Royal Mail under fire as price hikes are brought forward

Royal Mail is risking the wrath of the direct mail industry – as well as the sector’s long-term future – by bringing forward a flood of inflation busting price rises which were originally due to be implemented in January.

Brand owners, charities and online shopping firms are already facing serious disruption to their Christmas marketing plans following a major escalation of the Royal Mail dispute with the Communications Workers Union.

However, this could be further exacerbated by price hikes coming into force way before the festive season – on November 7 – and forcing a major squeeze on budgets. According to Print Week, these range from 10% to nearly 18%, and cover advertising mail, business mail, publishing mail, partially addressed mail, poll card mailing, and response services.

The move sparked one print industry chief to write on LinkedIn: “Smart move by Royal Mail to kill direct mail…turkeys and Christmas come to mind.”

But a Royal Mail spokesperson defended the decision and told Print Week: “We have thought long and hard about the price changes we are making. We have brought these changes forward because of unexpected macro-economic trends such as high inflation alongside the unwinding of the exceptionally high volumes of parcels we saw during Covid-19 restrictions.

“The Universal Service Obligation requires Royal Mail to be able to deliver to 31 million home and business addresses across the UK six days a week. It comes with high fixed costs, especially against a backdrop of high inflation.”

Prices for subscription mail will not go up until the original scheduled date of January 2 2023.

The CWU has already held six days of industrial action so far this year and has formally notified Royal Mail of a further two days of strikes this month. The union has also threatened to strike for 16 days in the run-up to Christmas.

On Friday, Royal Mail warned that it could report a loss of up to £450m and be forced to axe as many as 10,000 jobs, in response to the industrial action.

The postal service – whose parent company has rebranded as International Distributions Services – reported a UK operating loss of £219m between April and September this year, and a trading cash outflow of £274m.

Management claimed that strike action had already cost the business £70m, and complained that “agreed productivity improvements” had been obstructed.

Royal Mail estimates that it will have to cut around 5,000 full time roles by March 2023 and 10,000 by the end of August 2023, on a rolling 12 month basis. This is likely to involve between 5,000 and 6,000 redundancies.