Royal Mail is bracing itself for another year of pain for direct mail volumes, which will crash by a further 8% over the next 12 months due to continuing economic uncertainty and the impact of GDPR and are unlikely to recover.
To coincide with its results announcement, in which it revealed that letters volumes had lunged 8% last year, with revenues down 6% – it has published a new report, entitled “The Outlook for UK Letter Volumes to 2028”.
Commissioned by Royal Mail and drawn up PwC division Strategy&, the study predicts that there will be a “short term high rate of decline” until at least 2020.
It adds: “We expect limited recovery of those volumes, given interviews with direct marketers suggest ongoing cautiousness relating to the regulation and increased cost of ‘compliant’ data, together with wider economic uncertainty”.
However, it predicts that from 2020 onwards, the rate of decline will slow, driven by perceived ongoing value of direct mail as a marketing channel, supported by both interview and business survey feedback. The report predicts that initiatives such as Jicmail and Partially Addressed Mail will also benefit the market.
As part of its results announcement, the postal giant also revealed it will be investing a further £1.8bn in its parcel operations over the next five years to tap into the online shopping boom.
As part of the plan, the firm is introducing a second delivery for parcels that will expand in line with demand and be fully operational by 2023.
This second delivery will consist of Next Day parcels, typically purchased online from retailers the evening before, and larger items more appropriate for van delivery. In many cases, the delivery will be less than 24 hours after the order is made.
It is also introducing about 1,400 parcel postboxes across the UK, in what it said was the single biggest change to the traditional red postbox network for over 160 years. The new boxes will have wider openings to accommodate packages.
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