0

6. Post

Figure 6.1

UK postal services industry 2006 2007 2008 2009 2010 2011

Addressed mail volumes 22.0bn 21.6bn 20.6bn 18.6bn 17.5bn 16.6bn

Mail revenues £6.8bn £6.8bn £6.8bn £6.6bn £6.5bn £6.7bn

Proportion of access mail in total mail 9.6% 16.9% 24.6% 32.7% 39.9% 43.6%

Direct mail share of advertising spend 14.2% 12.7% 12.3% 11.6% 10.9% 10.7%

Value of UK e-retail market £30.2bn £35.2bn £43.8bn £49.8bn £58.8bn £68.0bn

Source: Royal Mail Regulatory Financial Statements, Royal Mail Wholesale, Royal Mail Group Annual Reports, AA/Warc. Revenue figures are nominal. Note: Addressed mail volumes and revenues include Royal Mail total mails (excluding Parcelforce and unaddressed), access revenues and end-to-end delivered addressed letter mail. This does not include courier or express volumes and revenues. Royal Mail calendar year volume and revenue figures are derived from Ofcom calculations based on financial year figures in Royal Mail’s Regulatory Statements and estimates of 2011-12 performance informed by Royal Mail’s Report and Accounts and are therefore not directly comparable with Royal Mail’s published accounts..

UK postal services industry key metrics

2

Collections Outward Processing

Trunk Network

Inward Processing

Local Distribution Delivery

Figure 6.2

Royal Mail’s pipeline

3

Collections Outward Processing

Trunk Network

Inward Processing

Local Distribution Delivery

Figure 6.3

Point of access

Access volumes

4

Source: Operators’ returns, based on former licensed area delivered volumes

Figure 6.4

Other operators’ end-to-end delivered volumes

11.8 11.3

8.5

0

3

6

9

12

2009 2010 2011

Volume (million items)

5

6,760 6,797 6,843 6,764 6,661 6,513 6,695

6,746 6,7836,755 6,653 6,522

6,371 6,5466,641 6,499 6,254 5,922 5,6015,281 5,302

104 284 501 731 921 1,090 1272

14 14 88 112 140 142 1500

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2005 2006 2007 2008 2009 2010 2011

Total mail

Royal Mail total mail

Royal Mail end-to-end

Royal Mail access

Other operator access

Source: Royal Mail Regulatory Financial Statements, operator returns to Ofcom, Ofcom estimatesNote: Royal Mail end-to-end refers to Royal Mail total mail revenues excepting access. Royal Mail calendar year revenue figures are derived from Ofcom calculations based on financial year figures in Royal Mail’s Regulatory Statements and estimates of 2011-12 performance informed by Royal Mail’s Report and Accounts and are therefore not directly comparable with Royal Mail’s published accounts.Addressed mail only. Figures are nominal.

Figure 6.5

Mail market revenue 2005 to 2011Revenue (£ mn)

6

22,280 21,976 21,58720,553

18,62017,515

16,599

21,494 19,85717,946

15,489

12,52810,519

9,361

7862,119

3,6415,064

6,092 6,996 7,238

00

5,000

10,000

15,000

20,000

25,000

2005 2006 2007 2008 2009 2010 2011

Total mail

Royal Mail end-to-end

Total access

Source: Royal Mail Wholesale, Royal Mail Regulatory Financial Statements, Ofcom estimatesNote: Royal Mail end-to-end refers to total mail volumes excepting access. Royal Mail calendar year volume figures are derived from Ofcom calculations based on financial year figures in Royal Mail’s Regulatory Statements and estimates of 2011-12 performance informed by Royal Mail’s Report and Accounts and are therefore not directly comparable with Royal Mail’s published accounts. Addressed mail only.

Figure 6.6

Royal Mail volume 2005 to 2011Volume (million items)

7

4% 10%17%

25%33%

40% 44%

0%

10%

20%

30%

40%

50%

2005 2006 2007 2008 2009 2010 2011

Source: Royal Mail Wholesale, Royal Mail Regulatory Financial Statements, Ofcom estimatesNote: Royal Mail calendar year volume figures are derived from Ofcom calculations based on financial year figures in Royal Mail’s Regulatory Statements and estimates of 2011-12 performance informed by Royal Mail’s Report and Accounts and are therefore not directly comparable with Royal Mail’s published accounts.

