In the fast-paced business world, where alliances and market dynamics shape fortunes, a captivating tale unfolds a narrative of strategic brilliance, consumer demand, and the convergence of two industry titans. We are talking about the partnership between Mukesh Ambani-owned Reliance and Tim Cook-led Apple, Inc. (NASDAQ: AAPL). Although Ambani’s direct connection to the Apple brand may seem unexpected, the collaboration between Apple and Ambani’s Reliance Jio World Drive Mall has proven to be a lucrative venture. Let’s delve into the details of this remarkable story.
Apple’s first official retail store in India found its home in Mumbai’s Reliance Jio World Drive Mall, owned by Ambani. The mall provides an exclusive space for Apple, ensuring it stands out amidst 22 competing brands barred from its exclusivity zone. Since its opening on April 18, 2023, the Apple store has become a thriving hub, offering a wide range of Apple products, including iPhones, Macs, iPads, AirPods, and more.
The sales figures have been nothing short of extraordinary. On its opening day, Apple BKC booked sales worth over Rs 10 crore, setting a new record. This figure surpasses the monthly sales of many of the largest local electronics stores by Rs 2-3 crore. Adding to the triumph, Apple’s retail stores in Mumbai and Delhi have consistently achieved monthly sales averaging around Rs 25 crore. This success story has translated into substantial profits not just for Apple, but also for Ambani.
But what is Ambani’s connection to this monumental success?
The answer lies in a smart negotiation and agreement between Apple and Ambani’s mall.
Under an 11-year lease, Apple occupies a prime space of approximately 20,800 square feet. In return, Ambani receives a monthly rent of at least Rs 42 lakh, along with a revenue share contribution of 2% for the first three years. Afterwards, the revenue share increases to 2.5%. The rent for the store will also increase by 15% every three years.
Ambani has shrewdly linked a significant portion of its gains to Apple’s prospective triumph in India. With the rise in Average Selling Price (ASP) and sales of Apple devices, Ambani’s bank account would witness a substantial increase, adding millions to its wealth.
In a market where price is often a primary concern, there’s a fascinating twist. Despite the prevailing notion of iPhones being costly, they possess a strong appeal that Indian consumers find irresistible. It is important to note that the average selling price (ASP) of iPhones in India during the calendar year 2022 was between $935 and $990 for offline purchases, and $890 for online purchases. However, this year, the overall ASP of iPhones is expected to surpass $950 and reach $1,000 or more for offline sales, as stated by Navkendar Singh, Associate Vice President at IDC India. These ASP figures do not include the 18% goods and services tax.
This increase in iPhone ASP can be attributed to the launch of Apple’s owned stores in India’s two largest metro cities. Unlike other retail channels, Apple stores are known for their limited discounts and promotions. Interestingly, these two stores alone contribute to around 25% of iPhone sales for the Cupertino giant in India.
This shift in pricing in just one year reflects Apple’s focus on maintaining a premium positioning for its products in the Indian market, leveraging the strategic advantage of its own retail stores to control pricing and promotional activities.
On the other hand, Apple’s performance in the Indian smartphone market during Q1 2023 was nothing short of impressive, with a remarkable 50% year-on-year growth in iPhone shipments. This growth propelled Apple to secure a 6% share of the overall smartphone market in India. This is despite the fact that the country reported its worst-ever first-quarter decline and the third consecutive quarterly decline.
The Cupertino giant continued its dominance in the premium segment, encompassing devices priced above INR 30,000. In this segment, Apple held a commanding 36% market share, solidifying its position as the preferred choice among discerning consumers. Furthermore, Apple’s stronghold extended to the ultra-premium segment, covering devices priced above INR 45,000 (approximately $550). The market share soared to an impressive 62%, reaffirming its status as the unrivalled leader in the upper echelons of the Indian smartphone market.
The growing purchasing power of consumers, coupled with relaxed financing norms, has opened doors for individuals to fulfil their desire of owning Apple devices. The iPhone acts as a gateway to the Apple ecosystem, naturally leading users to explore and embrace other Apple devices.
In India, metropolitan cities dominate iPhone sales, with Mumbai leading the way. The Apple Store in Reliance Jio World Drive Mall stands to gain the most from Apple’s remarkable success in India, contributing millions annually to Ambani-led Reliance’s account.
This narrative underscores the power of strategic collaborations and seizing opportunities in the dynamic world of business. Ambani’s ability to leverage his mall’s exclusivity and Apple’s brand appeal has led to unprecedented financial gains for both parties.