Xiaomi is set to close over 1,000 underperforming Xiaomi Home stores across China starting in 2026. This move marks a strategic pivot from aggressive retail expansion to a focus on profitability and operational efficiency. Wang Xiaoyan, Senior Vice President of Xiaomi Group and President of Xiaomi China, confirmed the decision in an internal notice to dealer partners.
Stores opened before January 1, 2025, will be carefully evaluated based on performance and profitability. Outlets with consistently low efficiency and losses will face closure. Xiaomi plans to bear a one-time adjustment cost of approximately $3.8 million (27.26 million yuan) to support the transition and help dealers cut losses.
The company estimates that shutting down these low-performing stores could reduce annual losses for dealers by around $10 million (72.46 million yuan). This balanced approach reflects Xiaomi’s priority to stabilize dealer operations while building a leaner retail network. Dealers choosing to keep stores earmarked for closure will lose access to assigned store managers and Xiaomi will no longer take responsibility for related staffing from January 1, 2026.
Restructuring in Electric Vehicle Retail
The retail overhaul extends beyond smartphone and gadget outlets to Xiaomi’s electric vehicle (EV) division. Xiaomi will simplify staff placement in EV stores from a 1+2+11 model to a leaner 1+1+5 structure. This adjustment aims to reduce labor costs and improve overall operational efficiency in the growing EV segment.
Focus on High-Margin and Growth Segments
Xiaomi’s store closures and operational reforms are part of a broader resource reallocation. The company now prioritizes segments with higher profit margins, especially electric vehicles, signaling a strategic shift toward sustainable growth. This reflects a global trend in the tech industry where companies seek to optimize physical presence against evolving market dynamics.
In mid-2025, for example, Apple closed its first retail store in China, underscoring the challenges and need for efficiency in the world’s biggest smartphone market. Similarly, other brands like Vivo and Realme adjusted their strategies in response to lockdowns and changing consumer behavior in markets such as India.
Operational Efficiency as a Competitive Edge
The intensified competition in China and international markets pushes Xiaomi to optimize all business lines. The company faces stiff rivalry especially in India, where supply chain disruptions and dynamic market shares demand nimble operations. Samsung’s recent leap back to second place in India’s smartphone market exemplifies the tough battle for dominance.
Xiaomi’s commitment to take on the financial cost of store closures shows a methodical and partner-conscious approach. Rather than abrupt cuts, the company aims for a controlled transition that retains viable operations and strengthens dealer relationships.
A Leaner and More Integrated Retail Future
Xiaomi’s refined retail network is expected to be smaller but more efficient. This will ideally enhance customer experience while improving profit margins. Focused investment in the EV business supports Xiaomi’s ambition to become a significant player in electric mobility.
By streamlining store staffing and operational models, Xiaomi is setting a foundation for more sustainable business growth. This approach avoids the pitfalls of past rapid expansions, emphasizing profitability at every outlet. The strategic changes underscore Xiaomi’s evolution from rapid growth mode to a mature phase centered on long-term stability and value creation.
The impact of this large-scale restructuring will unfold in the coming years. Xiaomi’s success will hinge on improving overall profitability, stabilizing dealer operations, and maintaining competitiveness in core product lines amid the fast-changing tech landscape.
