Several brick-and-mortar stores, especially mobile phone retailers, have closed ranks to unilaterally oppose brands that offer online discounts and launch online-only models at lower prices. Major cell phone retail chains such as Sangeetha, Poorvika and Big C have decided that they will not sell the online-focussed brand Realme.
The move follows the return of normalcy at online retail giants Flipkart and Amazon after operations were impacted by the implementation of revised e-commerce policy on Feb 1. Offline retailers fear the return of deep discounts after online majors made changes to conform to the rehashed policy.
Offline cellphone stores will not cooperate with brands if they continue to launch online-
exclusive models at lower prices than what is available offline or if models are sold at a
Besides mobile phone and information technology product retailers, companies selling consumer electronics are also a worried lot. Outlets selling IT products such as laptops have entered into an agreement with top brands including Dell, HP, Lenovo, Acer and Asus to sell products at the same prices as those online with any kind of losses being covered by the manufacturers.
Brick-and-mortar store associations representing over 70,000 outlets had risen up against FDI-funded online retailers and had asked the government to curb deep discounting, which was hurting sales at physical stores.
"Offline cellphone stores will not cooperate with brands if they continue to launch online-exclusive models at lower prices than what is available offline or if models are sold at a discount online," Arvinder Khurana, president of All India Mobile Retailers Association told The Economic Times. "Retailers are forced to take this course as it has become a matter of their livelihood," Khurana added.
Pact on pricing
Another grouping Federation of All India IT Associations secretary Saket Kapoor said it has entered into a pact with large manufacturers on pricing parity. While AIMRA represents over 25,000 stores, FAIITA has 30,000 outlets under its umbrella.
"The agreement includes no scope for any online-exclusive model and if the manufacturers do launch them, they have to offer it to offline trade first who have the right of first refusal," Kapoor told the newspaper. The tug of war is having its effect on online retailers as smartphone sales through online portals is likely to decline in the current quarter. According to research firms, IDC and Counterpoint Technology Market Research, the share of online sales is set to decline to 26-27 per cent in the current quarter from 30-31 percent earlier.