Xiaomi has announced a major shift in its retail strategy, moving away from aggressive expansion toward a focus on quality and profitability. According to reports, the company may begin closing more than 1,000 underperforming and loss-making Xiaomi Home stores across China in 2026.
Wang Xiaoyan, Senior Vice President of Xiaomi Group and President of Xiaomi China, confirmed the decision in a notice shared with dealer partners. The internal communication states that stores opened before January 1, 2025, will undergo evaluation. Outlets that meet both low efficiency and loss-making criteria will be closed. Xiaomi has committed to absorbing 27.26 million yuan ($3.8 million) in one-time adjustment costs to support the shutdown process.
Xiaomi aims to help dealers cut losses and stabilize operations. According to the company, this move could reduce annual partner losses by up to 72.46 million yuan ($10 million). The strategy reflects a trade-off between short-term financial impact and long-term sustainability.
Dealers who choose to continue operating flagged stores will lose access to company-assigned store managers starting January 1, 2026. Xiaomi will no longer cover staffing responsibilities for these locations, shifting full operational risk to the partners.
Xiaomi also plans to reduce costs in its electric vehicle retail division. The company will streamline its EV store staffing model from the current 1+2+11 structure to a leaner 1+1+5 configuration. The new model will cut labor costs and improve overall efficiency.
The decision marks a significant reallocation of resources. Xiaomi will now prioritize its EV segment and high-margin products, aligning its operations with growth areas. This shift signals the company’s broader intent to build a leaner, more profitable retail network for the future.
In related news, Xiaomi is reportedly developing a new AI assistant named Mi Chat.
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(Via)
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