Nationwide warns on future of DM as costs rise

Nationwide Building Society is ramping up efforts to move away from communicating with customers using mail over concerns that the cost of sending physical items is set to spiral.

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The mutual has undertaken a series of projects to accelerate the use of alternatives such as email, internet and telephone which will lead to a “long-term decline in volumes of mail being dispatched”.

News of the move came in its response to postal services regulator Ofcom’s consultation on the regulation of Royal Mail.

In proposals published in October, Ofcom said that Royal Mail should be free to increase the prices it charges direct marketers to deliver their bulk and business mail on condition that it makes efficiency improvements.

Items covered included metered or franked mail, pre-printed envelopes and large volume mail.

Nationwide said that price increases introduced last May has seen the costs of some of its services rise by 20%, warning that any further change will “make more technical change cost effective”.

It adds that work to move away from mail will have “limited impact” in 2012.

Elsewhere, rival UK Mail warns in its response to Ofcom that Royal Mail could use the freedom to increase prices to “impose on a declining market a second successive year of large price increases” that could lead to “irreversible losses of mail use”.

It adds that it is not convinced that the efficiency improvements required by Royal Mail are sufficient or adequately robust”.

Ofcom is expected to present its final proposals in the spring.

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