Future Trends in HRM

The Retail Market for Smartphones

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Industry Definition

Operators in this industry retail smartphones through traditional brick-and-mortar outlets, online websites and by mail order.

Major Players

1. Apple Inc.

1. Verizon

1. AT&T Inc.

1. Best Buy

Main Activities

The primary activities of this industry are:

1. Retailing smartphones in brick-and-mortar stores

1. Retailing smartphones online

1. Retailing smartphones through catalogs or mail-order forms

The major products and services in this industry are:

1. Apple Inc.'s iPhone

1. Samsung Galaxy

1. LG smartphones

1. Motorola and other smartphones

1. Google Pixel

Supply Chain

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Products & Services Segmentation

Major Players

SWOT

Executive Summary

Over the five years to 2020, the Retail Market for Smartphones industry is anticipated to benefit from the growing demand for smartphones and increasing percentage of services conducted online.

As per capita disposable income increased, consumers have increasingly purchased discretionary items. Smartphones are considered particularly discretionary because they are at the higher-end of the cellphone market. Furthermore, the industry has benefited from a rise in the popularity of products spanning a wide range of price points. This industry benefits from constantly improving technology, which benefits operators in two different ways. As technology improves, the efficiency of manufacturing certain smartphones rises and the cost typically falls, enabling operators to retail old models of smartphones at a lower price. However, as certain companies adopt new technology into their smartphones, they are able to retail their products at a much higher price point. As a result, a variety of consumers with various disposable income levels demand industry products. As a result, over the five years to 2020, industry revenue has increased at an annualized rate of 10.1% to $85.6 billion including an increase of 3.5% in 2020 alone.

As the smartphone market has expanded since 2015, more retailers have entered the industry, many of which are online retailers. Many new players have developed contractual relationships with major phone manufacturers, such as Apple Inc. and Samsung Electronics Co. Ltd., to sell these products. As online retailers with higher profit, resulting from lack of payment towards retail spaces and store employees, grew as a proportion of the industry and consumers purchased more high-end smartphones, industry profit has expanded.

Continued growth in the use of smartphones and higher disposable income is forecast to continue to drive revenue increases over the five years to 2025. Prices are likely going to continue to rise as high-end smartphones with more capabilities, such as the iPhone 11 pro series, are expected to become even more popular. Additionally, sales volumes are expected to continue growing since consumers typically replace smartphones every one to two years. However, as the smartphone market becomes more saturated, revenue growth is likely to slow. As a result, industry revenue is set to increase at an annualized rate of 2.5% to $96.6 billion over the five years to 2025.

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Historical Performance Data

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Outlook

The Retail Market for Smartphones industry is anticipated to continue to benefit from growing disposable income and increasing demand for smartphones, specifically those at the higher end of the market.

Per capita disposable income is anticipated to increase at an annualized rate of 1.9% over the five years to 2024. During this time, consumers are anticipated to upgrade and purchase new smartphones as they are less wary about spending money on discretionary purchases. As a result, industry revenue is anticipated to increase at an annualized rate of 2.5% to $96.6 billion over the five years to 2025. Industry growth is anticipated to slow down as the smartphone market becomes saturated, however as it becomes a consumer staple, industry operators will likely continue to experience steady demand. Additionally, smartphones typically have a lifespan of one to two years, driven by new technological advancements of newer products. According to a survey conducted by Deloitte, only 31.0% of smartphone owners have had their phone for over two years in 2019 (latest available data). Therefore, consumers are consistently upgrading their smartphone devices during a relatively short period of time.

Consumer trends

Smartphone trends are constantly evolving and changing based on consumer demands.

Manufacturers are consistently improving the technology within the smartphone to improve battery life and increase speed. On top of this, the appearance and capabilities of smartphones have evolved. For example, they are now much thinner and sleeker as consumers trended away from bulky smartphones. Furthermore, with the proliferation of social media platforms, the camera and photo technology has been prioritized. The majority of industry operators have been very successful in marketing and retailing the latest smartphone models, which has contributed to the strong demand for industry products.

