Ofcom: Addressed letter volumes still falling – and at a faster rate

The UK market regulator Ofcom published its annual Communications Report today, and its review of the postal sector found that addressed letter volumes not only continued to fall in 2015 (by 3.7% to 12.2bn), but they did so at a faster rate than in 2014. Addressed letter revenues were also down by 2% to £4.2bn.

There were some other statistics which gave a stark picture of how “digitalisation” has affected the postal world:

• 23% of adults say that they are sending fewer items of post than two years ago
• 21% of adults say that they have sent no post in the last month; and in the 16-34 age bracket, this figure rises to 31%
• Nearly half of UK adults (47%) say that they only use post if there is no alternative.

The Ofcom report underlined just how important direct mail and other business-related products are to Royal Mail – and posts generally.

“Three-quarters of letter revenue comes from business and marketing mail, and less than a tenth from personal letters,” said the Ofcom report. “The proportions of letter revenue by application have remained fairly stable for a number of years. Business mail, which is primarily made up of transactional mail such as bills or statements, accounts for nearly half (49%) of all letter revenue. Marketing mail, which includes addressed advertising, accounts for 26% of all letter revenue.”

Of the total 12.2bn addressed letters, the volume handled end-to-end by Royal Mail fell by 7% to 5.1bn items. Access volumes increased slightly and remain at around 7.1bn items. “This small increase,” said Ofcom, “is likely to be driven primarily by the return of some of Whist’s end-to-end volumes to the access market following its exit from the end-to-end letter delivery sector in June 2015.”

In its review of the parcel sector, Ofcom  – to no one’s surprise – identified the growth in online shopping as the key driver. Ofcom passed on the information that: “Royal Mail estimates that the total blended market of parcels will grow at 4% per year in the medium term, and that its returns volumes have grown by 24% in the past year.”

That statement shows just how important a good returns strategy is, for both retailers and carriers.

The Ofcom report also highlighted the growing consumer appetite for same-day, within-the-hour and scheduled home deliveries, as well as the of parcel lockers and parcel stores for Click and Collect items.