A mature market is dampening revenue but smartphones are helping demand
London, United Kingdom (PRWEB) April 26, 2013
Mobile phones have become a must-have item of the modern world. Although solid growth in mobile connections and continuing advances in product design and technology have fuelled consumer demand, the effects of these changes have not translated well into the retail market. Instead of experiencing record sales, operators in the Mobile Telephone Retailers industry have faced a difficult trading environment and revenue is expected to decline at a compound annual rate of 1.5% over the five years through 2013-14. According to IBISWorld industry analyst Andrew Johnson, “revenue has been limited by the mounting competition between operators, which has led to declines in the average price of phones and falling product margins”. Revenue has also been influenced by trends in real personal disposable income and consumer sentiment.
Revenue is expected to contract by 1.4% in 2013-14 to £3.0 billion. Now that 92% of UK adults own a mobile phone, the market is approaching saturation, which has hindered demand for new phones. Consumer demand will be held back by the declines in disposable incomes brought by higher inflation, and deteriorating consumer sentiment due to uncertainty in the eurozone. However, increased penetration across the smartphone market has provided some avenues for retailers to generate revenue. Industry sales are also likely to suffer from the continued shift to 24-month contracts, under which customers return for new products less frequently.
Despite these difficulties, mobile telephone retailers are forecast to return to modest growth over the next five years through 2018-19. After reasonable growth in 2014-15 and 2015-16, the industry is expected to stagnate. Johnson adds, “in the short term, demand will be helped by the continuing popularity of smartphones as consumers change the way they use their mobile phones”. Growing demand for data instead of the traditional voice and text facilities suggests that the availability of 4G mobile connections will be a popular development among potential mobile phone customers. The increased length of contracts will continue to decrease the speed at which customers can upgrade.
The UK Mobile Telephone Retailers industry has a high level of market share concentration. The two major companies, Carphone Warehouse and Phones 4U, account for an estimated 72.2% of specialist phone retailer revenue.
For more information on the Mobile Telephone Retailers industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Retailers in this industry specialise in selling mobile telephones. The industry does not include mobile telephone and paging services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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