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OnePlus embarks on offline expansion, plans large stores

Vikas Agarwal tells DNA that offline expansion with exclusive brand is a major focus area

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OnePlus India, which clocked Rs 500 crore in revenues within two days from its sales of OnePlus 7T smartphones and Q1 smart televisions on Amazon.in, is set to embark on massive offline store expansion. In the 12 months of the calendar year 2020, the global mobile technology firm's India unit will be adding 100 exclusive OnePlus stores in the top 50 cities, said a senior company executive. Vikas Agarwal, general manager, OnePlus India, told DNA that offline expansion with exclusive brand outlets (EBOs) is a major focus area. "Approximately 75% of the 100 new EBOs next year will be company-owned and company-operated (CoCo) and the balance will be franchisee outlets," he said, adding that every EBO will typically occupy 2,000 to 2,500 square feet of retail space.

While store expansion related investment details were not disclosed, the executive confirmed that the exercise will require a huge capital commitment and the company is well placed to deploy the same in the India market. In the current calendar year, the number of exclusive brand stores will increase from 15 to 35 outlets by December 2019 end.

Taking the OnePlus experience of smartphones and high-end televisions to the next level, the India unit is also planning to launch super large format experience stores in top three to four metros of the country. OnePlus will open these large experience stores exclusively in the India market and after necessary evaluations will take the concept to some of its prominent international markets.

"The location for our concept store in Bengaluru has been identified already. And it's work-in-progress for Mumbai and Delhi stores that will open in the next couple of years. The one coming up in Bengaluru will be spread across 36,000 sq ft. The Mumbai and Delhi stores will also be in the same range. The whole idea is to create a destination for the OnePlus community where they can actually experience the brand. We are trying to bring in the next level of international retail concept for Indian consumers. India is our biggest market and the only country where we are expanding offline. As of now, India is our pilot market for all offline expansion," he said.

The company will invest heavily towards offline expansion while also bringing something new/ unique for its target audience. There is an upfront capital commitment and a big one that too, the management said it is committed towards making India the biggest market even in offline retail.

"We don't have any investment constraints and are willing to invest as much as it is required. The only investment figure that we have made public is on the research and development (R&D) front. Towards August 2019 end, we opened our biggest R&D facility in Hyderabad with an investment outlay of Rs 1,000 crore over the next three years. It's currently spread across 36,000 sq ft employing 250 people and will be expanded to 186,000 sq ft with 1,500 employees to make it fully operational," said Agarwal.

The company's retail footprint in India is through multiple formats viz. shop-in-shops with partners like Reliance Digital, Tata Croma and other leading chains across India, EBOs including experience stores that are owned and operated by the company, and a few franchisee outlets. "With partners, we have close to 2,000 stores across India and 50 shop-in-shops with some of the large Reliance Digital and Tata Croma outlets. Offline expansion for OnePlus started two years ago and all our stores are profitable and self-sustainable," he said.

While players in other consumer sectors have been witnessing a demand slowdown, companies like OnePlus have been registering record-breaking sales online as well as offline. "That's because our target audience is not price-sensitive. Also, technology has become very important today and people have a different way of spending money on different products. A smartphone has become an essential part of the consumer's life and it is no longer a discretionary product. If people need a product they will buy it," he said.

In terms of the future line-up of products, the company has already forayed into high-end smart televisions category this festive season. The 55" OnePlus Q1 smart TV series featuring 4K QLED display, though priced at the higher end at Rs 69,900 and Rs 99,900 have received encouraging response from the market. Going forward, the OnePlus management will focus its energies on building a community and capturing significant market share in the premium smartphone and smart TV product categories.

Already compliant with the foreign direct investment (FDI) regulations for single-brand retail in India, the OnePlus management doesn't see any change in its current operational model. "With just 15 CoCos, the market is still very small for us. Post opening 100 stores next year, we will be looking at a pan-India rollout thereafter. As of now, there is no change in terms of our offline expansion, but we are evaluating the possibilities and will re-look at our structure once we have better clarity," said Agarwal.

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