Strategy

Royal Mail Group has a clear vision to be recognised as the best delivery company in the UK and across Europe.

This is underpinned by three priorities: capitalising on growth in online retailing to grow our parcels businesses; continuing to mitigate structural decline in the letters market by maximising the value of mail; and by being customer-focused.

Corporate strategy

Our corporate strategy has three priorities:

Being a successful parcels business

The UK parcels market has shown continued growth, thanks to the increase in online retailing. More than half the money we earn comes from our parcels businesses. We are investing in our parcels networks and our tracking technology to meet customer needs. A long-term investment programme in our UK network will ensure we have the capability we need to accommodate the changing traffic mix from letters to parcels.

Managing the decline in letters

We have already transformed how we sort letters, automating the handling process in our Mail Centres. We are continuing with our programme of delivery revisions, changing the way we deliver to more than 29 million addresses across the UK. This also allows us to effectively manage growth in parcel volumes and at the same time improve our productivity. Changes to the regulatory framework in 2012 have given us greater commercial freedoms. These enable us to respond better to market changes. We have already taken steps to simplify and improve many of our propositions. Marketing mail is one of the most successful ways to reach out to customers. We launched MarketReach in 2012 to transform our direct marketing offering. We are now developing ways to help our customers derive more value from all the mail they send, like Mailmark, which combines a new barcode with innovative optical technology and digital performance reporting.

Being customer focused

In this competitive market, our customers have a choice. We are developing the services we offer to ensure they meet our customers’ needs. We are investing in technology to provide the tracking services our customers expect. We are working with our customers to anticipate times of peak demand and ensure we can deliver the high quality service they need. We have achieved a great deal. But more remains to be done to safeguard the sustainability of the Universal Service and ensure we can continue to provide high quality jobs for our people.

Priority one - Being a successful parcels business

 

Definition

  1. To leverage our network reach and our strong brand to ensure we can capture increasing parcel volumes as a result of the growing popularity of online retailing in the UK.
  2. To use our new regulatory freedom for parcels to develop new offerings and compete more effectively in the marketplace.
  3. To ensure our combined core UK network can accommodate increasing parcel volumes and meet customer needs through the completion of our modernisation programme.

Key initiatives

  • Investing in our technology: from how customers access our networks through to tracking and management information;
  • Progressing our core UK network transformation: improving safety, customer service, quality and productivity to deliver parcels effectively and efficiently;
  • Enhancing products and services: expanding services, such as Delivery to Neighbour, to give parcel recipients more choice and convenience;
  • Expanding Parcelforce Worldwide: increasing the capacity of the network to meet customer needs; and
  • Strengthening our competitive position in the countries where GLS operates.

 

Priority two - Managing the decline in letters

 

Definition

  1. To manage the structural decline in the letters market by becoming more productive and effective, and ensuring we remain the carrier of choice for delivery of letters in the UK.
  2. Harnessing the new regulatory freedoms we have won to ensure we make a reasonable, commercial return for the letters we deliver.
  3. Making marketing and business mail more valuable to our customers by increasing the data and insight they can gather.

Key initiatives

  • Continuing to focus on improving operational productivity through the automation of the sequencing and sorting process and completing our programme of delivery revisions;
  • Demonstrating to customers the value of mail in customer retention and when used in conjunction with other media;
  • Building on the successful launch of MarketReach last year to develop new ways to prove the value of mail in a digital world and enable businesses to take advantage of it; and
  • Investing in barcode tracking services to provide far greater information and value for bulk mail customers.

 

Priority three - Being customer focused

 

Definition

  1. Putting the customer at the heart of everything we do to ensure that we continue to be the delivery partner of choice.
  2. Being easy to do business with, and building new propositions that truly meet customer needs.

Key initiatives

  • Extending and enhancing our services: launching the UK’s largest ‘click & collect’ network; working with the Post Office as it lengthens opening hours in many branches; simplifying our international product portfolio;
  • Tackling the root causes of complaints: focusing on the four areas that cause most dissatisfaction – ‘Something for you’ cards, redelivery, redirection and misdelivery; and
  • Transforming our digital channels to serve customers better.

 

General Logistics Systems strategy

GLS aims to be a high-quality service leader in the parcels segments in which it operates. Its strategy is to continue to invest in systems, products and processes to enable it to capture a larger share of B2C opportunities in the geographic markets it covers.

GLS already has a strong presence in the European business-to-business parcels market. In 2012-13 business-to-consumer parcels represented approximately one quarter of GLS volumes and GLS will continue to look for opportunities to strengthen its offering of delivery options within the B2C segment. GLS will also focus on continuing to expand the footprint of the GLS Network into new countries through both organic growth and strategic acquisitions of established businesses. In particular, GLS will continue to monitor and look for opportunities in emerging markets in Europe.

GLS’s ground-based network and pan-European reach mean it is already benefiting from cross-border growth in parcel volumes. It has a broad customer base which means it is not dependent on specific accounts to maintain and increase parcel volumes.

Approximately 70% of GLS’s revenue is generated in its three major markets: Germany, Italy and France. GLS provides high service levels, supported by its tracked, cross-border technology platform and European reach.

GLS brings a number of strategic benefits to the wider Group, including an important level of geographical earnings diversification, its ability to generate cash which can be used to fund investment in other parts of the Group’s business, a means to capture growth in European cross-border parcel traffic and opportunities for sharing operational excellence within the Group.