Figure 6.7

Proportion of access in total mail 2005 to 2011Year on year growth rate of access volumes

1817.1% 169.6% 71.8% 39.1% 20.3% 14.8% 3.5%

8

Source: Royal Mail Wholesale, 2011-12

Figure 6.8

Royal Mail access volumes and revenues by format 2011-12

88.2% 81.3%

11.3%16.3%

0.5% 2.4%

0%

20%

40%

60%

80%

100%

Volume Revenue

Packet/A3Large LetterLetters/Other

9

Source: Ofcom estimates

Figure 6.9

Applications of mail

Transactional59%

Advertising22%

Publishing8%

Fulfilment3%

Social8%

10

Source: Mediatel, Royal Mail Regulatory Statements, Ofcom estimates

Figure 6.10

Direct mail volume and proportion of total mail 2006-2011

5,028 4,655 4,3533,563 3,537 3,620

22.9%21.6% 21.2%

19.1% 20.2%21.8%

0%

5%

10%

15%

20%

25%

0

1,000

2,000

3,000

4,000

5,000

6,000

2006 2007 2008 2009 2010 2011

Direct mail volume Proportion of total volume

Volume (million items) Share of total volume

902.2 857.9 714.9 734.5 774.1

1269.13 1182.33971.08 977.04 977.12

2,171.42,040.2

1,685.9 1,711.5 1,751.3

0

500

1000

1500

2000

2500

2007 2008 2009 2010 2011

Expenditure on production

Expenditure on post

11

Source: Mediatel. Figures are nominal.

Revenue £m

Figure 6.11

Spend on direct mail post and production, 2007– 2011

12

25%26% 26% 25%

22%23%

20% 19%

15% 15% 16% 18%

13% 12% 12% 11%

0%

5%

10%

15%

20%

25%

30%

2008 2009 2010 2011

Mail Order / Home ShoppingOther

Charities

Finance - General InsuranceRetail

Travel and Transport

Telecoms - Fixed Line ServicesOther Finance

Finance - Plastic Cards

Source: Nielsen Addynamix

Share of direct mail expenditure by sector

Figure 6.12

13

Source: Interactive Media in Retail Group

Figure 6.13

E-retail sales value from 2000 to 2011

0.8 1.86.4

1114.5

19.2

30.235.2

43.849.8

58.8

68

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Sales value (£bn)

14

Source: Interactive Media in Retail Group / Metapack Delivery Index, April 2012Note: Proportions rebased to exclude international

Figure 6.14

Packet and parcel service types used for UK delivery, April 2012

Economy54%

Specified day(including next

day)41%

Specified time slot

5%

15

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Q: Please now think about the parcels you send. How many parcels do you send in an average month? *Assuming those saying ‘don’t always send one each month’ send 1 parcel every 3 months; Q: ‘Approximately how many parcels do you receive on average in a month?’*assuming those saying ‘don’t always receive one each month’ receive 1 parcel every 3 months

Figure 6.15

Approximate number of parcels sent and received each month by residential consumers

50

14

5

41

24

40

0

20

40

60

Don't always send/receive parcels each month

1 or 2 3 or more

Parcels sent Parcels received% of consumers

16

Source: Mediatel/ABC, 6 monthly net average circulation subscription sales 2007-2011

Figure 6.16

Magazine subscription volumes 2007 - 2011

7,301 7,241 7,075 6,476 6,480

14.4% 13.3% 15.0%13.6% 14.2%

0

2

4

6

8

10

12

14

16

0

2,000

4,000

6,000

8,000

2007 2008 2009 2010 2011

Subscription circulation Share of total circulationSubscription circulation (thousands) Share of total circulation

17

27p 27p 27p 28p 28p 30p 32p 34p 36p 39p 41p46p

60p

19p 19p 19p 20p 21p 21p 23p 24p 27p 30p 32p36p

50p

0

10

20

30

40

50

60

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

First Class

Second Class

Source: Royal Mail. Figures are nominal.