While per capita disposable income has increased, many smartphones, particularly those with the most recent technological advancements have become increasingly expensive. As a result, consumers have expressed concern over the exorbitant price points. To retain their consumer base, many retailers have introduced interest-free payment plans which have made expensive phones more affordable in the short-term. Furthermore, smartphones have increasingly become a consumer staple, as over 80.0% of Americans currently own a smartphone. Additionally, while younger demographics are more likely to own a smartphone, over 16.0% of adults over the age of 65 own a smartphone. As a result, industry products are relatively popular across all ages, further contributing to the large consumer base. The number of adults aged 20 to 64 are set to increase at an annualized rate of 0.2% over the five years to 2020, further benefiting operators.

Industry landscape

The industry is dominated by several companies, with the remaining industry revenue generated by smaller third-party retailers.

Despite the concentration within the industry, many smaller retailers and online operators are entering the industry as a result of the strong demand for industry products. Industry enterprises are set to increase at an annualized rate of 8.1% to 34,803 companies. The number of industry establishments are estimated to grow at a similar annualized rate of 7.7% during the same five-year period. Companies within this industry are expanding their operations to capture a broader consumer base. However, the number of employees is anticipated to grow at a slightly slower annualized rate of 4.8% to 592,385 individuals. The majority of growth in the industry has stemmed from an increase in online operators, which do not require as many employees as brick-and-mortar locations since they do not need employees working in the store. Similarly, wages are set to increase at an annualized rate of 4.4% to $7.8 billion over the five years to 2025. Operators prioritize hiring tech savvy employees that are able to successfully and efficiently answer questions regarding all aspects of the product. As a result of the intense price-based competition among retailers, and the increasing smartphone market saturation, profit is anticipated to fall slightly to 6.6% in 2025. To retain customers, operators have increasingly offered deals and promotions, which have eaten into profit.

Industry Life Cycle

The life cycle stage of this industry is    Growth

LIFE CYCLE REASONS

1. IVA is expected to grow at a faster rate than US GDP over the 10 years to 2025

1. The number of industry participants has grown and is expected to continue to grow over the next five years

1. The industry's products are constantly evolving as a result of new technological advancements

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Products & Services

Apple Inc.'s iPhone

The iPhone is a line of smartphones firstly introduced in June 2007 by Apple Inc.

Since then, the company has released a variety of advanced models with new hardware and iOS operating system changes. The iPhone also introduced the App Store, which contains more than 2.2 million applications available, consisting of video games, references works, social network, organizational tools, among others. The first iPhone is deemed as a game-changer in the mobile phone industry, and is the most popular smartphone in the United States, with more than 2.2 billion iPhones sold around the world. The latest model introduced is the iPhone 11 Pro and 11 Pro Max in September 2019. In 2020, the iPhone is anticipated to account for 42.0% of Retail Market for Smartphones industry revenue.

Samsung Galaxy

The Samsung Galaxy is manufactured by Samsung Electronics Co.

Ltd. (Samsung) and released in June 2009. The product line includes high-end smartphones referred to as Samsung Galaxy S series and Samsung Galaxy Tab series, which are smart tablets. The line has recently introduced a series of smartwatches in 2018 named Samsung Galaxy Watch. Google LLC (Google) produced the Android operating system, which is what Samsung Galaxy devices use. Android enables optimal customization and includes the Google Play store, which has attracted a large audience over recent years. In 2020, the line of Samsung Galaxy smartphones is anticipated to account for 25.0% of industry revenue.

Other smartphones

In 2020, other smartphones are anticipated to account for a total of 33.0% of industry revenue.

Within this segment, LG, Motorola and Google Pixel have the highest share of the market. Google Pixel is estimated to account for 13.0% of industry revenue. Firstly, introduced in February 2016, Google Pixel is developed by Google and runs on either Android or Chrome OS operating system. Closely, LG's smartphones are anticipated to account for 12.0% of industry revenue. Lastly, Motorola and other lines of smartphones are anticipated to account for the remaining share of industry revenue at 8.0%.

Demand Determinants

The level of demand for the Retail Market of Smartphones industry is highly sensitive to changes in consumer confidence and disposable income.

