Royal Mail plans to hike bulk mail prices have been branded “outrageous” by the DM industry, after Postcomm paved the way for the postal operator to raise prices by up to 19 per cent.
Financial services, utility companies, and catalogue retailers are likely to be the hardest hit by the increase, which, if given the green light, will take effect from April 2011, although all brands who run direct mail campaigns will also be affected. Yesterday Postcomm launched a two-month consultation on the move, designed to raise an extra £100m from business mailers.
DMA (UK) head of postal affairs Alex Walsh blasted: “Business customers appear to be paying the price for Government plans to make Royal Mail attractive to potential buyers. Some of the proposals could even see bulk mailers become liable to pay VAT – which would add another 20 per cent on top of the 19 per cent price rise. This is outrageous and we will be doing everything we can to ensure it doesn’t go through.”
Criticising the planned rise as short-sighted, he added: “It is difficult to see a strategy which could do more to drive customers to alternative media.” Walsh also questioned the timing of the announcement, revealing that Royal Mail is poised to launch a 20 per cent off ‘sale’ on some mailing services.
The Communications Workers Union claims the rise is the tip of the iceberg. General secretary Billy Hayes said: “Over-zealous price controls and an obsession with preparing the British market for full-blown competition has destroyed Royal Mail’s market share and burdened the company with the full responsibility of the expensive final-mile network.
“We’ve enjoyed the cheapest postal services in Europe for decades but regulatory mismanagement and competition – which is meant to deliver efficiencies and competitive pricing – is destroying the UK postal service as we know it. Unless the government changes its approach to privatisation we had better all get used to massive price hikes.
so they hammer suppliers with a 20% discount request, then in the same week increase bulk mail prices by 19%; so that could be a circa 40% variance on some budgets (without the VAT implication)… nice work if you can get (away with) it. and someone thinks it will raise £100m from users, more like at best an exodus into other mail suppliers, more probably a big exodus from post mail into online digital… I think the whole marketing industry has just received a sharp alert… and there will be some serious re-jigging of 2011 media plans. Talk about shooting yourself in the foot, the whole postal industry should take a look at what is going on in comms and their responsibility to the workforce employment and how they can offer better value to users.