Yahoo Finance Signed-for deliveries under threat in Royal Mail shake-up
Royal Mail is weighing plans to axe signed-for parcels under a sweeping review that could also signal the end of Saturday letter deliveries as its new boss fights back against Amazon amid a slump in demand for letters.
Simon Thompson, a former executive at Ocado and Apple, has launched a review of Royal Mail’s “whole product suite and offering”, The Telegraph has learned.
The six-month review will look at customer appetite for expensive tracked, signed-for and special deliveries as part of an effort to cut costs and adjust to the modern world where customers are increasingly happy for parcels to be left in a safe place or with a neighbour.
Culling signed-for services will require a change to the law which governs Royal Mail's responsibility to provide a universal service. The review is keeping all options open, with a final decision set to be made next year.
Keith Williams, Royal Mail chairman, has already suggested that Saturday deliveries could be axed as the postal monopoly battles against a terminal decline in letters - a move that would also require changes to legislation and support from Westminster MPs.
Letter volumes have fallen by almost a fifth compared with pre-pandemic figures two years ago, Royal Mail announced on Wednesday.
Ofcom, the postal regulator, has researched demand for a Saturday letters service. It found that the public would not suffer if deliveries were cut to five days a week. The move could save Royal Mail an estimated £225m.
Part of Mr Thompson’s review is understood to include an extension to a trial for delivering parcels on Sunday, taking this nationwide. The seven-day-a-week pilot was launched earlier this year, for the first time in the company’s 500-year history.
The likes of Amazon, Hermes and DPD have stolen market share from Royal Mail in recent years as more people shop online.
Royal Mail’s efforts to change have been repeatedly hampered by a series of rows with its powerful trade union, the CWU. Tensions between union bosses and the company’s senior management played a key role in the surprise departure of German chief executive Rico Back in spring last year.
Mr Williams subsequently struck a deal with the unions to introduce greater automation and invest in large sorting offices so the company could keep up with the demand for parcels.
Royal Mail’s turnaround has been a significant boon for Daniel Kretinsky, the media-shy billionaire investor dubbed the “Czech sphinx”. Mr Kretinsky began stakebuilding in Royal Mail 18 months ago and is now the company’s biggest shareholder.
Royal Mail shares have surged since Mr Back’s exit, netting Mr Kretinsky a hundreds of millions of pounds of paper profit on his investment, and the company has reclaimed its spot on the FTSE 100.
Shares closed at 516.2p on Wednesday, down 2.7pc, valuing the company at almost £5.2bn.
There were 2bn addressed letters posted between April and June this year, Royal Mail said as bosses prepared for its annual shareholder meeting.
Although higher than the 1.6bn mark noted this time last year when Britain was in the grip of the first lockdown, this was 18pc lower than the number two years ago before Covid struck.
Royal Mail revenue was 12pc higher than the same quarter last year. Parcel volumes decreased 13pc, however, compared with a surge in the first three months of the pandemic.