As per capita disposable income increases, consumers are willing to shift to smartphones, which have a higher price tag than regular mobile phones. Also, as income and consumer spending increases, consumers will likely upgrade their phones to the newest models, which in turn increases industry revenue. In moments of economic downturns, smartphones and other electronics are considered a discretionary purchase. For this reason, consumers will likely stay with their old phones, buy secondhand products or delay the upgrade when they do not feel as comfortable in their financial situation or outlook.

Price also influences the level of demand. Newer models that include the latest technological innovations tend to have a higher price tag. Price conscious consumers may opt for an older model to save money. However, tech-savvy consumers that rely on their smartphones for work or their daily lives may demand the latest model of the smartphone to improve efficiency, which in turn increases industry revenue. The smartphones market has become increasingly saturated in recent years considering that most consumers already own a smartphone. Due to the increase in competition from different retailers, consumers will likely search for the best deal possible, increasing price competition within the industry.

Operators that have an e-commerce platform have also experienced a rise in demand as the percentage of services conducted online continues to increase. Consumers visit industry establishments to try the product, but tend to order it online to be delivered to their homes at their convenience. The rise in e-commerce has also benefited this market as most smartphone have access to the internet, where consumers are able to shop through their phones and through mobile applications.

Major Markets

Consumers aged 18 to 29 years old

An estimated 96.0% of consumers aged 18 to 29 own a smartphone, with 99.0% owning any cellphone according to Pew Research.

Consumers aged 18 to 29 were introduced to smartphones at a young age and have implemented them to their daily routines. As a result, this market segment is anticipated to account for the largest share of Retail Market for Smartphones industry revenue at 30.0% in 2020.

Consumers aged 30 to 49 years old

Consumers aged 30 to 49 are starting their careers or building a family, which may require the use of smartphones due to its efficiency and organizational tools.

Furthermore, consumers with children will likely purchase more than one phone since most children carry smartphones as a result of its perks, such as learning tools and video games applications. This market segment is anticipated to account for 28.8% of industry revenue.

Consumers aged 50 to 64 years old

Consumers aged 50 to 64 generally use smartphones as a way to simplify their daily lives, even though they are not as technologically invested as other age demographics.

Still, this demographic has the highest income levels, which in turn tend to purchase the latest models of smartphone and premium accessories, benefiting the industry. As a result, this market segment is anticipated to generate 24.7% of industry revenue.

Consumers aged over 65 years old

Consumers aged over 65 are less likely to switch their mobile phones to smartphones considering that they are less tech-savvy and need a longer time to get used to the new technology.

As a result, only 53.0% of consumers in this age demographic own a smartphone. This older demographic is usually in the retirement stage and need to be less active online. Also, social media and other applications are less popular. For this reason, this market segment only accounts for 16.5% of industry revenue.

Exports in this industry are    Low  and Steady

Imports in this industry are    Low   and Steady

The Retail Market for Smartphones industry does not participate in international trade, as trade figures are accounted for in the relevant upstream manufacturing industries. However, many of the products sold by industry operators are imported, and the manufacturing costs and exchange rates in the countries from which industry products are sourced heavily influence the prices of electronics and appliances. Additionally, larger retail operators have international operations and online operators, such as Amazon, ship products internationally.

Business Locations

The distribution of establishments in the Retail Market for Smartphones industry closely follows the US population spread. Industry operators typically want to be located in high foot traffic areas to attract a wider audience. As more consumers are exposed to industry establishments, demand for industry products will be stronger and industry revenue will increase. The regions with the highest concentration of industry establishments are the Southeast, Mid-Atlantic, Great Lakes and the West.

The Southeast region holds the largest share of industry establishments at 24.2% and also accounts for the largest share of the US population. Florida, which accounts for 7.6% of establishments, holds the highest share of population and market presence in the region. Industry operators are also attracted to large cities due to the high rate of tourism and spending activity. The Mid-Atlantic region accounts for 17.2% of industry establishments, bolstered by New York, which accounts for 8.1% of establishments. Since New York has a higher disposable income than the national average, industry operators are attracted to the state.

