Customers would accept five-day delivery, says key UK postal report

Most UK businesses and consumers would accept the loss of Saturday postal deliveries if theycould collect packets and signed-for goods in the evenings and on Saturdays, according to a survey

In what it claimed was “the most comprehensive research ever undertaken by the regulator intothe needs of UK postal users”, covering 4,000 residential consumers and 1,100 businesses andseveral “workshops”, the study identified that the majority of customers would also prefer to scrapthe UK’s ‘First Class’ and ‘Second Class’ mail system in favour of a single, mid-priced, two-daydelivery option.

Ofcom said its research findings should be seen “in the context of a reduction in reliance onthe postal service generally, except in relation to packets”. It identified that consumers’ coreneeds, including simplicity, trust, speed, affordability “and a service that fits in withmodern day life”, were largely being satisfied by Royal Mail’s postal service, and that 90% ofresidential and business consumers consider the current level of service to be acceptable.

The study found that the average number of items sent by residential consumers each week hadmore than halved since 2006, from 3.5 to 1.5 items, while over a fifth of consumers (22%) expectedto send even less mail in three years’ time, although 82% of residential consumers and 87% ofbusinesses said there were some things they would always need to send by post, including personalcommunications such as greeting cards and parcels and packets.

Ofcom said that in order to establish the parts of the postal service that consumers andbusinesses value, respondents were asked to give their opinion on a variety of potential changes tothe service, including the scenario of reducing the number of days collection and delivery from sixto five. Royal Mail, as the universal service provider, is currently obliged to collect and deliverletters Monday to Saturday, and other packets from Monday to Friday.

Ofcom said that, overall, its research showed that users would find removing a weekday deliverywould be detrimental to them, especially because businesses find it valuable. “However, afterdiscussion, participants considered that removing Saturday collections and deliveries would beacceptable, as long they could collect packets and signed-for goods from delivery offices in theevening and on Saturday,” the report concluded. “Indicative estimates suggest that the potentialcost savings of removing Saturday collections and deliveries are high.”

Although the majority of consumers (59%) and businesses (66%) use First Class – the currentnext-day delivery service – over Second Class, only 9% of residential consumers and 15% of businesscustomers say they need to deal with all or most of their post on the same day it arrives.

When given the choice, 59% of residential consumers and 58% of businesses had a preference for asingle class of service over the current two-tier service – if it was less expensive than FirstClass, but delivered in two days. Comparatively, 36% of residential consumers and 41% of businessespreferred the existing service where First Class is normally delivered within one day while SecondClass is normally delivered within three.

Other key findings included a desire to have more-convenient packet and parcel services andflexible re-delivery, as internet shopping continues to fuel an increase in the number of packetsand parcels being received by consumers.

The survey found that 35% of residential users receive packets and parcels at least once amonth, up from 27% in 2010. More than half also predict that they will be ordering more goods to bedelivered by post in three years’ time. Suggested improvements to Royal Mail’s basic parceldelivery service included changes to delivery office opening hours, improved tracking services, andthe ability to select a delivery time-slot.

“Users who took part in our workshops felt that there should be changes and improvements toRoyal Mail’s basic packet delivery service to ensure that people could receive their packets moreeasily,” observed the report. “For example, they suggested there should be changes to deliveryoffices’ opening hours. For more valuable or time-sensitive items, users in general, and smallbusinesses in particular, said that a level of control is important, for instance tracking themail, or guaranteeing when it arrives, or offering an arrival timeslot.”

Ofcom called for the views of stakeholders by 18 December 2012 on all of the issues raised bythe consultation document, ahead of its report by 31 March 2013, which would consider whether anychanges to the regulatory framework for the universal postal service should be made. But itstressed that the UK government had ruled out any changes to the minimum requirements of the USOduring this parliament.

Royal Mail said that it would comment more fully after considering the report in detail, butsaid that overall it supported “the removal of other regulation that unnecessarily restricts ouroperational and commercial flexibility to deliver for our customers”.

The UK’s largest postal workers’ union, CWU, said it would be making a full response to theresearch in due course, but said it was “keen to ensure this does not open the door to a loweringof service standards”. The union said it was “concerned about how the Universal Service Obligationwill fare beyond this parliament” and argued that it was central to maintaining service standardsfor consumers.

Billy Hayes, CWU general secretary, said: “The ink is not even dry on the USO, having beenenshrined in the Postal Services Act only last year. This research clearly shows the value thatpeople put on the post and highlights growth areas for consumers who predict they will increasinglyrely on postal services for the delivery of parcels and online purchases. We want to see innovationnot cuts in order to maintain and improve service standards.”

Dave Ward, CWU deputy general secretary, said the union was “very concerned at what we’ve seenin other countries”, for example in the Netherlands, where the postal operator was “lobbying forminimum services standards of three days a week. This approach would be bad for customers and forjobs,” Ward claimed.