Royal Mail’s warning that GDPR nervousness could lead to a decline in direct mail has proved all too accurate after the company revealed that volumes for the medium have fallen by a worrying 7% in the six months to the end of September.
Its latest trading update shows profits have fallen from £77m to £33m in the last six months, and that excluding political parties’ election mail, the number of addressed letters being sent across the UK fell by 7%, as did corresponding total sales from letters. By contrast, revenues from parcels rose 6%.
The direct marketing industry had been hoping that Information Commissioner’s Office guidance – released earlier this year – confirming that companies will be able to use legitimate interests to contact consumers by post would provide a boost to the sector.
The company has also started trials of a new scheme, called “Partially Addressed Mail”, which is a GDPR-compliant, standard addressed direct mail product with new customer targeting options. But the scheme has yet to gain regulatory approval.
Rico Back, group chief executive, admitted that the last few months had been “challenging” and that it was “disappointed” with its performance, but preparations for the key Christmas season was going “very well”.
He said: “We have put in place a range of actions to improve our performance. We are reconfirming our commitment to our revised £100m cost avoidance target and adjusted group operating profit before transformation costs of £500m – £550m for the financial year.
“We will update the market next year on our strategy. There will be a greater emphasis on how we connect customers, companies and countries through our domestic and international businesses. There will be a clearer focus on financial performance and management accountability.”
One industry source said: “By all accounts direct mail should be seeing a renaissance not a decline. Royal Mail should be grabbing this opportunity with both hands and investing more in innovation to ensure the market remains strong.
“Royal Mail MarketReach [the business division] has been banging the drum but maybe it needs more support to get its message across to a wider audience.”
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