Analysis: Royal Mail’s long cold winter of industrial action

The Royal Mail brand is already taking a battering. The timing of an expected widespread strike is set to ensure that the situation will only get worse before anything is resolved.

Many larger online retailers and catalogue businesses are expected to start proactively telling their customers that they will guarantee delivery of goods in time for Christmas – that is, that they will be ‘Royal Mail risk free’.

Nigel Swabey, CEO of catalogue firm Scotts of Stow and president of industry body the Catalogue Exchange, says it is not only looking at alternative delivery services, it will be informing its customers about this in its marketing communications.

Direct Marketing Association chief of membership and brand, Robert Keitch, says many mail order companies are likely to follow suit in a bid to distance themselves from Royal Mail.

Jonathan DeCarteret, founder of postal consultant Post-Switch.com, adds that delegates at the catalogue and home shopping industry’s ECMOD conference in London this week (October 8) have been openly discussing “contingency plans” to deal with the backlog of mail items estimated to be as high as 30 million, currently sitting in mailrooms. Around 30 online retailers are expected to seek alternative providers.

“Nearly all of the people I’ve spoken to – high-volume mailers and catalogue sellers – are putting contingency measures in place to use other operators. Some of Royal Mail’s biggest users are actively searching for alternatives,” DeCarteret says.

Among them is the postal service’s second largest customer, online retailer, Amazon. Argos and eBay are also among those leading the exodus.

But while large companies such as Amazon can afford to use courier services such as TNT Express and DHL, small businesses with much smaller orders may not be so fortunate.

“We will ensure that our customers will get their Christmas orders even if it costs us a very large amount. We need to make that pledge. But not everyone can afford to do this. For smaller operators they will either need to somehow fund the cost, or simply not operate during this period. What this will mean for them given the current economic climate, I don’t know,” Swabey says.

For now, there doesn’t appear to be much good news for anyone, apart from the courier companies which expect to enjoy an uplift in business.

Postal workers have today voted three to one for a national strike. Royal Mail has condemned the move as “deplorable and irresponsible”, adding that the union’s action would drive customers away from the business and undermine confidence in the entire postal services industry.

Many observers are also warning that a nationwide strike will have long-term damaging implications for Royal Mail.

DeCarteret says: “We foresee that the integrity of Royal Mail will be shaken. In the trend line we’ve seen where there’s been industrial action and customers have been forced to turn to other suppliers, there’s strong evidence that they will defect permanently and that will have an impact on depleting Royal Mail’s revenue stream.”

TNT Express Services head of communications, David Walker, agrees that historically it has seen an upturn in volumes and in some cases it is able to retain companies’ as customers after Royal Mail resumes normal services.

In terms of the impact on unions, one former Royal Mail executive predicts they will “lose public trust and support”. “The unions and government deserve one another. They both created this situation – the unions for being so stubborn about bringing any change, and the government for failing to respond,” the former executive says.

Keitch on the other hand says the finger of blame needs to be pointed at all parties, which also include Royal Mail management and its stakeholders.

Details of what the union now plans to do following the results of its ballot are still to be revealed. It has 28 days to decide its next move, or the ballot will become invalid. For many, such as Swabey, they are simply hoping that the CWU will decide “not to wreck everyone’s Christmas”.