UK Mobile Phone Market Shows Unexpected Resilience

Sales fell less than expected in the second quarter

Sales in the mobile phone market in the UK fell 20% year-on-year in the second quarter. At any other time, this would be a disastrous performance. But in 2020, this is in fact good news.

The market has surpassed not only our expectations — which were for a decline in excess of 30% — but also those of many executives. In late March the only benchmark we had was China, which was just opening up its economy after two months of lockdown: there, sales of mobile phones declined by 36% in the second quarter.

So in comparison, the UK market did remarkably well. Analysing the reasons for this unexpected resilience in demand for mobile phones, I believe there are three (and a cheeky half) reasons.

Firstly, the British people are very comfortable with shopping online or over the phone, and clearly those who weren’t at the start of the pandemic became very quickly accustomed to it. Our consumer research shows that even in 2019 almost half of phone buyers in the UK had gone online at some point when purchasing their current phone. Given no choice, when stores were closed throughout April, May and half of June, people who wanted a phone simply ordered one online or by calling their operator or chosen retailer.

Secondly, the UK market is highly skewed toward two brands, Apple and Samsung. For owners of these phones, but particularly for iPhone users, upgrading to a new device of the same class from the same brand is a relatively risk-free purchase. People know exactly what they’re getting, even without seeing the phone in a shop.

Thirdly, and importantly, during the lockdown weeks, the majority of people in the UK continued to earn: they either continued to work or received a state-funded salary. Arguably, everybody knew that a recession was imminent, but four in five people who were due to upgrade their phones were unphased by this threat, at least then.

And finally, that half a reason, which is just a hunch. The average replacement cycle in the UK is already long enough — close to four years. Unit sales in the UK have been dropping for over seven years now, and there was always going to be a time when the market wouldn’t decline any further, because phones can only last so long. I personally believe there was a bit of this aspect in the surprisingly robust demand for phones in the quarter.

So what do we expect for the rest of 2020?

Despite the relatively good news from the second quarter, we remain cautious about the remainder of the year. Even assuming no further major lockdowns, we’re already swimming in the familiar but dangerous waters of an economic recession. The first days of July have brought news of thousands of retail jobs being lost in the UK, and unfortunately more bad news is likely. This will prey on the minds of consumers in the next few months, and this is before we even start talking again about Brexit.

Potential delays in the introduction of a new iPhone portfolio would also have a negative effect on phone sales in the UK, as the iPhone typically accounts for a very large chunk of sales in the Christmas quarter.

With all this in mind, we expect demand for mobile phones in the second half of 2020 to be 9% lower than in the same period of 2019, before the market starts recovering in 2021. The chart below shows our forecast of changes by quarter.

CCS Insight clients can access our newly published mobile phone forecast for the UK here.

If you want to know more about our expectations for recovery and new opportunities in the tech industry in 2021 and beyond, join us during our Predictions week. See