Brands may look to flood market with smartphones, offers after Covid-19 restrictions ease: Analysts

New Delhi: Smartphone brands, grappling with plunging sales, are likely to flood the market with new devices, aggressive pricing and channel incentives, in the hope of capitalizing on likely pent up demand after the Covid-19 induced restrictions wind down, analysts say.

“When the markets reopen, all the major OEMs will rush to address the latency in demand by heavily incentivizing both offline and online channels,” said Neil Shah, Research Director, Counterpoint Research.

Almost all major phone brands have suspended launch of their latest offerings including Oppo Enco M31, Vivo V19, Realme Narzo and Xiaomi Mi 10 while keeping stocks on hold.

“If the COVID-19 situation gets normal by the end of April, we should expect brands to resume product launches and devise pricing and marketing strategies to push sales,” Shah said.

However, there is no denying to the fact that organic growth will be difficult and consumers will only buy a phone out of necessity or maybe settle for a refurbished one depending on their spending ability, he added.

ET had reported last week that market research agencies have slashed their 2020 smartphone sale forecasts to show a first ever decline of 3-4% on year, from an expected 6-8% rise.

For 2020, while Counterpoint Research predicts a 3% on year fall in shipments, Canalys expects a 4.2% decline, as consumers focus on non-essential purchases and conserve cash.

“Between April to August, only those requiring a smartphone in case of breakdown will be the primary buyers while elective upgrades and replacements will be at minimal,” said Faisal Kawoosa.

Consumers will hold their hands tight as there is a high probability of many people losing jobs and/or their incomes shrinking, he added.

Besides this, offering discounts in the near-term would be challenging for OEMs because of the 6% GST hike on mobile phones, analysts say.

“Towards the festive season OEMs may bring back discounts,” Shah said.

CyberMedia Research (CMR) believes online has the potential to pick-up in terms of sales during mid-to-late second quarter and beyond, it said in a report last week.

“The pent-up consumer demand will be high, and with the right messaging from smartphone brands, consumers would seek to upgrade their value for money, and premium smartphones,” said Prabhu Ram, Head-Industry Intelligence Group, CMR.

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