Royal Mail 'must modernise' to win customers

27 August 2007
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28 August 2007 | Antony Barton

Royal Mail is a long way from achieving its own vision of becoming a "modern and efficient operator", according to the postal regulator.

Postcomm said that, after a long period of underinvestment, Royal Mail needs to modernise its business to improve cost efficiency. It added that if Royal Mail is to adapt to a changing mail industry and take advantage of developments in wider communications and distribution markets, such as e-mail and the internet, it needs to transform its business across a much broader front.

The comments appear in Postcomm's Strategy Review, which looks at whether the regulator needs to reshape its policies to protect postal users in the future - from 2010 and beyond - and also allow all mail operators the flexibility to adapt to market changes.

Royal Mail has argued for the power to raise charges to deliver mail collected by competitors, after losing a number of business contracts over the past year. It claimed this year alone rivals were carrying around 600 million more letters than regulator Postcomm had anticipated when it set a price control (Web news, 26 March 2007).

In response to the review, Alex Batchelor, Royal Mail's marketing director, said: "Royal Mail knows that if we are to succeed in a very tough and open market we urgently need to modernise and become more efficient. Royal Mail is losing business to rivals whose costs and prices are lower than ours because they have the modern technology Royal Mail urgently needs to install.

"Royal Mail has long argued for lighter-touch regulation and a level playing field on which to compete with large rivals - and we'll continue to press Postcomm on these issues."

The next stage of the review will come in early 2008, when Postcomm will publish detailed policy proposals.


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