The future of mobile operators: online or on the high street?

Digital Consumer Trends 2020

Published: 11 November 2020
Authors: Cornelia Calugar-Pop, Paul Lee

10 minute read

Digital Consumer 2020 - The mobile operator store: Where next?


Mobile shopping has redefined retail in the last decade – both transforming in-store experiences and enabling consumers to make an increasing number of purchases online. But how has this impacted mobile network providers themselves? Though in-store purchases only accounted for 32 per cent of smartphone sales in the past two years, physical mobile stores have the potential to act as a key differentiator, delivering a highly personalised customer experience in an increasingly digital landscape. As high streets across the UK face new lockdowns, our latest Digital Consumer Trends insight looks at changing customer behaviour and what this could mean for the future of mobile operator stores.

Online’s share of all retail sales is growing rapidly. But buying a mobile service or a smartphone - is not akin to ordering a sweater or a loaf of bread online. The decision-making is far more complex. For example, the wrong decision regarding memory or screen size may lead to years of regret. There are currently 1,800 mobile operator stores in the UK, all of which provide a useful service, and are powerful brand promoters. But are the online undercurrents – even for mobile network providers – simply too strong now?

In May 2020, internet sales reached a record 33 per cent of the total retail sales in the UK. While online’s share fell back slightly as lockdowns eased, online shopping levels have not snapped back to pre-pandemic levels. Arguably the longer restrictions remain, the more entrenched online consumption patterns are likely to become. A second lockdown overshadowing Black Friday and the build up to Christmas, is likely to accelerate further the transition to online.

Online’s share of retail sales had been growing strongly prior to lockdown. In December 2019, e-commerce represented over 21 per cent of all UK shopping. A decade earlier it was 7 per cent. Many high street retailers have been resizing their portfolio of stores in response to changing consumer preferences. A few have gone online only.

According to our research, only a minority of mobile phone owners (two in five respondents) visited their mobile operator’s store in the past two years. Two out of five smartphones were purchased online; 32 per cent were purchased in-store and 9 per cent via a sales representative over the phone (see Figure 1). Among those who purchased their phone either online or in-store, only a third were purchased directly from an operator (see Figure 2).

Figure 1. Smartphone purchasing channel
Figure 2. Smartphone sellers for devices purchased online or in-store


Purchasing a smartphone will likely continue to have a tactile element – for some

Buying a smartphone involves trying out the phones. Many prospective consumers may want to hold the device in their hands before they buy it, or try out the user interface, check out the screen’s colours and take a few photos. A smartphone is, for many, an expensive and therefore a considered purchase.

Our research found that what respondents would miss most if their mobile network provider permanently closed its stores is related to the phone itself: 27 per cent indicated they would miss handling or trying out a phone, while 26 per cent would miss comparing phones side by side. Yet, this implies that the majority may be content in purchasing solely based on what they see online (see Figure 3).

Figure 3. Reasons to miss operator stores if they were to close permanently


More options online, fewer on the high street

As we highlighted earlier, among those who purchased their phone either online or in-store, only a third were purchased from operators who, hampered by a higher fixed cost base, may see this share erode further, as they struggle to match offers by online-only, price competitive phone retailers such as Mobile Phones Direct, Metrofone, Affordable Mobiles, BuyMobiles. An iPhone 11 Pro over the duration of a two-year contract is £306 (or 17 per cent) cheaper from an online-only retailer than directly from an operator. Cashback offers may further increase these sellers’ appeal.

One other benefit of online-only phone retailers is their ability to compare packages across several operators. This service is less readily available in the High Street following the closure of 531 Carphone Warehouse stores in April 2020. Price sensitivity is likely to heighten if the economy softens and consumer confidence weakens. Among our base, 16 per cent purchased their devices from phone retailers such as Carphone Warehouse. In the future, these users may well purchase a smartphone from online-only phone retailers.

Online-only phone retailers may also appeal to the 38 per cent of smartphone owners on SIM-only contracts who are less likely to visit stores. SIM-only’s share has doubled since 2015. Only 6 per cent of SIM-only users visited a store in the last two years to purchase a mobile phone, compared to 26 per cent for respondents on a contract with the phone included. (Of these, three quarters are on a monthly contract/post-pay which doesn't include the phone. The remainder are on monthly contract/post-pay which included the phone and have lapsed into a monthly rolling contract.)

The introduction of financing options by a variety of online retailers may also increase this channel’s appeal. For example, Amazon offers a five–month interest-free financing option for SIM-free Samsung devices. Some manufacturers offer financing options, while others use online finance providers such as Klarna. The appeal of buying a phone on the high street may be further dampened by pandemic-related restrictions such as the need to wear a face covering or pre-book appointments. Moreover, the decline in the overall number of physical stores may reduce the high street’s appeal.


Visits to operator stores may become even less frequent

A number of other longer-term trends suggest store visits may become even less frequent.

First, consumers are keeping their devices for longer. When the survey was conducted in 2016, two-thirds of smartphones were purchased in the last 18 months; in 2020, this declined to 52 per cent.

