In spite of loss in business for close to three months, leading consumer technology firm Realme managed to grow by a healthy double-digit rate last year. Madhav Sheth, vice-president of Realme and chief executive officer of the units in India and Europe, is confident of growing by 25 per cent in 2021. The pandemic, however, is changing buying patterns across the industry like never before, Sheth tells Arnab Dutta. Edited excerpts:
Is Realme going to compete in the ultra-affordable entry-level smartphone (priced below Rs 5,000) space?
According to our observation, demand for smartphones priced between Rs 10,000 and Rs 20,000 is the highest. We have a C-series of handsets that are priced slightly below Rs 10,000 and will continue to grow in that segment with that line-up. But we have not been operating in the sub-Rs 5,000 price band. We believe that operating in the entry-level category, priced below Rs 7,000 per unit, is not feasible. Offering smartphones with a proper size touch screen interface and at least 5,000 mAh battery is very difficult to achieve below a particular price point.
What has been the impact of the pandemic on consumer behaviour?
There is noticeable change in buyers’ behaviour. The market was divided between two types of buyers — the ‘value-conscious’ and the ‘lifestyle buyers.’ In the last one year, consumers who were primarily ‘lifestyle buyers’ have turned value conscious. Overall, people are now seeking more value against the money they spend. As a result, while in the end-2019 average replacement cycle of smartphones had come down to 12 months, now it has gone up to 18 months. This means, people are using the same handset for longer periods now.
The crisis has led to shrinking incomes and surging prices across the board. Will it impact consumption in the short term?
There will definitely be an impact on consumption patterns and spending by average consumers. It is already evident from the longer replacement cycle and demand for more value-for-money. But once the extent of vaccination reaches a certain level, the economy will surely bounce back.
Will the inflation in handset and TV prices continue?
Overall costs have gone up by 8-10 per cent in the last one year. While we have absorbed some of it in certain categories, we had to pass it on to consumers in our affordable segment — both in smart TVs and smartphones. Given the fact that the higher prices continue to prevail, the impact will definitely be felt in the next quarter.
What is the growth projection for 2021?
In 2020, we had grown by 30 per cent in spite of lockdowns and other Covid-led disruptions. Like last year, in 2021, we suffered a loss of sales for about a quarter. Still, I believe Realme will grow by 25 per cent in this calendar year. There is a lot of pull for the right product in the market and if we continue to come up with competitive products, then we are set to grow.
Do you expect business to grow over last year’s record sales during the festive quarter?
There has been a component shortage in the industry. Further, prices went up due to higher cost of memory-related components. In spite of that — in April we became one of the top three players in the smartphone market — according to Counterpoint Research. We have already managed to restore production levels to 100 per cent and are pretty confident about decent growth, at least 10-15 per cent, in the festive season.
How are you preparing for the festive season?
We will be launching one of our best handsets so far in the coming season, apart from some four new smartphone models. Further, we will be entering the notebook and tablet market in India before Diwali. We entered the smart TV market last year, and currently, we are among the top five players.