Figure 6.17

First and Second Class Stamp prices from 2000-2012

Price (p)

18

1

1

1

2

5

10

10

67

0 20 40 60 80

Post

Social networking

Instant messaging

Email

Text messaging

Voice calls via fixed landline phone

Voice calls on mobile phone

Meet face to face

% of adults who communicate with friends and family

Q5a: If you had to pick one method of communicating with friends and family which one would it be?Source: Use of communication services including post research, 2012Base: all who ever use at least one form of communication to communicate with: Friends and family, n= 2007. Note - other mentions by 1% or fewer included: Emails, social networking, VoiP calls,

Preferred method of communication with friends and familyFigure 6.18

19

10

11

17

18

34

41

47

55

67

70

86

0 10 20 30 40 50 60 70 80 90

Post (letters/cards/packages)

Micro blogging

VoIP (e.g Skype)

Comments on websites

Instant messaging

Social networking

Emails

Voice calls on fixed landline

Voice call on mobile phone

Text messages

Face to face

Q2a: Devices/ services used Source: Use of communication services including post research, 2012Base: UK adults aged 16+ who communicate, n = 1980

Methods used at least once a week to communicate with friends and family

% of adults

Figure 6.19

20

Communication methods ever used to send greetings (e.g. birthdays) by age of respondent

0

1

11

0

38

12

7

46

77

4

23

16

41

15

38

53

59

31

2

11

20

21

30

33

36

55

58

0 20 40 60 80 100

Any comments on website forums

Any instant messaging eg MSN

Any email

Any social networking eg Facebook

Voice calls via fixed landline phone

Voice calls on mobile phone

Text messaging

Meet face to face

Post ( letters/cards/packages)

All

16-24

65+

Q3a: Thinking about personal communications which of these methods do you ever use to – greetings such as birhthday/ get wellSource: Use of communication services including post research, 2012Base: UK adults aged 16+, n = 2012

Figure 6.20

1

8

23

29

19

14

5

1

0 20 40 60 80 100

Don't know

Don't send mail

Don't always send post each month

1 or 2 items

3 or 4 items

5 to 10 items

10 to 20 items

20 or more

% of consumers

21

Claimed volume of letters sent in an average month

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘Approximately how many letters and cards, do you personally send in an average month? This should exclude any items you send from home in connection with running a business, if you do this from home. We will ask about parcels separately.’

Average number of letters sent per month = 3.2

Figure 6.21

22

Claimed volume of letters received in an average week

1

8

14

18

30

20

7

2

0 20 40 60 80 100

Don't know

Don't always receive post each week

1 or 2 items

3 or 4 items

5 to 10 items

10 to 20 items

20 to 30 items

30 or more

% of consumersSource: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘Approximately how many letters or cards do you receive in an average week? Please don’t include parcels, we will ask you about these separately.’

Estimated average number of letters /cards received = 8.5 per week or 34 per month

Figure 6.22

23

Claimed volume of parcels sent in an average month

30

50

14

5

0 20 40 60 80 100

Don't send parcels

Don't always send post each month

1 or 2 items

3 or more items

% of consumersSource: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘Please now think about the parcels you send. How many parcels do you send in an average month?’*assuming those saying ‘don’t always send one each month’ send 1 parcel every 3 months

Estimated average number of parcels sent = 0.52 parcels per month*

Figure 6.23

24

Claimed volume of parcels received in an average month

18

41

24

10

5

1

0 20 40 60 80 100

None/don't receive parcels

Don't always receive parcels in a month

1 or 2

3 or 4

5 to 10

10 or more

% of consumersSource: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘Approximately how many parcels do you receive on average in a month?’*assuming those saying ‘don’t always receive one each month’ receive 1 parcel every 3 months

Estimated average number of parcels received = 1.3 per month*

Figure 6.24

25

5239

30

AB C1C2 DE

% sending 3 or more letters a month

Volumes of post: by social grade

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011. Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘Approximately how many letters and cards, do you personally send in an average month? This should exclude any items you send from home in connection with running a business, if you do this from home. We will ask about parcels separately.’ ‘Approximately how many letters or cards do you receive in an average week? Please don’t include parcels, we will ask you about these separately.’ ‘Please now think about the parcels you send. How many parcels do you send in an average month?’ ‘Approximately how many parcels do you receive on average in a month?’

