In 2023, brands confronted a scenario in which an influx of excess inventory was carrying into the festive season. They did not predict the severe drop in shipments during the second quarter, which ultimately hindered them from introducing a variety of new models prior to the festive celebrations, according to Pathak. Brands that rely predominantly on virtual channels for their sales were the worst affected. Some companies, for instance, witnessed a significant annual decrease of 44% and 52% in their shipments within the first quarter of 2023 due to the substantial overstocking from the previous year.

By the time the second quarter came around, these brands decided a strategic shift to offline expansion to help them get rid of their excess stock. They reduced prices on products that were close to their end-of-life and hired brand ambassadors with the aim of liquidating their inventory. “The ideal inventory state is around 3-4 weeks," asserted Upasana Joshi, Research Manager for Channel Research at IDC India. "Currently, however, it's slightly elevated, given this is the period in which the channels purchase from the brands to sell during the festive season," she elaborated.

Joshi further indicated that every brand is motivated to enter the festive season with refreshed stocks and new models. However, retailers remain cautious about overloading their stocks due to the uncertainty surrounding the renewal of demand during the festive time frame. Sanyam Chaurasia, a Research Analyst at Canalys, suggested that channels incurred significant losses in the previous year as a result of their inability to offload stocks acquired for the festive season. As such, they remain careful this year and only stock amounts they are certain they can sell.

Despite the fact that the inventory situation has improved, market trackers suspect that brands will continue to provide attractive deals during the festive period. Pathak notes that brands might aim to offer substantial discounts on budget smartphones to lure buyers in that category, while also presenting finance solutions and exchange offers for their more premium products.

In conclusion, brands are cautiously optimistic going into the festive season, aiming to balance required stock levels with potential demand. While they remain committed to ensuring availability of new models and fresh stock, the experience of past years have necessitated a more measured approach in stock accumulation. Attractive offers and discounts, however, remain a key sales strategy. The market could anticipate special deals, especially on budget smartphones, and unique finance and exchange offers for premium models.