Europe’s national postal operators are set to lose market share dramatically over the next fewyears as domestic markets are fully liberalised and competition intensifies, according to a study
by Mercer Management Consulting. Customer focus and innovative products would be their keystrategic success factors in future.The combined overall market share of European Posts will drop from 95% in 2006 to about 70%in 2015, with private competitors growing from 5% to 30%, the study predicted. In particular, Postscould lose business massively in the lucrative small business sector that currently generates up to60% of profits, it said. Mail profits could drop up to 30% as a result.
New competitors would be not only rival postal groups from other European countries but alsocompanies from the media distribution sector and even postal technology suppliers, the studypointed out.
European Posts would be forced by liberalisation and competition to review their businessmodels, Mercer forecast. Cost-cutting and job reductions would not be enough since competitorsgenerally operated at lower cost levels. The best strategy for the former monopolists would be toconcentrate on quality products and services.
“The priority will be to defend the domestic core business because it is the existential roleof the European postal companies,” commented Mercer postal expert Marco Demuth, a former DeutschePost senior manager. “To do this, they must clearly focus their business model on customer needs.”
Competition would be most intense for business customers who account for 88% of mail sent inEurope. In particular, Posts should offer innovative products for small companies (SOHOs) whorepresented a major source of profits. Cooperations with franking machine suppliers such as PitneyBowes and Neopost could be a good way forward, the study suggested.
At a strategic level, some European countries facing budget problems could privatise theirPosts via an IPO or direct sale to a strategic investor. “That could be a good opportunity forprivate-equity companies and other international investors to buy into the company and torestructure it,” Demuth noted.
The most profitable European Posts are TNT, Swiss Post, Post Danmark, Austrian Post, PosteItaliane and Deutsche Post, according to the study.
