Can India’s 1st Apple Store kickstart a Win for the Tech Giant?

The first flagship Apple store in India was opened on April 18, 2023.

Chief Executive Tim Cook launched the Mumbai store, highlighting Apple’s growing aspirations to expand in the country it also hopes to turn into a potential manufacturing hub.

Dozens lined up outside for the grand opening.

The store’s design is inspired by the city’s iconic black and yellow cabs.

Mr Cook was seen waving to customers and opening the store’s doors as employees clapped and cheered.

He also greeted customers who visited the store and posed for selfies with some of them.

Mr Cook will open a second store in New Delhi on April 20, 2023.

In a statement, he said: “India has such a beautiful culture and an incredible energy, and we’re excited to build on our long-standing history.”

The tech giant has been operating in India for over 25 years, selling its products through authorised retailers and the website.

However, regulatory hurdles and the Covid-19 pandemic delayed plans to open a flagship store.

The new stores highlight the company’s commitment to invest in India, where iPhone sales are gradually increasing.

According to Jayanth Kolla, analyst at Convergence Catalyst, the stores show “how much India matters to the present and the future of the company”.

Neil Shah, vice president of research at Counterpoint Research, says approximately 600 million Indian citizens have smartphones, “which means the market is still under-penetrated and the growth prospect is huge”.

Between 2020 and 2022, Apple gained some ground in India’s smartphone market, going from two per cent to six per cent.

But the iPhone’s hefty price tag puts it out of reach for many Indians.

Instead, iPhone sales have thrived among the upper-middle-class and wealthy Indians with disposable incomes, a segment of buyers that is rising.

In 2022, Apple had a 60% market share in the Indian “premium smartphone” market, which refers to phones that cost Rs. 40,000 (£390) or more.

This is compared to Samsung’s 21% share.

In September 2022, Apple said it would start making its iPhone 14 in India, which was hailed as a win for Narendra Modi’s government.

Apple first started manufacturing the iPhone SE in 2017. Since then, it has continued to manufacture a number of models in India.

Most Apple products are made in China but in 2020, Apple started looking at potentially moving some production after repeated Covid-19 shutdowns.

Kolla said: “Big companies got a jolt, they realised they needed a backup strategy outside of China — they couldn’t risk another lockdown or any geopolitical rift affecting their business.”

Currently, India makes nearly 13 million iPhones every year.

This is approximately six per cent of iPhones made globally but still tiny in comparison to China, which still produces around 90%.

Apple has plans to have 25% of its global production come out of India in the next five years.

But the challenge is that the raw materials are still coming from outside India. Therefore, Apple will need to either find a local supplier or bring their suppliers, based in countries like China, Japan and Taiwan, closer to drive up production.

Shah is optimistic this target could be met, especially with India’s lower labour costs and the government wooing companies with attractive subsidies to boost local manufacturing.

He said: “For Apple, everything is about timing. They don’t enter a market with full flow until they feel confident about their prospects.

“They can see the opportunity here today — it’s a win-win situation.”

Navkendar Singh, a technology analyst at research firm International Data Corporation (IDC), says that the timing of the store launches also bodes well for the company because the premium market in India is growing.

He said: “Apple is doing well across categories.

“When you launch an Apple store you’re basically giving a premium experience to your premium consumers.”

“It might not pull up sales but it definitely pulls more people into the Apple ecosystem.”

He went on to say that Apple can absorb losses even if the stores do not start making money in the first year.

He added: “The real challenge will be to pull away consumers from retail stores to these flagship centres without alienating the partner sellers.

“Otherwise it’s a good story. They finally understood that India’s premium market is growing, so why not be serious about it.”