To date, Xiaomi has focused overwhelmingly on internet sales of its smartphones and media devices in order to keep costs down. Even its tiny retail footprint has largely been limited to service centers and “experiences.” However, that’s all going to change in the next few years. Xiaomi has revealed that it plans to open 1,000 honest-to-goodness retail stores by 2020. It’ll make sure that customers can “touch and test” Xiaomi’s technology, CEO Lei Jun says. He hasn’t said where those stores will be, but it’s reasonable to expect most or all of them to be located in greater China.
Xiaomi hopes to open 1000 stores by 2020
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A spokesperson said that the retail plan is an acknowledgement that Xiaomi has “become a household name” in China, and that you’ll see its presence grow relatively quickly. The firm is converting its existing Mi Home outlets into full-on stores, and expects 60 Mi Home locations to be up and running by the end of 2016.
The dive into retail is bound to be expensive for Xiaomi, and a gamble when the company is almost legendary for its razor-thin profit margins on hardware. It might not have much choice, mind you. While it’s true that Xiaomi is well-established, its smartphone shipments plunged this year — in no small part due to rivals like Huawei, which has a whopping 11,000 stores across China. Physical stores could both snap up more impulsive buyers and remind customers that Xiaomi is still a force to be reckoned with. There’s no guarantee that it’ll work, but Apple’s recovery in the 2000s was partly credited to launching stores that both increased availability and presented its products in the best light. Xiaomi is no doubt hoping for a similar effect.
Questions & Answers
Q.What is the primary reason for Xiaomi's shift towards opening more physical retail stores?
What is the primary reason for Xiaomi's shift towards opening more physical retail stores?
A.
Xiaomi has acknowledged it has become a household name in China and its smartphone shipments plunged this year. Physical stores could attract impulsive buyers and remind customers of the brand's presence, countering rivals like Huawei.
Q.How many of its existing retail locations does Xiaomi plan to convert by the end of 2016?
How many of its existing retail locations does Xiaomi plan to convert by the end of 2016?
A.
Xiaomi intends to convert 60 of its existing Mi Home outlets into full-on stores. These locations are expected to be up and running by the end of 2016 as part of its wider retail expansion.
Q.What is the main financial risk associated with Xiaomi's plan to open 1,000 new stores?
What is the main financial risk associated with Xiaomi's plan to open 1,000 new stores?
A.
The dive into retail is likely to be expensive for Xiaomi, posing a significant gamble. This is particularly notable given the company's almost legendary reputation for maintaining razor-thin profit margins on its hardware.
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