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Survey: Online Smartphone Sales Sustain Growth in UK, Germany, Spain

  • While a cheaper deal is important, UK smartphone consumers are looking at convenience (55%) most, even after COVID-19.
  • Consumers in Germany and Spain will look at the pricing and offers in a more engaged manner, with most preferring full upfront payment.
  • For the next purchase, a big proportion in these three countries is not actively looking at reducing touchpoints during the experience.

Just as in other parts of the world, European countries have been hit hard by COVID-19 when it comes to smartphone sales. Our latest Consumer Lens surveys reveal that many consumers here have opted for reduction in budget for the next smartphone and extension of ownership period before the next purchase. In a silver lining of sorts, a higher than normal growth has been witnessed in online smartphone purchases.

In this article, we cover three big markets in Europe — United Kingdom, Germany and Spain — to understand consumer preferences for the modes of next purchase, based on the Consumer Lens surveys.

Offline vs Online

With ~35% of smartphone sales in the UK happening online, the proportion of online sales has gradually increased since Q1 2020. Interestingly, this growth was sustained even after the physical stores opened following the COVID-19 triggered lockdowns.

Outlets like Carphone Warehouse and Currys PC World stores have been subject to quite a few shutdowns and layoffs. However, the managements of these brands are looking to stay committed to the brick & mortar outlets and their employees. Their recent efforts for boosting in-store sales include:

  • Customers choosing to shop from home are given a ShopLive video as a personal shopping experience.
  • Retailers like Currys PC World will also offer free recycling of any electrical or electronics item brought in store.

Companies have also realized that consumers would rather buy smartphones from large format stores instead of smaller standalone mobile shops.

A big proportion of consumers in the UK would ideally want to experience the purchase in a more engaged manner. For example, buyers opting for upfront payments are less likely to choose online sources like Amazon.com or Buymobile.com. Our survey reveals that for more than 90% of the respondents, electronic stores and supermarkets are among the first three channel options.

Other countries prefer online modes:

In Germany, 35% of the respondents purchased their current phone online. For their next purchase, online is one of the main channels for 95% of the respondents.

In Spain, this proportion was 30% for current smartphones. For the next purchase, 76% chose online as one of the main channels.

What drives consumers now

UK: Most of the respondents will make their next smartphone purchase at an operator store.

The reason: Convenience, followed by probability of it being cheaper.

Exhibit 1: Reasons for Choosing a  Purchase Source

Reasons for Choosing a Purchase Source
Source: Counterpoint Consumer Lens

Interestingly, there are different dynamics at play here:

  • Almost 60% of these respondents have a monthly income less than £ 1600.
  • More than 40% of those planning to go in for an operator are self-employed individuals.
  • Among those opting for full upfront payment, more than 50% are either homemakers or unemployed.

Irrespective of the demographic, most UK consumers still look at the benefits of contract smartphones. Established players like Carphone Warehouse continue to underline benefits like:

  • Latest phone ownership without the hassle of upfront full payment.
  • Bundling plan charges with phone installments over the period.
  • Direct debit options with offers and treats.

Germany and Spain: While operators do not sway consumers in Germany and Spain as much, full upfront payment is the most preferred method. Also, consumers are most likely to choose online retailers like Amazon in these countries. Electronics stores and mass merchandisers like Media Markt, Saturn and Comtech in Germany, and Fnac, Conectrol and Walmart in Spain are also big options.

Key points:

  • Germany: 41% choose to pay upfront, with the salaried making up 42% of these respondents.
  • Spain: 53% choose to pay upfront, with the salaried making up 61% of these respondents.

For both Germany & Spain:

  • Consumers who choose to buy it upfront earn less than €1,900 per month.
  • The main motivators for going in for full upfront payment are cheaper deals and better offers.

Bottomline

Average selling prices (ASPs) will decrease as consumers are highly likely to reduce their smartphone budgets. While these budgets reduce, consumers are looking to opt for full upfront payment to reduce a deferred liability.

We also asked the consumers who purchased their current smartphone by making full upfront payment, whether they would buy it the same way next time. A good proportion of such consumers will continue to prefer a one-time payment:

Exhibit 2: Upfront Buyers and Their Next Purchase

Counterpoint Upfront Buyers and Their Next Purchase
Source: Counterpoint Consumer Lens

 

COVID-19 effect:

Lastly, we made sure to understand their concern levels with regard to COVID-19 and whether it would affect their behaviour on the touchpoints involved in a smartphone purchase:

Coronavirus pandemic concern and smartphone purchase location
Source: Counterpoint Consumer Lens

For their next purchase, a big proportion of the respondents in all three countries said they were not actively looking to reduce touchpoints during the experience.

It remains to be seen how offline and online channels lure the potential consumers as things go back to the new normal. While there are multiple routes to the end customer, brands and distribution channel stakeholders are likely to sweeten the deal further.

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Glen is a Senior Research Analyst at Counterpoint Research looking after the smartphone ecosystem in Southeast Asia and the global refurbished smartphone market. He has done his MBA in marketing and joins Counterpoint after a 7-year stint in core market research with global players like Nielsen. He has experience in primary quantitative as well as qualitative research. His expertise lies in the telecommunication and automotive sectors.

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