The importance of the entry-level smartphone market is highlighted by the fact that 42% of smartphone owners who bought their device upfront paid less than £250, with the next closest being £250-399 (16%).

The entry- to mid-level market is set to thrive even more due to the impact of COVID-19. Some 52% of consumers who paid over £550 for their phone say concerns over their finances as a result of the pandemic mean that their next phone will be cheaper than their current one. The pandemic caused an estimated 9.7% drop in the mobile phone market in 2020, with particularly low consumer confidence in the early months and the lack of access to stores reducing purchases of handsets. Despite there still being some concern over finances, confidence now is as strong as it has been since COVID-19 started, placing the mobile phone market in a better position to succeed in 2021.

One of the biggest threats in the industry, though, is the rise in SIM-only deals, which are now the most popular form of payment for a mobile phone. This means that more consumers are keeping their current phones for longer– slowing the growth of the market.

There is an opportunity to attract Generation X and Baby Boomers with cheaper smartphones that offer excellent battery life. These are the age groups most likely to prioritise battery life in a phone and they are the least likely to say their current phone is from the same brand as their previous phone. The latter indicates that they could be a group that can be convinced to switch manufacturer if the next phone provides the features important to them.

• The short-, medium- and long-term impact of COVID-19 on mobile phone sales, consumers’ intent to upgrade and how they are using their phones.

• How people paid for their phone – whether it was upfront or as part of a contract and if it is the former, how much they spent on it and whether they intend to spend less on their next device.

• Ownership of 5G devices and foldables.

• Which features are most important to consumers when buying a smartphone.

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It wasn’t until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social-distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the reopening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March, and with a hoped end to all restrictions by 21 June. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

The UK’s vaccination programme started on 8 December, 2020, and with the Pfizer-BioNTech, Moderna and Oxford-AstraZeneca vaccines all licensed for use in the UK, the government aims to offer a first dose of the vaccine to 32m people by mid-April.

Mintel’s economic assumptions are based on the Office for Budget Responsibility (OBR)’s central scenario included in its March 2021 Fiscal Sustainability Report. After the fall of 9.9% over the course of 2020, the scenario suggests that UK gross domestic product (GDP) will grow by 4% in 2021, and 7.3% in 2022.

GDP isn’t expected to return to pre-COVID levels until the second quarter of 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster than expected roll-out of vaccines.

Unemployment is expected to peak at 6.5% in the fourth quarter of 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

This Report covers the UK consumer market for mobile phones. Mobile phones are defined as any device being used to place or receive calls by connecting to a mobile network. ‘Basic mobile phones’ and ‘feature phones’ are terms used to describe non-smartphones.

Smartphones are defined as any portable computer capable of making calls, sending and receiving data (either over a mobile or Wi-Fi network) and downloading, installing and running applications from an app store.

Foldable smartphones are devices that can be opened inwards or outwards to reveal a bigger screen.

Market value data in this Report includes sales of feature phones and smartphones to consumers, and is based on the full retail selling price of handsets rather than the amount paid by consumers on post-pay contracts.