Royal Mail’s masterplan for Sunday parcel boom

Royal Mail is paving the way to its first full-scale Sunday parcel delivery service as it enters a fierce battle with rivals. 

Bosses have drawn up a ‘road map’ that could build its Sunday proposition tenfold in an effort to put the 506-year-old business at the forefront of weekend online shopping. 

The group has hailed the plan a ‘revolution’ similar to the end of Sunday trading restrictions for shops in the 1990s. It would also mark an end to the frustration of waiting days for parcels to arrive until after the weekend. 

The strategy is part of chief executive Simon Thompson’s plan to transform the business and take market share from competitors such as Amazon, DPD and Hermes, which is now known as Evri. 

Internet purchases surged during the pandemic. B u t demand has been on the wane with the end of lockdown restrictions. Royal Mail has also faced decades of dwindling letter volumes as more mail is sent digitally. 

The group’s commercial director Nick Landon said the plan was to stoke demand for more weekend orders from shoppers and to grow the overall parcel delivery market. 

Royal Mail, similar to other carriers, has offered a restricted Sunday service for around 75 larger retailers. 

But Landon said Royal Mail would this week open the service to any retailer – creating a platform for shops of all sizes to provide the service to millions more customers. 

It means online shoppers would get the opportunity to order items on a Friday night or Saturday for delivery on Sunday. 

He said the scale of the Royal Mail service could make weekend shopping for Sunday parcel deliveries the norm. He compared it to the seismic transformation of the high street in the 1990s when shops were allowed to trade on Sunday for the first time. 

Landon added: ‘We are the biggest delivery firm for parcels, and our ambition – and the reason we’re building at this scale – is to be at the forefront of that for Sunday deliveries.

‘Order any day of the week and you know you can get your item next day.

‘We are seeing clear demand for this from consumers.

‘The world of physical retail has had seven-day shopping for the past 30 years. We see that opportunity for online shopping and deliveries,’ he said.

If demand meets expectations, Royal Mail will double the number of Sunday deliveries by the end of the year as part of the acceleration of the programme. ‘What we are doing today is to make sure we can deliver the scale. If more people want to use it, we can build it from there,’ he said. ‘We are trying to open up this capability for every business, every consumer. 

‘So, for us, this is the start of a revolution. This is our road map to Sunday being a full delivery day. It won’t happen overnight. But this is the first step.’ 

Landon said the plan initially includes its Tracked 24 ‘next day’ service. But Sunday deliveries could then be offered as part of its other services as demand accelerates – including its two-day and Special Delivery parcels, he said. Royal Mail’s share price has fallen 38 per cent so far this year to £3.24 as revenues plateaued and profits contracted. There are concerns rising that fuel and labour costs could squeeze margins further. 

The former State-owned company is currently in heated negotiations with unions over pay. 

Its offer – a 5.5 per cent pay rise if targets and conditions are met – is opposed by the Communication Workers Union. 

The union wants a ‘no strings’ pay rise in line with inflation – now expected to hit 10 per cent by the end of the year If no agreement is found by the end of this month, the CWU says it will call a strike ballot. A strike would be the first in almost a decade. Royal Mail has also asked workers to commit to Sunday shifts to cater for the new service.

Landon said that he was not part of the negotiating team on pay, but he added that ‘the current roll-out has been agreed with unions’.

The pressure Royal Mail faces on costs has attracted interest from ‘short sellers’ over recent months – investors betting that the share price will fall. But Royal Mail shares could find support from its largest shareholder, billionaire Daniel Kretinsky. He holds 21 per cent of the stock. 

Landon said the Sunday delivery plan so far did not include letters, but added: ‘I never say never on anything. I won’t say no to expanding this to other services if I can see a market demand. To some extent, this is, ‘If you build it, they will come.’ 

‘As we open this up to all retailers, eventually, that will allow us to access about ten times the volume we’re processing for Sunday deliveries.’