are equalising now. “The burning stage for e-commerce platforms has now passed. For brands also, dealing with e-commerce is getting more expensive, and the margins with physical retail are much better. So they have equalised prices and ensured availability across channels,” Navneet Pathak, joint general secretary of All India Mobile Retailers Association told The Core.

Brands like Samsung, One Plus and Apple have started focusing on opening more physical ‘experiential’ stores. Apple opened its first two stores in Mumbai and Delhi in 2023 which clocked in the biggest revenue numbers by an electronics store in India, just weeks after their launch. The Bandra Kurla Complex and Saket stores reportedly crossed Rs 20-25 crores in monthly sales, much above the average monthly sales of electronics shops in the country.

 gs 

A customer trying a pair of heaphones at the Apple Store in Badra Kurla Complex, Mumbai. 

Customers Get More Discerning As Phone Prices Are Higher

Tarun Pathak, Research Director at Counterpoint Technology Research told The Core, “When we transitioned from 3G to 4G sometime around 2014, people were getting more into online. But now we have seen a shift towards offline again at least for consumer electronics, especially smartphones. One reason is that people are buying smartphones that are more expensive and so want to have a look and feel of the product.”

Pathak pointed out that as hardware innovations plateau, the colour, materials and finish are becoming differentiators for smartphones. Foldable phones and titanium casing are examples of Samsung and Apple bringing innovation to their phones. These features are best experienced in person.

At the same time, the prices of smartphones are also increasing. This has made the consumer rethink and physically evaluate a product before making the purchase. “I will be using this laptop for at least 5-7 years, so I need to be completely satisfied with it,” said Patil.

For these expensive purchases, the reports of fake products being sold, soaps being delivered instead of smartphones and delivery executives swapping originals for fakes have made customers wary of making these purchases without assuring the authenticity of the products right before their eyes. 

“Earlier, the average selling price for a smartphone used to be $150-$180, so for a Rs 10,000 phone, they (consumers) just went online. Now, people are putting much more thought before buying a more expensive phone,” Tarun Pathak said.  

Easier Financing

While these factors may have led people to visit physical stores earlier as well; see offline, buying online was still a trend as pandemic effects were wearing off. There’s a renewed interest in buying from physical stores as consumers look for easier financing options too. 

Aisha Khan, a relationship officer from HDFC Bank at a Croma store in Mumbai’s Lower Parel told The Core, “To claim a zero-cost-EMI online, you’d need a credit or debit card, and there may be limited bank options as well. But here, at a physical store, we just require the customer’s Aadhar card and PAN card to offer EMI financing.”

There is greater clarity and the consumer is well-informed about the down payment they’d need to make and the subsequent instalments. There is also room for negotiation about the amount of upfront payment and the number of instalments.

“I wanted to pay a higher amount upfront and reduce the number of instalments, and just with my Aadhar Card and PAN card, the representative confirmed my eligibility and limit and I didn’t even need a credit or debit card,” Patil who bought a laptop from a physical store told The Core.

 

login-icon

The Core brings you exclusive reporting, insights & views on business, manufacturing and technology.

ALL OUR ARTICLES ARE FREE TO READ.