With its workforce of 140,000 people providing a service to every home in the UK 6 days a week, Royal Mail dominates the UK postal market. The company is profitable — it reported operating profits of £184 million for the first 6 months of this financial year. So why does Royal Mail need to change?
The profits represent a considerable improvement on the situation of 7 years ago, when Royal Mail was losing £1 million a day. However, they are fairly modest given the size of the organisation. Moreover, the profits can serve to obscure some of the underlying issues facing the company, such as the £6.8 billion pensions deficit and the fact that Royal Mail’s core business of delivering letters and parcels is declining. In particular, the standard-sized letter is steadily disappearing. Instead there has been a growth in A4-sized letters and bulkier packages known as ‘packets’. Despite these changes in customer behaviour, which have been evident over many years, the company’s operating systems are still largely geared towards the small letter rather than the larger bulkier items.
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