Hi Sweatha,
Thanks for asking.
Offline sales have gone from 63% ish to 49% (Aug'19-Aug'21) but it has held fort. Infact there is a report by Predictivu's on how offline smartphone MBOs have been resilient despite the pandemic.
Two things to think about offline are (a) Smartphones are not impulse purchases, people like to spend time to decide, consult. This is more so for premium. Even apple was doing 50% offline sales till March this year. It's opening more physical stores as we speak (b) As the pricing, discounts and offers become more even (the industry bodies are on it), it would propel offline even further. In Ahmedabad, some big retailers have done well in the pandemic - incentivise people to shop offline using innovative discounts.
There will always be a decent population (counterintuitive as it may be) who either use offline while staying in metros or people in T2/T3 who buy premium. So you need to cover a geography with retail and after sales stores as per size.
For Xiaomi per se, it's also important to look at it from an ecosystem point of view too. The lifetime value of a customer is much more important that a single sale and thus, whether someone in T2/T3 buys a wearable, phone, router or a laptop (or a cyberdog someday!), Xiaomi would want it to be from them. And while instincts say it should be online, an offline store is where a customer comes for a phone and gets converted into others. Where the final sale happens then becomes irrelevant. And as their ecosystem grows and new versions of the existing products are launched, the conversion logic will continue to work.
Aayush Agarwal