Xiaomi goes back to basics to woo customers

Beijing

XIAOMI Corp pioneered an online flash-sales model that lifted it to dizzying heights and made it Asia's most valuable startup, but it's since fallen on hard times. Now it's counting on old-fashioned retail to make a comeback, and that's proving a much stiffer challenge.

The smartphone maker is going through a major transformation after missed targets prompted a bout of soul-searching by billionaire co-founder Lei Jun. From Harbin in the chilly north-east to glitzy eastern Shanghai, it aims to build 1,000 "Mi Homes" by 2019 - about twice Apple Inc's global store count - that will rake in an envisioned 70 billion yuan (S$13.8 billion) in sales by 2021.

Xiaomi - which has no real track record running stores or armies of sales reps - wants to set an upmarket tone for its brand by building its own signature outlets. But it's taking on surging rental and labour costs, while rivals Huawei, Oppo and Vivo have sewn up prime locations by striking deals with hundreds of thousands of resellers. Customers browsing the Apple-style blond-wood tables at Xiaomi's flagship outlet in Beijing are confronted just across the road by a giant Huawei chrysanthemum logo. In the central city of Wuhan, a new outlet is flanked by one hawking devices from Lenovo Group Ltd. "The reason the Chinese brands are building these experience stores is because they want to lift their brands to appeal to higher-end buyers," said Jin Di, a research manager at IDC China. "It fits Xiaomi's long-term strategy but t…