The West accounts for 16.5% of industry establishments, with California alone accounting for 11.8% of establishments within the region. Lastly, Great Lakes follows with 14.7% of industry establishments. Large cities and areas with competitive colleges typically result in higher overall consumer spending.

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Market Share Concentration

Concentration in this industry is    High

The Retail Market for Smartphones industry exhibits a high level of market share concentration. In 2020, the four largest operators in the industry are anticipated to account for 76.3% of industry revenue. Even so, market share has been decreasing over the five years to 2020 as industry operators expand operations abroad to reach untapped markets. Large industry operators are able to leverage their size and offer lower prices without affecting margins. Most retailers in this industry have favorable contracts with suppliers and manufacturers of smartphones that help them keep within the market price. Wireless carriers that participated in the industry usually offer homogeneous products and services. As a result, wireless carriers are more focused on offering plans, such as bundled and unlimited, to increase their subscriber base, which is one of their top competitive factors. Consumer electronics stores, such as Best Buy Co. Inc. (Best Buy) sell a wide variety of items apart from smartphones, which takes away a share of the market. Even so, Best Buy generates almost half its revenue from computing and mobile phones.

Key Success Factors

IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:

Proximity to key markets: Industry stores should be located in well-populated areas and be easy to locate and access. Smaller operators should also consider locations with high foot traffic.

Ability to control stock on hand: Effective and efficient control of stock reduces inventory costs, increases stock turnover and prevents excess inventory build-up.

Attractive product presentation: The store layout and stock display should be clear and well-presented, even in an online store. Having appealing product displays can encourage product purchases and strengthen the company's image.

Having a good technical knowledge of the product: Smartphones are always evolving and companies aim to introduce the latest model. Retailers of smartphones must know how to operate the device and teach consumers to offer superior consumer experience.

Having links with suppliers: Products sold by this industry often have high brand recognition. Stores should have links with suppliers of such brands to generate high sales.

Cost Structure Benchmarks

Basis of Competition

Competition in this industry is    High   and the trend is  Increasing

Internal competition

Operators in the Retail Market for Smartphones industry compete with each other on the basis of price, product range, customer service, location and promotional activity.

Considering that the consumer electronics and phones market is characterized by frequent product introduction and rapid technological advancements, retailers must offer the latest models to attract tech-savvy consumers. Since many industry operators offer homogenous products and services, retailers compete through aggressive pricing and low-cost structures. Product service quality and reliability is also an important competitive factor. Retailers that offer the best-known smartphone brands that have a solid reputation are also able to attract a larger audience.

A store's staff must also be knowledgeable in the function of technical products that they offer. Consumers that are switching from a mobile phone to a smartphone will likely seek out help in how to manage the device. Retailers that can teach consumers and offer extended warranties and repair services are able to gain a competitive advantage. Furthermore, a store's location and promotional activity influences the store's popularity and the number of potential customers. Operators that are located in high foot traffic areas are able to reach a wider audience. Also, by offering coupons, discounts and add-ons, the retailer can attract price conscious consumers.

External competition

The rise in tablets, smart watches and computers have diminished the need for the latest model of smartphones since technological innovation has enabled other devices to act as a phone with internet connection.

These devices serve as a competitive threat to the industry as consumers opt to buy these devices instead of smartphones since the price has become largely the same. International competitors are also penetrating the US market and taking a larger share of the market through aggressive marketing strategies and promotional activity.

Barriers to Entry

Barriers to Entry in this industry are    Medium   and the trend is  Steady

Industry Globalization

Globalization in this industry is    Low   and the trend is  Steady

The Retail Market for Smartphones industry in the United States is largely dominated by domestic operators. Globalization measures foreign activity and the presence of foreign operators in the domestic market. For this reason, globalization level is low as most participants earn most of their revenue from domestic operations. However, larger industry operators have international operations in Canada, China, Europe and Mexico.

The level of globalization is increasing. Apple Inc. (Apple), for example, has international operations and sales outside the United States represent the majority of the company's total net sales. Also, a majority of Apple's supply chain and its manufacturing and assembly facilities are located outside the United States. Most smartphones are manufactured abroad but brought back to the United States to be directly distributed to US consumers. Conversely, wireless carriers, such as AT&T Inc. and Verizon Wireless, operate domestically since they are tied to the domestic telecommunications industry.

