Direct mail spend is set to rocket as the economy starts to improve, delivering greater profits for Royal Mail, according to a report designed to make the postal operator’s City sell-off more attractive to investors.
The upbeat study, commissioned from accountancy firm PwC, predicts letter volumes will fall by only 4% a year for the next decade. But this will be offset by Royal Mail’s growing parcels arm, which is forecast to continue growing 3% a year until 2023.
While the parcel division has been the star performer for the postal operator over the past two years – revenues were up 13% in its latest results and now account for 48% of group sales – PwC believes this will moderate as the online shopping sector levels out.
PwC claims the rate of decline in letter volumes will slow over the period, while an improving economy will help stem the fall because businesses will begin to spend more on direct mail, the report says.
Earlier this month Royal Mail revealed a £70m investment in barcode technology which will enable firms to track their direct mail from postbox to home. It will also pave the way for what Royal Mail MarketReach boss Jonathan Harman claims will be “Google Analytics”-style data analysis.
At the time it was launched, Royal Mail managing director of consumer and network access Stephen Agar said: “The introduction of this new barcode technology to letters will enable businesses to track the progress of bulk mail consignments through the postal network, helping them to improve their own efficiency and customer service.”
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