Xiaomi goes for retail to revive China sales

After pioneering online flash sales in China to reach the top of the smartphone market, Xiaomi is turning to old-fashioned retail to arrest its slide.

The phone maker will roll out a chain of about 1,000 brick-and-mortar stores under the Mi Home banner over the next three years, as co-founder Lei Jun mimics a strategy that’s helped the Oppo and Vivo brands leapfrog Xiaomi to the top of China’s smartphone market. The new target accelerates plans outlined just last month to open 200 stores in 2017.

Xiaomi, which was valued at about $45 billion in 2014, is resorting to traditional selling techniques to make inroads into the next generation of smartphone buyers who eschew buying online. While Oppo and Vivo use a network of resellers to reach consumers in rural areas, Lei’s strategy would be more akin to Apple’s, with plans to own and operate its own signature outlets.

“This is Xiaomi’s biggest problem: How we can overcome the obstacles of our business model,” Lei said in a video clip from a business forum posted by CCTV. “Our model can no longer be online, it has to be new retail.” “We have a chance to do 60 to 70 billion yuan in business” from those stores, Lei said without specifying a time frame.