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Major Players

Apple Inc.

Market Share: 28.8%

Founded in 1977, Apple Inc. (Apple) designs, manufactures and markets smartphones, computers, tablets, accessories and other related products and services. Some of the company's products consist of the iPhone, Mac, iPad and wearables, home and other accessories, such as AirPods, Apple TV and Apple Watch. Apple mainly serves the consumer, small- and mid-sized business, education, enterprise and government markets. The company's reportable segments are based on geographic location and consist of Americas, Europe, Greater China, Japan and Rest of Asia Pacific. In 2019, the company generated 39.3% of sales in the United States (latest data available). Overall, Apple generated a total of $260.2 billion in revenue and employed 137,000 people in 2019.

The company relies heavily on research and development for its market position and future growth since the constant introduction to new and updated products and services are central to the company's business strategy. The company has a direct sales force, which serves consumers directly through its retail and online stores, and indirect distribution channels, such as third-party cellular network carriers, wholesalers, retailers and resellers. However, the company relies more on indirect distribution channels, which generate 69.0% of total net sales. The direct sales force is the only relevant to the Retail Market for Smartphones industry. The company has expanded and focused its e-commerce platforms as online sales increase at rapid pace over the five years to 2020.

Financial performance

Over the five years to 2020, Apple's industry-relevant revenue has been increasing at an annualized rate of 11.8% to $24.6 billion. The company generated a total of $142.4 billion in iPhone sales in 2019, 40.0% of which sold in the United States. The company has focused on introducing new models of iPhones every year, keeping sales growing as consumers updated their old iPhones. In September 2019, the company introduced the latest models: the iPhone 11, iPhone 11 Pro and the iPhone Pro Max. Considering that the company is always introducing new products with higher price tags, company profit has grown during the period an annualized 6.0%.

Apple Inc. (US industry-specific segment) - financial performance*

Verizon Wireless

Market Share: 21.2%

Verizon Wireless (Verizon) operates under Verizon Communications and provides wireless communication products and services across the United States. The company serves individual consumers in addition to business and government customers. The company generated a total of $91.7 billion in operating revenue in 2018 (latest data available). Accounts within this segment include customers with unlimited plans, shared data plans and corporate plans.

Verizon's strategy revolves around maintaining the loyalty of high-quality retail postpaid customers and bringing their consumers new and innovative ways of using wireless services. Smartphones, tablets and other connected devices, such as smart watches and wearables, are likely to continue to grow as companies introduce new models and technological advancements. However, due to the high penetration of smartphones, this will reduce the opportunity for new phone connection growth in the industry. The company's unlimited plan matched with a high-quality network has been the main reason customers are attracted to Verizon.

Financial performance

Over the five years to 2020, Verizon's industry-relevant revenue has increased at an annualized rate of 7.3% to $18.1 billion. The increase in revenue has been partly due to the introduction of devices with higher price tags considering that units sold have been stagnating as the market reaches maturity. However, due to increased competition from other wireless carriers that introduce plans with lower rates, profit has decreased during the period.

Verizon Wireless (US industry-specific segment) - financial performance*

AT&T Inc.

Market Share: 15.4%

AT&T Inc. (AT&T) participates in the Retail Market for Smartphones industry through its Communications reportable segment, which accounts for 84.0% of total segment operating revenue. The Communications segments provides services in the United States across three business units: Mobility, Entertainment Group and Business Wireline. The Mobility unit provides nationwide wireless service and equipment, including smartphones. AT&T Mobility generated a total of $71.3 billion in 2018 (latest data available), in which $16.4 billion came from equipment sales. An estimated 96.0% of wireless subscribers used smartphones in 2018, a number that has been increasing over the five years to 2020.

The sale of higher-priced devices has resulted in an increase in equipment revenue. However, equipment revenue can be unpredictable as consumers are choosing to upgrade their devices less frequently or bring their own devices from another retailer. Also, as the wireless industry has matured, the company has increasingly focused on offering innovative services in bundled product offerings with their broadband services. As a result, the company offers a wide variety of plans, including unlimited and bundled services, in addition to equipment installment programs.

