Weak demand, slow retailer uptake may pose challenges to smartphone firms

New Delhi: Spurring sales during the upcoming festive season may prove to be a challenge for smartphone brands, as several of them are staring at a huge inventory leftover from the first half due to low demand and facing slow uptake of products by retailers, said industry executives and analysts.

Handset makers are testing waters with discounts on older models and launching new ones ahead of schedule to see how they are received by the market, executives said. Some brands are also moving to a shorter lifecycle of products to keep their portfolio fresh for the festive period.

“A significant amount of inventory has built up over the first half of 2025 which brands are struggling to clear,” a sales executive at a smartphone brand told ET on the condition of anonymity. “Retailers are also cautious about stocking more units since they are already carrying a lot of inventory from last year.”


Xiaomi and Realme are particularly affected by the inventory buildup, the executive said. Both brands are now offering additional margins and incentives to retailers to flush out end-of-life products.

“Xiaomi now needs to offer more margins to retailers to get their support in clearing out inventories. But they are also facing a challenge in roping in more in-store promoters as there is a stiff competition from rivals such as Vivo and Samsung in hiring competent sales agents,” he said.

Xiaomi India chief business officer Sandeep Singh Arora said the company is confident of meeting its plans. "We are entering the festive season with confidence and are well positioned to meet our Diwali plans; delivering a successful season for all our partners and consumers," he said in a statement.

Realme, meanwhile, has been expanding its distribution network, roping in new distributors in Maharashtra, Uttar Pradesh and Rajasthan to tap into more retail stores. Some of its online-exclusive products are also being diverted to the offline channels, to make room for fresh volumes ahead of the festive season, according to the executive.

Realme did not respond to emails seeking comment.

Longtail brand Transsion, which has also been struggling with an inventory build-up, has switched to a six-month product lifecycle for its top-selling products. The brand is launching “the slimmest Android smartphone ever seen” in the market ahead of the festive season to spur sales.

"This festive season, we are leaving no stone unturned to cater to the diverse Indian consumer. We have launched a robust and comprehensive portfolio designed to cover every critical price point and feature demand," said Arijeet Talapatra, CEO, Tecno India. Tecno is one of the three smartphone brands operated by Transsion.

Market trackers have forecast a flat festive period for the smartphone industry in volume terms as compared to last year when shipments totalled 45-46 million according to market research firm IDC.

“Many launches which were originally planned for Q3 were moved to Q2 to serve as a testing ground for brands to gauge market reception before the main festive period. They are testing pricing strategies and go-to-market strategies,” said Upasana Joshi, senior research manager, IDC India.

Some brands such as Xiaomi are also facing financial constraints, limiting their ability to invest significantly in marketing channels and compete with rivals’ marketing budgets, following a pivot in their global strategy to focus on other Southeast Asian markets and the IoT (Internet of Things) segment, Joshi said.

According to research firm Canalys, small brands are now increasingly targeting customers in rural areas where consumer preference is shifting from the top five brands to a wider variety.

“Sales in urban areas are becoming patchy and comes with a certain amount of risk these days as urban consumers are now increasingly cautious about spending on things that are not necessary. In contrast, in rural areas, due to expanding financing schemes, and a bountiful monsoon, electronics sales have been growing,” said Canalys principal analyst Sanyam Chaurasia. “That is going to be a major focus for smartphone brands this time.”