When Amazon decided to invest in additional $3 billion in India in June, they sent a clear message to every other retailer that the country was a high-priority destination going forward. Apple appears to have caught onto this trend as well, with CEO Tim Cook announcing that the tech giant will open retail stores in India.
The announcement comes after Apple’s quarterly earnings report revealed that the retailer’s profit dipped 27% to $7.80 billion, largely due to a saturated market for iPhones.
With sales becoming difficult in China amid currency volatility — revenues there fell 33% to $8.85 billion — it feels more appropriate for Apple to set its sights on another Asian market with a growing economy. It’s also a market that Apple has only begun to tap: iPhone sales in India in the first three quarters of Apple’s fiscal year grew 51% over the prior year, while sales in the U.S. and China have significantly fallen.
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Apple currently sells its iPhones and iPads through third-party retailers in India, such as Tata Group and Reliance Industries.
During a visit to India in May, Cook met with Prime Minister Narendra Modi to discuss the possibility of manufacturing and opening Apple retail stores in India. The next month, the Indian government reduced hurdles for Apple’s retail store plans by approving an exemption to a rule that mandates foreign companies to purchase 30% of their components from Indian businesses if they wish to open up retail stores.
The exemption granted foreign single-brand retailers the chance to comply with local sourcing norms within three years, with an additional five years tacked on for retailers having “state-of-the-art” technology.
With a median age of 27 and a projected 7.5% economic growth rate in 2017, India appears to be ripe for the picking within retail tech circles, particularly as such restrictions continue to dissipate. While smaller brands are likely to have difficulties finding the bandwidth to launch operations in India, companies with the resources to make the effort should be building out their expansion strategies now.
