London, United Kingdom (PRWEB) September 23, 2013
Mobile phones have become a must-have item of the modern world. Although solid growth in the number of mobile connections and continuing advances in product design and technology have fuelled consumer demand, these changes have not translated well into the retail market. Instead of record sales, operators in the Mobile Telephone Retailers industry have faced a difficult trading environment. According to IBISWorld industry analyst Christopher Edwards, “revenue is expected to decline at a compound annual rate of 1.5% over the five years through 2013-14 because mounting competition between operators has led to shrinking profit margins and declines in the average price of phones”. Trends in real personal disposable income and consumer sentiment have also played their part in limiting revenue.
Over 2013-14, revenue is projected to contract by 1.4% to £3.0 billion. Now that 92.0% 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 in 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, the revenue of mobile telephone retailers is forecast to rise once more and expand at a modest rate over the five years through 2018-19. Nonetheless, after reasonable growth in 2014-15 and 2015-16, revenue is projected to stagnate over the remainder of the outlook period to 2018-19. Edwards 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 with growing demand for data instead of the traditional voice and text facilities suggesting that the use of 4G mobile connections will be a popular development”. Longer contracts will continue to decrease the speed at which customers can upgrade.
The UK Mobile Telephone Retailers industry has a high level of market concentration. The two main chains, Carphone Warehouse and Phones 4U, account for an estimated 75.3% of specialist phone retailer revenue. The major players have performed relatively well in the recession because they are both in a good position to alter their product mix, pricing promotions and channels to maximise revenue. Independent retailers have largely suffered as a result of the tougher retail trading conditions which has increased concentration in the industry.
The main mobile phone retailers have not had it all their own way in recent years as the specialist industry sits in the wider mobile market, which means they compete with the retail arms of the four main networks (Everything Everywhere, O2, Vodafone and Three), supermarkets and online-only retailers. Mobile phones are sold in a broad range of stores, especially with the rapid expansion of the Apple Retail Store, which has diluted the market for iPhone sales. In order to compete, mobile phone retailers have had to present their products in a similar way to the Apple Stores and allow consumers to interact with a greater range of their products. Firms have also expanded their range to include products like tablet computers.
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
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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