Customers criticise ‘unresponsive’ Royal Mail

Royal Mail remains unresponsive to customer needs, puts barriers in the way of ‘downstreamaccess’ mail providers, and is damaging the market with postal price rises, speakers criticised at

Mark Bigley, CEO of the UK’s third-biggest downstream-access mail provider, Secured MailServices, told delegates: “One of the interesting and disappointing things is that we are acompetitor to Royal Mail but we are also a customer, and it seems that Royal Mail has been tryingto put barriers in our way. If we worked together, we would be able to achieve much more.”

Bigley said he had always talked in the past about the value of Royal Mail and the importantfunction that it undertakes. “In terms of innovation, we feel that we could innovate in terms of ITand processes if Royal Mail embraced us. My plea to Royal Mail and the CWU union is to treat us asa customer and not just as a competitor.”

Alex Walsh, head of postal and environmental affairs at the Direct Marketing Association,commented: “I think the Royal Mail has not been a consumer-focused organisation in the past; infact it has been quite arrogant. Now customers have got the opportunity to make the switch.Therefore, to safeguard that volume, there has to be a change in mind-set in Royal Mail, to realisethat customers now have a choice of medium even if they don’t have a choice of supplier, andaddress their customers’ needs.”

Walsh said that no customers liked dealing with a monopoly. “Royal Mail still delivers 96% ofmail in the UK and still takes 90% of the money, even of access customers,” he observed. “That tome is a monopoly.” He said customers needed to be protected from price increases in this monopolyenvironment, particularly when Royal Mail had a short-term goal of increasing its attractiveness toinvestors ahead of its planned IPO.

“Moya Greene said that Royal Mail was very proud that its revenues have gone up while volumesare going down. So it is clear that customers are paying for Royal Mail’s profits,” said Walsh. “Royal Mail can affect the volumes that go by mail, and therefore it needs the regulator to helpstop this headlong rush towards price increases in an attempt to make Royal Mail more attractive tobuyers.”

Robert Hammond, director of postal policy and regulation at Consumer Focus, said that surveyshad confirmed the widely-held view that price increases were driving customers away from using mailservices and accelerating their switch to other channels. He suggested that there needed to be “amore mature relationship in the market” in order to bring increased benefits to customers.

Bigley observed: “Where Royal Mail has been faced with competition, it has become moreefficient, but it has less pressure to become more efficient with its universal service. When wetalk about regulation and where Royal Mail sits, there isn’t a fair playing field at the moment andthe challenge on price is to make sure that Royal Mail does not continue to come back using priceas a blunt instrument to improve its revenues.”

Mike Newnham, chief customer officer at Royal Mail, who said he had only been in the postalindustry for nine months, joining from telecommunications operator Orange, acknowledged that thesector did not have the best reputation for customer-facing decisions and indicated that thingswere improving.

“We are going out to the market regularly now to find out what the customer needs,” saidNewnham. “And there is further work going on in simplifying our products; in the past, our productrange in part reflected our internal processes, but this is being changed to reflect what customersneed.”

Stuart McIntosh, group director for competition at regulator Ofcom, said the regulator’s job wasnot only to protect Britain’s universal service, but also to ensure that it was deliveredefficiently. He said the organisation’s latest consultation would examine what Royal Mail had actedupon in terms of competition.

McIntosh said he could see the arguments both for and against competition in the mail sector.But his observations of the postal markets in Sweden and Denmark indicated that competition inSweden had resulted in lower prices and helped halt the decline in mail volumes in comparison withDenmark, a monopoly mail market.