Financial performance

AT&T's industry-relevant revenue is anticipated to increase at an annualized rate of 4.7% to $13.2 billion over the five years to 2020. The company has high consumer retention rates due to the lower price rate offered through bundled programs that encourage consumers to upgrade their smartphones and attract consumers from other carriers. Even as the wireless industry matures, consumers are still switching toward smartphones considering the multiple payment options wireless carriers are offering to attract a larger market. Profit, measured as earnings before interest and taxes, has also increased during the period as a result newer models of smartphones that come at a higher price tag. As consumers continue to upgrade to the latest models, profit will continue to expand.

AT&T Inc. (US industry-specific segment) - financial performance*

Best Buy Co. Inc.

Market Share: 10.9%

Best Buy Co. Inc. (Best Buy) is a consumer electronics, home office products, entertainment software and appliances retailer that also offers related services. The company is headquartered in Richfield, MN, and currently operates 1,187 stores worldwide with more than 125,000 employees. The company consists of two reportable segments: domestic and international, in which the domestic segment accounts for almost 92.0% of total revenue. In 2019, the company generated a total of $42.9 billion in revenue.

The company generates the majority of its revenue from the computing and mobile phones product segment, which accounts for an estimated 44.0% of domestic revenue. This product segment includes computers, tablets, mobile phones, smartwatches, among other related accessories. Furthermore, Best Buy announced in 2018 that it would close all of its 250 Best Buy Mobile standalone stores considering that smartphone sales matured and the company did not deem the stores profitable. As a result, the company has decided to shift its strategy toward investing in its big-box stores to enhance consumer experience.

Financial performance

Overall, Best Buy's industry-relevant revenue has been increasing at an annualized rate of 2.3% to $9.4 billion over the five years to 2020 as the company continues to introduce the latest models and updates of smartphones. Best Buy's economies of scale have benefited the company by enabling it to offer lower prices and increase promotional activity without hampering profit to compete with other retailers. Profit, measured as earnings before interest and taxes, has also been increasing during the period as the company has enhanced relationships with key suppliers, such as Samsung Electronics Co. Ltd.

Best Buy Co. Inc. (US industry-specific segment) - financial performance*

Other Companies

Samsung Electronics Co. Ltd.

Samsung Electronics Co. Ltd. (Samsung) is a South Korean electronics company employing more than 300,000 people. It is one of the world's largest manufacturer of consumer electronics and semiconductors by sales. In 2018 (latest data available), the company generated $221.6 billion in revenue. Samsung manufactures a wide range of electronic components, such as chips, image sensors, semiconductors and flash memory devices. Also, the company is one of the largest manufacturers of mobile phones and smartphones, in which the Samsung Galaxy remains a top competitor in the smartphone industry. Samsung's Information technology and Mobile communications (IM) business unit includes mobile phones, communication systems and computers. Considering that Samsung largely retails through third-party retailers and wholesaling in the United States, its direct-to-consumer market is not has developed as other companies participating in the industry. Even so, the company has manufacturing facilities and offices across 46 US states and employs 20,000 people. Samsung also operates four stores in the United States located in New York and California to compete with larger consumer electronics retailers. Since the company is mainly dedicated to manufacturing, most of its revenue is not considered industry-relevant since the company's direct-to-consumer and retail business is not as supported.

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Capital Intensity

The level of capital intensity is    Low

Technology & Systems

Potential Disruptive Innovation: Factors Driving Threat of Change

The Retail Market for Smartphones industry has not been disrupted by technological advancements.

Conversely, the rise of e-commerce has benefited industry operators tremendously by enabling them to reach a wide audience without opening a store. Furthermore, many operators have implemented a program where consumers are permitted to return a used product for store credit or an upgrade in the device. This promotes consumers to continue to upgrade their phones to the latest model, which keeps demand for smartphones steady and increases customer loyalty. As more consumers feel more comfortable online, industry operators will continue to increase their digital marketing efforts.