Second, making a device and package choice may require less input from store sales assistants. The UK smartphone market currently consists of two main players – Apple and Samsung – that jointly represent 70 per cent of the smartphone base. Loyalty is high with most people tending to upgrade within the same brand family. Store sales assistants need to compete with product websites that have the production budgets of an episode of Game of Thrones. Consumers may just buy the model that best matches their budget and requirements. They may also need less advice regarding tariffs as most packages include unlimited calls and text messages with the only variable being the data allowance.

A number of other customer interactions with the mobile operator such as billing and researching take place online, through the website or app (see Figure 4). For example, within the last two years, 27 per cent of respondents have used the operator’s website to get information about contracts/tariffs while only 12 per cent have visited a store for this purpose. The more consumers use digital channels for such interactions, the more likely they are to purchase their phones that way, too.

Figure 4. Customer interaction with the mobile operator within the last two years, by reason



A new mobile retail experience post-lockdown?

COVID-19 has accentuated the need for mobile service providers to re-think the way they interact with customers.

As digital channels continue to grow their share of customer interactions, operators are increasingly focusing on delivering seamless customer experiences across all owned and third party channels, empowering customers to define the way they interact with them and identifying opportunities to optimise their customer-facing operations. In so doing, they will likely challenge the rationale for operating over 1,500 mobile stores.

At the same time, as online retailers become increasingly sophisticated, shops have the potential to act as a key differentiator for mobile operators, not least in delivering a highly personalised customer experience while driving brand prominence and recall.

This being said, making such a vision a reality will require that operators fundamentally re-think the role of stores in the context of an increasingly digital-first, omni-channel, customer-driven journey. Operators will need to find a way to deliver both ROI on this investment and leaner customer-facing operations to protect both profitability and competitiveness.

To be successful, this overhaul must span every aspect of retail operations.

Introducing innovative retail formats, including store-in-store, store-to you and other pop-up concepts has the potential to not only capitalise on customer desire for both immediacy and a tactile exploration of new mobile devices, but also to align sales costs with fluctuations in demand. If developed in partnership with device manufacturers, such new concepts could also deepen the relationship with these increasingly important stakeholders and help, at least partially, curtail the threat of disintermediation. Consumers, confronted by the many changes that COVID-19 has imposed, are currently more likely to be open to new ways of selling, and operators could use this moment in time to experiment.

Meanwhile, thanks to new digital tools, upskilled store advisors could help deliver the kind of experiences their customers have come to expect not just in-store but across multiple channels. Armed with a single view of their customers, data-fuelled decision engines and next-generation customer service platforms, store advisors will be able to help customers experience and make decisions across an ever-increasing ecosystem of products and devices. Meanwhile, when footfall is low, they could also be in a position to answer voice or video calls or online queries in line with a re-invented incentive model aimed at making them channel-agnostic. Video also offers the ability to show customers who are more accustomed to using video calling than ever before – to offer a store-like experience without the need to maintain a store, or the need for clients to wait their turn. In turn, this approach would help streamline voice channels and re-focus them on higher-value pro-active sales campaigns.

These changes and many more will increasingly and productively blur, or better still, remove the traditional lines operators have used to organise themselves: digital vs. in-store, sales vs. care, fixed vs. mobile. Historically these categories have led to competition between different groups, with in-store competing with online for commissions, sometimes to the detriment of the consumer. By doing so, they will not only shape the way operators interact with their customers for years to come, but will also require a significant re-examination of how they build and structure their operations.

The journey is just beginning.

More data, more trends

We have launched five articles so far from our 2020 Digital Consumer Trends survey. Click through the links below to discover more insights!


Lasting lockdown habits: a new digital consumer?

Read more

5G: evolution deferred – what’s next for operators?

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Changing attitudes to data privacy


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Online entertainment accelerates, boosted by lockdown

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How we can help

With digital pure plays setting the bar ever higher on customer expectations and telco growth becoming increasingly elusive, operators must focus to differentiate on the quality of the propositions and experience they offer their customers.”

Deloitte can help you re-imagine and transform your customer-facing operations, bringing together retail best practice and the latest digital technology to help you delight customers and create value for shareholders.

Patrick Ugeux
Associate Partner, Deloitte
Email: pugeux@deloitte.co.uk


In an omni-channel and seismically shifting market the role of the store and physical outlets are changing. This has been even more significant within the telcos market where the path to purchase has become ever more complex. As the market continues to change the need to understand and optimise store location and strategy is essential for operators to maximise customer loyalty and their revenues.”

Nielsen Harrap
LocationEdge & Geospatial Lead, Deloitte
Email: nharrap@deloitte.co.uk

Get in touch

David Halstead
David Halstead

Head of Technology, Media & Telecommunications UK

Paul Lee
Paul Lee

Partner, Head of Global Research Technology, Media & Telecommunications

Cornelia Calugar Pop
Cornelia Calugar-Pop

Lead TMT Researcher

Selina Newstead
Selina Newstead

Marketing Lead for Technology, Media & Telecommunications

Patrick Ugeux
Patrick Ugeux

Associate Partner

Lizzie Tantam
Lizzie Tantam

Public Relations Manager

Nielsen Harrap
Nielsen Harrap

LocationEdge & Geospatial Lead


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