3928 24

AB C1C2 DE

% receiving 40 or more letters a month

2719 12

AB C1C2 DE

% sending 1 or more parcels a month

5242

28

AB C1C2 DE

% receiving 1 or more parcels a month

Sending Letters

Receiving Letters

Sending Parcels

Receiving Parcels

Figure 6.25

26

1829

3644 50 52

45

16-24 25-34 35-44 45-54 55-64 65-74 75+

% sending 3 or more letters a month

Volumes of post: by age

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011. Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘Approximately how many letters and cards, do you personally send in an average month? This should exclude any items you send from home in connection with running a business, if you do this from home. We will ask about parcels separately.’ ‘Approximately how many letters or cards do you receive in an average week? Please don’t include parcels, we will ask you about these separately.’ ‘Please now think about the parcels you send. How many parcels do you send in an average month?’ ‘Approximately how many parcels do you receive on average in a month?’

1424

32 33 37 3626

16-24 25-34 35-44 45-54 55-64 65-74 75+

% receiving 40 or more letters a month

19 20 26 22 17 14 9

16-24 25-34 35-44 45-54 55-64 65-74 75+

% sending 1 or more parcels a month

43 49 5043

3629

17

16-24 25-34 35-44 45-54 55-64 65-74 75+

% receiving 1 or more parcels a month

Sending Letters

Receiving Letters

Sending Parcels

Receiving Parcels

Figure 6.26

27

39 37 46

UK Urban Rural

% sending 3 or more letters a month

Volumes of post: by rural vs urban

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011. Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘Approximately how many letters and cards, do you personally send in an average month? This should exclude any items you send from home in connection with running a business, if you do this from home. We will ask about parcels separately.’ ‘Approximately how many letters or cards do you receive in an average week? Please don’t include parcels, we will ask you about these separately.’ ‘Please now think about the parcels you send. How many parcels do you send in an average month?’ ‘Approximately how many parcels do you receive on average in a month?’

29 29 32

UK Urban Rural

% receiving 40 or more letters a month

19 19 23

UK Urban Rural

% sending 1 or more parcels a month

40 40 44

UK Urban Rural

% receiving 1 or more parcels a month

Sending Letters

Receiving Letters

Sending Parcels

Receiving Parcels

Figure 6.27

28

Class of letters and time critical posting

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘When sending letters/cards which do you use? (Answers on a showcard)

Proportion of letters sent that need to arrive next day

Use of first and second class for letters

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘And what proportion of these letters/cards have to be at their destination the next working day? (Answers on a showcard)

Figure 6.28

29

Claimed experience of problems in last 12 months

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘In the last 12 months have you experienced problems with Royal Mail’s service in terms of…(READ OUT ITEM)?’ ‘Did you make a complaint to Royal Mail about its services?’ (n=2029)

5

14

18

20

41

56

0 20 40 60 80 100

Other

Damaged mail

Lost mail

Delayed mail

Misdelivered mail

Any problem

% of consumers

Figure 6.29

30

Views on post and other means of communication

Source: Ofcom Post Omnibus 2011 - fieldwork 1st Dec – 13th Dec 2011Base: All consumers responsible for sending or receiving post (n= 3621)Question: ‘Which of these statements apply to you?‘ (answers on a showcard)

% of people saying that a statement applies to them. NB percentages add to more than 100% as more than one statement can apply to a respondent.

Reluctant post use

38% I prefer to send emails than letters whenever possible’

21% ‘I only use post when there is no alternative’

Some preference for written

27% ‘I prefer to send letters or emails to companies rather than make a telephone call so that I have a written record’

Some preference for post

34% ‘It’s worth sending a letter for important communications’

13% ‘I frequently use post when I can use other methods’

Emotional attachment to post

33% ‘I love to send and receive letters and cards’

21% ‘I would feel cut off from society if I can’t sent/don’t receive post’

Figure 6.30