The level of technology change is    Medium

The Retail Market for Smartphones industry has a moderate level of technology change considering the most industry operators rely on e-commerce platforms and websites.

Consumers are increasingly buying smartphones and other consumer electronics online, which in turn incentivizes operators to keep tab of the latest software and technological innovations to implement to their online stores, including increasing payment options and product display.

Most technological advancements in the industry have benefited industry operators as they are able to manage their operations and inventory more efficiently. Automated inventory equipment, computerized point of sale (POS) equipment, among others, have helped industry operators to control more effectively their merchandise, distribution, sales and stock. Barcode scanning has also increased labor productivity and reduces errors along the supply chain.

Another beneficial technological advancement has been radio frequency identification (RFID), which provides real-time information about the inventory, which is especially important for retail industries. RFID tracks products from a chip that has been inserted in the product at the manufacturing stage and are monitored by a radio frequency receiver. The chip releases signals from when the product leaves the assembly line to when it leaves the store. As a result, RFID reduces shoplifting, paperwork errors and supplier fraud and improves efficiency. Closed-circuit TV cameras, source tagging, signature-capture technology (this is used at the POS terminal for credit card transactions) and fingerprint-scanning systems that verify customer identities are other theft-prevention advancements used by retailers.

Revenue Volatility

The level of volatility is    Medium

The Retail Market for Smartphones industry has displayed a moderate level of revenue volatility over the five years to 2020.

Since smartphones are largely discretionary since they are on the higher-end of cellphones, demand is influenced by variations in consumer confidence and disposable income. However, the smartphone industry has grown rapidly in the last decade, with 81.0% of US adults owning a smartphone in 2019, up from 35.0% in 2011 according to the Pew Research Center. As a result, demand for industry products increased quickly during a short period of time, contributing to the volatility in the industry. Consequently, industry revenue increased as much as 25.5% in 2017 and as little as 3.5% in 2020. However, as the smartphone becomes even more commonplace, volatility will likely subside. Furthermore, the constant introduction of new smartphones and the relatively short replacement cycle, will also contribute to decreasing volatility.

Regulation & Policy

The level of regulation is    Light   and the trend is  Steady

The Retail Market for Smartphones industry has a low and steady level of government regulations.

However, wireless carriers that participate in the industry tend to have a higher level of regulation and have to comply with the Federal Communications Commission (FCC). Furthermore, industry operators that operate online and have a wide delivery system have to be prepared for tightened vehicle emission standards due to environmental concerns, which can in turn increase delivery costs.

Regulations relevant to the retail sector very by state since they have enacted their own antitrust laws to ensure fair prices, quality and choices to the public. Industry operators must also comply with Fair Labor Standards Act and other governing laws regarding minimum wage, overtime, working conditions. Operators must also comply with the provisions of the Americans with Disabilities Act of 1990, in which stores must be accessible to customers with disabilities.

Industry operators that have an e-commerce platform must comply with the tax imposed depending on the state. Previously, online retailers were only required to collect sales tax if a business had a physical location in the state the purchase was made in. However, on June 21, 2018, the United States Supreme Court fundamentally altered e-commerce sales tax regulations in its South Dakota v. Wayfair Inc. decision. As a result, states are permitted to enact legislation requiring online retailers to collect state sales taxes on their online sales even if they do not have a physical presence.

Industry Assistance

The level of industry assistance is    Low   and the trend is  Steady

The Retail Market for Smartphones industry does not receive assistance from the government.

Even though tariffs are applicable to goods supplied by this industry, trade is recorded at the manufacturing level and tariffs have already been imposed before the product reaches the retail level. In other words, retail operators purchase goods from importers, wholesalers and, in some cases, manufacturers after the tariff has been applied. However, a change in the tariff rate of a good can alter where the good is purchased from and change the purchase price. Furthermore, the purchase price of the good can be altered at the retail level if the tariffs declines since the cost savings can be passed on to consumers, and vice versa.

There are no industry associations that provide assistance at the smartphone level. However, the Consumer Technology Association (CTA) educates consumers about public policy and provides networking opportunities to its members.

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Industry Data

Annual Change

Key Ratios

None available.

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