Tag: Royal Mail

Message to ministers: Future of Royal Mail requires judgment of Solomon

Posted by | Dec 29, 2006 | |

Royal Mail’s letters business is a conundrum. A state-owned organisation operating in a free market. Charged with making profits but obliged to offer a universal service delivering to 27m addresses six days a week. The competition wants to dig deep into its market share and for a year has had the freedom to do so. Top management wants to open up the share capital to the workforce – a proposal that leaves the government facing a judgment that would stretch Solomon.

Yesterday regulator Postcomm delivered its verdict on the first year of liberalisation of the 80m letters-a-day market which has pitted the 350-year-old monopoly against almost 20 challengers. The conclusion? So far, so good – but it’s not going to get easier. Price sensitivity, alternatives such as email and the need for innovation mean tough times for the industry as a whole, while Royal Mail also faces the need to adapt and invest.
According to Postcomm the introduction of full-scale competition has given postal service users greater choice and lower costs and has spurred Royal Mail into dramatically improving its service.

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TNT UK aims for final-delivery business

Posted by | Dec 29, 2006 | |

Orange-clad postal workers are expected to hit the streets next year, putting the state-owned Royal Mail under pressure.
TNT, a subsidiary of the privatised Dutch postal group, says it wants to send postmen and women wearing orange uniforms – TNT’s corporate colour – out to deliver mail to homes and workplaces in selected cities.
The company already handles more than 5 per cent of UK mail, through contracts with business customers to collect and sort their post before handing it overfor delivery by Royal Mail under so-called “downstream access” arrangements.
Nick Wells, chief executive, said the company had adopted a dual strategy of using downstream access while developing its own collection and delivery service.

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Opening up the UK market appears to have been positive for all concerned

Posted by | Dec 29, 2006 | |

One year after the introduction of full competition in the UK’s postal market, everyone appears to be a winner.

Customers are benefiting from record levels of service and big business mailers are enjoying substantial savings in costs.

Eighteen new postal operators have been licensed and have seized a bigger share of the market than the regulator expected, handling more than 10 per cent of the mail.

Royal Mail remains the dominant force in the industry despite losing its monopoly. Its competitors hand over most of the mail to the state-owned operator for final delivery, leaving it with 97 per cent of postal revenues.

Postcomm, the postal regulator, declares itself pleased with the progress made so far. “Royal Mail has really raised its game, especially on quality of service,” says Richard Moriarty, deputy chief executive. “And the competition has brought a range of new business models, with operators offering different ways of doing things, such as later collection times and guaranteed delivery.”

The state-owned operator is on course to meet all 12 of its performance targets for the first time in the 2006-07 year – these require it to deliver 93 per cent of first-class mail on the next working day and 98.5 per cent of second class mail by the third working day. Two years ago, only four of the targets were hit.

The greatest benefits have accrued to the biggest mail users, which include banks, utilities, local councils and charities. Businesses account for 87 per cent of the more than 20bn items sent each year, with 500 companies providing half of all mail volumes.

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‘The charmed generation’: UK businesses recognising a unique market worth GBP1 billion

Posted by | Dec 29, 2006 | |

UK businesses are waking up to the value of the Charmed Generation, a group of two million over 55 year olds with the highest disposable income of any other consumer age group, it was revealed today.

Research from Royal Mail and 20plus30 Consulting has estimated the net capital worth of the Charmed Generation is GBP1 billion – a level of wealth for over 55 year olds that will not be repeated in future generations.

Royal Mail statistics show that ‘The Charmed Generation’ has the highest response rate to direct mail (over 16 per cent) of any group of consumers. Forty two per cent of this age group have said that in the last six months a mailing enticed them to become a new customer of a company and 48 per cent said a mailing had encouraged them to buy from a company they already use, indicating high levels of brand loyalty.

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One year on from full liberalisation – UK customers and operators are rising to the challenges.

Posted by | Dec 28, 2006 | |

Postcomm has hailed the first year of full competition as a promising start but warned there are more challenging times ahead for postal operators.

Postcomm Chairman Nigel Stapleton said:

“Full competition is off to an encouraging start in 2006 with 18 new operators now in the market. Many large mailers, both in the private and public sector, have switched to new operators who they have found to be reliable and sensitive to their specific needs. Everybody has benefited because, in response to competition, Royal Mail has delivered record service levels.

“Mail is a challenging market because it is being impacted by e-substitution and is price sensitive, particularly with direct mailers, who account for nearly a fifth of the market as they have other ways by which to promote their products and services. However, we believe there is more scope for all postal operators to introduce innovative products which will be valued by customers.

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