HOW THE ROYAL MAIL STOLE CHRISTMAS…Published on October 13th, 2009 by PressUK
NATIONAL POSTAL STRIKE ACTION SET TO COST UK ECONOMY £1.5 BILLION IN RUN UP TO CHRISTMAS
13th October 2009: Consumers and retailers alike are bracing themselves for the impact of a series of Royal Mail nationwide strikes which would cripple deliveries and cause havoc this Christmas. The move is seen as a ‘death wish’ at a critical time for retailers and the UK economy. The estimated cost of the walkout would be £1.5 billion, with the retail industry bearing the brunt of this at a cost of £270 million, according to new analysis commissioned by shopping comparison site Kelkoo.
The strike could have costly ramifications for both consumers and businesses. It would force online retailers to use more expensive delivery services in order to uphold their service standards and to help people get their shopping on time, resulting in price increases for consumers. Given their reliance on the Royal Mail to fulfil orders, online retailers would be worst hit with a potential cost of £220million, while high street retailers would face a bill of only £50 million. This is down to the fact that £580 million worth of items are ordered online and delivered every week.
For example, delivery prices for some of Kelkoo’s top retailers would go up from £1.90 per package with Royal Mail to around £4.80 with Parcel Force – a 153% increase. It is the smaller businesses who are likely to be worst hit since 98% of their post goes through the Royal Mail. Additionally, companies which rely on payments by cheque will feel the full force of this strike, since £75 billion of cheques are sent in the post annually and a delay of a week could prove fatal to hard hit companies.
Importantly for retailers, according to Kelkoo research, 94% of shoppers said they would be unlikely to place further orders with a retailer that failed to deliver. Consumers are being advised to post cards and gifts three weeks early to ensure they avoid disappointment. Meanwhile, major retailers like Amazon and eBay have started to make their own plans to deliver goods in the event of a strike.
The timing of strike action could not come at a worse time. Forecasts from the Confederation of British Industry (CBI), Organisation for Economic Co-operation and Development (OECD), and the Bank of England indicate that the economy is now emerging from recession and growth is likely over the next few quarters, although likely to be uncertain and weak. It all comes at a time when businesses and the Government are desperately working to grow the UK economy and just as the retail industry was seeing some initial shoots of recovery.
In September, figures from the CBI showed a year on year uplift of 4% for sales in the first half of September, following four months of year on year decreases. Today, the British Retail Consortium (BRC) is also expected to report a rise in UK retail sales on trend with these figures. However, Kelkoo is warning that any upside will be affected by the losses incurred from future postal strikes.
Christmas and the January sales are critically important for retailers, accounting for 23% of annual retail sales over a ten week period. A poor Christmas, as seen in 2008, led to 20 major retailers going into administration, the loss of 40,000 jobs, and shop voids rising to 10% in February 2009.
In addition to the to the £1.5 billion blow the strike could cost the UK economy in the lead up to Christmas, it has been estimated that the total cost of lost orders, bank charges and administration costs incurred by consumers will exceed £300 million as the postal backlog mounts.
Bruce Fair, Managing Director of Kelkoo UK, comments: “The timing of the strike beggars belief. In one fell swoop it threatens to bring the postal network to a standstill, spoil the beginnings of the retail sector?s financial recovery, increase prices for cash strapped consumers and cause a further backlog which already stands at some 30 million items. To add insult to injury, it is speculated that consumers will also be hit with a 3p stamp increase to fill the hole in Royal Mail finances.
“However, it is not all bad news. Although the postal strikes are bound to have repercussions, the BRC is today expected to announce an increase in retail sales for September on last month’s figures after a tough period, boding well for the busiest sales period of the year. In addition, in its latest Shop Price Index report issued last week, the BRC announced that the cost of non-food produce has fallen for the tenth consecutive month.
“Price deflation on non-food items and the big discounts currently available on clothing, electricals, gadgets and home furnishings have provided a much needed cash injection for struggling retailers and have been a contributing factor in the biggest jump in consumer confidence in the last 18 months.
“Consumers should not rest on their laurels and count on prices falling any further but should make the most of discounts while they can. People shouldn’t be put off ordering online as there are always savings to be made, especially on items with a higher price tag. Shopping now will help to spread the cost of Christmas and protect shoppers against price rises on the most popular gifts.”
Kelkoo’s Top Tips to Survive the Postal Strike:
1) Look for the IDIS (Internet Delivery is Safe) badge when shopping online as this shows the retailer has met industry standards for delivery services.
2) Always check with your retailers which delivery service they are using and if it will result in any additional costs.
3) Find out if you will need to sign for deliveries. Having parcels delivered to your work address can save time and help you avoid missing deliveries.
4) Use special delivery services which offer guaranteed delivery times but be aware of the potential extra costs and size limits that some providers impose.
5) Plan and send your Christmas mail as early as possible ? with the current uncertainty it is recommended to send any gifts or cards 3 weeks in advance. But as it stands, the last First Class postal date for Christmas is Monday 21st December and Friday 18th December for Second class deliveries.
6) For messages and written mail, seek an alternative means of communication altogether. If you are awaiting important messages in the post try to make direct contact over the phone or email.
7) Keep tabs on the exact dates of the postal strike and wait until after the strikes to post mail. This means your mail won’t become part of the back-log of undelivered post.
8) Look for click-and-collect services where you can order online and then collect from high street branches cutting out the postal strike altogether.
9) Research your online Christmas shopping early and check delivery times with your e-tailer as these times will differ. Shopping early may also save money on the cost of your gifts.
10) Use PayPal as this should mean you can select the delivery address, and can have items sent to friends or family if you cannot take delivery yourself.