Based on the information available, Xiaomi, the Chinese technology giant, is shifting its strategy in India to focus more on boosting its sales through retail outlets. This move comes after years of relying heavily on e-commerce platforms, which have seen a surge in sales in recent years, helping Xiaomi and other brands expand in one of the world's fastest-growing markets with 600 million users.

Despite the success of online sales, which currently account for 44 percent of India's smartphone sales, Xiaomi recognizes the potential of the brick-and-mortar segment, which remains the larger market. The company expects this segment to grow further and is keen to increase its market share in this area. "Our market position in offline is substantially lower than what it is online," says Muralikrishnan B, Xiaomi's India head. "Offline is where you have other competitors who have been executing fairly well and have a larger market share."

Data from Counterpoint Research shows that just 34 percent of Xiaomi's India unit sales this year have come from retail stores, with the rest through websites that have long been its dominant sales generator. In contrast, Samsung, one of Xiaomi's main competitors, gets 57 percent of its sales from stores.

To increase its offline sales, Xiaomi plans to expand its store network beyond the current 18,000 and partner more with phone vendors to offer other products, such as Xiaomi TVs or security cameras, where competition is less intense. The company also plans to address marketing issues where some partner stores that display Xiaomi's bright orange branding outside shops were found to be displaying rival brands more prominently inside.

This strategic shift comes months after Xiaomi lost its leadership position to Samsung, which had a much larger portfolio of premium phones now in vogue. The South Korean giant has a 20 percent market share in India, while Xiaomi, which historically focused on budget phones, has 16 percent.

"Offline remains a key platform as India embraces the premiumisation trend," says Counterpoint analyst Tarun Pathak. "Consumers spending more would like to have the look and feel of the premium product."

To further boost its offline sales, Xiaomi plans to hire more store promoters — salespeople who lure, pitch, and sell phones to prospective buyers inside outlets. It targets tripling the count to 12,000 promoters by the end of next year from early 2023 levels.

However, Xiaomi's efforts in India face a significant challenge in the form of a federal agency's $673 million freeze on its bank assets since last year. The agency alleges Xiaomi made illegal remittances to foreign entities in the name of royalties. The company denies any wrongdoing. "We'll continue to be confident... that ultimately our position will be heard and validated," says Muralikrishnan.

Despite these challenges, Xiaomi remains optimistic about its prospects in India and is committed to its new strategy of boosting its sales through retail outlets. The company is hopeful that this move will help it regain its market leadership and continue its growth trajectory in one of the world's fastest-growing markets.