What implications will the Royal Mail strike have on UK retailers?

Royal Mail workers have voted to strike over job insecurity and employment terms and conditions, raising concerns that there could be walkouts in the run-up to Christmas. The announcement comes as we approach the retail industry’s crucial Q4 period where Black Friday, Cyber Monday and Boxing Day sales all take centre stage.

Currently, Royal Mail holds 51 percent of the British parcel market, meaning the strike could have severe implications for online orders and deliveries. Royal Mail claims that modernisation is needed because of changing consumer and business trends as parcel delivery volumes grow due to the convenience of online shopping, and letters decline because of email and online bill payment services.

Many businesses are banking on this critical period to boost their revenue for the year. BlackFriday.com predicts online spending will surpass £9.2bn, with 61% of shoppers planning to make their purchases online. This could have a detrimental effect, particularly for merchants with existing partnerships with Royal Mail. The shockwaves of this announcement are already being felt throughout the industry.

According to Bearing Point, retailers may be forced to shift more than eight million parcels to other couriers. This would set retailers back £8m in costs, which they won’t be able to reclaim. Customers will also be wise to this, potentially resulting rising in high cart abandonment rates if delivery alternatives are not presented.

Fuelling footfall in-store

The looming threat of the strike and the possibility of undelivered packages could lead consumers to shop on the high street. Consumers tend to warm to personalised offers as well as exclusivity. Merchants can capitalise on this by offering exclusive in-store discounts, which could offer a way of killing two birds with one stone by driving footfall while negating deliveries.

Online brands are now reluctant to open bricks-and-mortar stores, with shops closing at an alarming rate due to increasing rent prices. However, several brands have bucked the bleak trend of late. Online sleep brand Casper announced an in-store partnership with John Lewis earlier this summer, while grooming company Harry’s partnered with Boots, seeing that its products be sold in over 300 Boots stores. Opportunities do exist.

Click and Collect

With the festive season around the corner, merchants may not have sufficient time to secure a partnership with an alternative courier service. Instead, they could explore avenues which utilise both online and high street stores, such as “click and collect”. Click and collect has witnessed a surge in popularity of late and isn’t showing any signs of slowing down.

68% of shoppers now use in-store collection services. Customers are now beginning their journey online where they are browsing products and making the initial purchase. This journey ends in-store with the collection. However, customers are also making additional purchases from the stores when they make collections, ultimately driving up cross sales for retailers.

Barclaycard revealed that a third of retailers offering a click and collect service have experienced increased in-store sales. Globally, the service is considered the most valuable aspect of the retail shopping experience for four in 10 consumers, according to i Vend Retail.

Additionally, 85% of consumers admitted to making additional purchases in-store as a result of collecting their online parcels according to Barclaycard. Several retailers have jumped onboard with this trend. For instance, John Lewis recently extended its click-and-collect trial with the Co-op, while Amazon now allows customers to collect packages from Next stores. This shows that consumers want more retailers to pair up to allow the collection of parcels from more convenient locations.

The point of no returns

During the strike, delivering parcels to consumers is only half of the problem. Whilst many
merchants use a multitude of couriers, these will have differing delivery and returns policies.

Research by post-purchase customer platform Navar found that 69% of consumers do not buy online if they have to pay for returns. However, the threat of this strike could make it more difficult for retailers to maintain their returns services at the existing standards, and also be financially viable.

Online retailers must also think strategically about how they will manage their returns policy during the strike, especially given this time of year when businesses begin to handle a greater volume of returns.

Another option that retailers could undertake is partnering with a store-based parcel delivery and returns service. Collection points or ‘drop off delivery’ stores are often in the form of convenience stores and corner shops that exist on the high street.

Consumers can pick up their deliveries more flexibly as these stores are open seven days a week and later than your standard post office. That way, merchants can drop off a series of parcels in one delivery rather than going door to door.

Every cloud…

Whilst the Royal Mail strike can potentially cause significant disruption during this critical period, it’s not all doom and gloom. There is still uncertainty surrounding the dates as to when the strike is set to fall, so potentially the disruption may not affect crucial busy periods.

Merchants can also find other ways to negate risks to ensure they are still generating sales, like offering choice of delivery, collection and returns services which are convenient for the customer. These can all be utilised to drive purchases and increase cross sales during the crucial festive season.

Mark Adams, VP of BigCommerce EMEA