Royal Mail ‘must improve’ deliveries; Primark sales hit by bad weather – business live | Business

Royal Mail’s parent company, International Distribution Services, says the universal service obligation needs to change.

Responding to the news that Ofcom is considering its proposal to downgrade second class deliveries, Martin Seidenberg, Group CEO of IDS, says:

“To save the Universal Service, we have to change the Universal Service.

“Letter volumes have fallen from their peak of 20 billion to just 6.7 billion a year today meaning the average household now receives just four letters per week. Yet whilst most countries have adapted their Universal Service requirements to reflect the new reality, in the UK the minimum requirements have not changed.

“Our proposal for the future of the Universal Service has been developed after speaking to thousands of people across the country and is designed to protect what matters most for customers. It can be achieved through regulatory change with no need for new legislation.

“The Universal Service faces a very real and urgent financial sustainability challenge. Change cannot come soon enough. We look forward to continuing to engage with all our stakeholders to secure a financially sustainable Universal Service for many years to come.”

Another British institution, Primark, has been hit by the grizzly weather this summer.

Primark’s owner, Associated British Foods, warned shareholders this morning that like-for-like sales at the clothing chain have fallen in the last six months.

Like‐for‐like sales are expected to decrease by around 0.5% in the six months to 14 Semptember, driven by a 0.9% decline in the last three months.

ABF says:

This primarily reflects unfavourable weather in the UK and Ireland in H2, which resulted in lower footfall and particularly impacted sales of our seasonal lines in womenswear and footwear.

But thanks to new store openings, Primark’s overall revenue growth is expected to be around 4% for the last six months.

Last summer was the coolest since 2015, according to provisional Met Office statistics.

This made it more of a ‘drat summer’ than a ‘brat summmer’ for retailers hoping to shift summery garments.

Or, as CEO George Weston puts it this morning, “the British weather was not in Primark’s favour this summer.”

ABF has also flagged that profits at its sugar business will be below expectations, due to “a sharp fall in European sugar prices” this year.

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Britain’s Royal Mail “must improve” its delivery performance, says communications regulator Ofcom this morning, as it proposes changes to its second-class letter service.

The proposals are meant to secure the future of the universal postal service, it says.

Ofcom warns that Royal Mail’s delivery performance has simply “not been good enough” in recent years. In the last five years, the regulator has found it in breach of its quality of service obligations twice and fined it both times.

The regulator says:

We have been pressing the company on what it is doing to turn things around, and we are currently investigating its latest failure to hit its annual delivery targets. Regardless of how the universal service evolves, Royal Mail’s delivery performance must improve.

Ofcom has been examining potential changes to the universal obligation – that compels the postal operator to deliver letters six days a week (Monday to Saturday) and parcels five days a week (Monday to Friday) to every address in the UK.

And today, it is proposing that Royal Mail should be allowed to downgrade its second class service, and no longer deliver letters with a 2nd class stamp on Saturdays.

The regulator argues that this would give Royal Mail flexibility to improve its service, and is going to consult on the plan.

Ofcom says today:

The evidence we have gathered so far also suggests people want a next-day service available six days a week for when they need to send the occasional urgent letter or card. However, people acknowledge that most letters are not urgent.

If Second Class letters continued to be delivered within three working days but not on Saturdays – and First Class remained unchanged at six days a week – it would enable Royal Mail to improve reliability, make substantial efficiency savings, and redeploy its existing resources to growth areas such as parcels.

This proposal is likely to please Royal Mail – back in April, it asked Ofcom to let it reduce deliveries of second-class letters to just two or three days a week

Lindsey Fussell, Ofcom’s group director for networks and communications, says Royal Mail must do better:

Postal users’ needs are at the heart of our review. If we decide to propose changes to the universal service next year, we want to make sure we achieve the best outcome for consumers.

So we’re now looking at whether we can get the universal service back on an even keel in a way that meets people’s needs. But this won’t be a free pass for Royal Mail – under any scenario, it must invest in its network, become more efficient and improve its service levels.

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