6 - Post Figure 6.1 UK Postal Services Industry Key Metrics

6 - Post Figure 6.1 UK postal services industry key metrics

UK postal services industry 2008 2009 2010 2011 2012 2013

Addressed mail volumes 20.6bn 18.7bn 17.5bn 16.7bn 15.5bn 14.8bn

Addressed mail revenues £7.0bn £6.8bn £6.7bn £6.9bn £7.3bn £7.5bn

Proportion of access mail in total mail 25% 33% 40% 43% 46% 49%

Letter volumes delivered by operators other n/a 11.8m 11.3m 8.5m 18.0m 56.1m than Royal Mail

Direct mail share of total advertising spend n/a 17.8% 15.9% 14.9% 14.5% 14.1%

Source: Royal Mail Regulatory Financial Statements, Royal Mail Wholesale, Royal Mail Group Annual Reports, AA/Warc, Nielsen. Revenue figures are nominal. Note: Royal Mail calendar year volume figures are derived from Ofcom calculations based on financial year figures in Royal Mail’s Regulatory Statements and unaudited submissions to Ofcom, and are therefore not directly comparable with Royal Mail’s published accounts. Royal Mail figures relate to the "Reported Business”. Other operators’ end-to-end included in ‘Total mail’ since 2009. Prior data are not comparable. Figures are nominal. Figure 6.2

Total items of post sent per month: June 2012 to February 2014 Items sent

2012-13 2013-14 20 15 10 5 0

Month in which items were sent through the post

Source: Ofcom research, Q2 2013-Q1 2014 QC1. Approximately how many items of post – including letters, cards and parcels – have you personally sent in the past month? 3 Figure 6.3

Letters, cards and parcels sent per month: June 2012 to February 2014

Number of letters and cards sent 2012-13 letters and cards 2013-14 letters and cards 2012-13 parcels 2013-14 parcels 16 12 8 4 0

Month in which items were sent through the post Source: Ofcom research, Q2 2013-Q1 2014 QC1. Approximately how many items of post – including letters, cards and parcels – have you personally sent in the past month? QC2. And how many of these items sent in the past month were parcels rather than letters or cards? 4 Figure 6.4

Companies used by residential consumers to send post Proportion of consumers (%) 100 93 88 88 88 80

60 45 44 39 40 32 27 25 24 20 12

0 Q1 Q2 Q3 Q4 Royal Mail Parcelforce Any company other than Royal Mail Source: Ofcom research, 2013 Q:Which, if any, of these companies have you used to send a packet, parcel or letter? Please think about your personal use rather than any use as part of a business. Base: all respondents

5 Figure 6.5 Companies other than Royal Mail used by residential consumers to send post Proportion of consumers (%) 15 13 13 13 11 11 10 9 9 8 8 7 7 7 7 6 6 6 6 6 6 6 6 6 5 5 5 5 4 4 3

0 Q1 Q2 Q3 Q4 DHL FedEx City Link Hermes TNT UPS Yodel Source: Ofcom research, 2013 Q:Which, if any, of these companies have you used to send a packet, parcel or letter? Please think about your personal use rather than any use as part of a business. Base: all respondents

6 Figure 6.6

Letters and cards received per week: July 2012 to March 2014 Number of letters and cards received in past week

2012-13 2013-14 16

Month of interviewing Source: Ofcom research, Q2 2013-Q1 2014 QD1. Approximately how many items of post – including letters, cards and parcels – have you personally received in the past week? QD2. And how many of these items received in the past week were parcels? 7 Figure 6.7

Mail revenue: 2008-2013 Revenue (£m) 8,000 7,514 6,953 7,303 6,837 6,653 6,899 Total market 7,339 6,841 6,744 7,141 6,000 6,697 6,505 6,120 Royal Mail 5,772 5,844 total 5,425 5,475 5,696 4,000 Royal Mail end-to-end Royal Mail 2,000 1,445 1,495 1,080 1,270 access 721 924 157 163 112 140 142 150 Access 0 operators 2008 2009 2010 2011 2012 2013 Source: Royal Mail Regulatory Financial Statements, Royal Mail Wholesale, operator returns to Ofcom, Ofcom estimates. Royal Mail calendar year volume figures are derived from Ofcom calculations based on financial year figures in Royal Mail’s Regulatory Statements and unaudited submissions to Ofcom, and are therefore not directly comparable with Royal Mail’s published accounts. Royal Mail figures relate to the "Reported Business”. Royal Mail end-to-end refers to Royal Mail total mail volumes excepting access. Other operators’ end-to-end included in ‘Total mail’ since 2009. Prior data are not comparable. Figures are nominal. 8 Figure 6.8

Mail volumes: 2008 to 2013 Volume (million items) 24,000 20,577 Total mail 18,651 17,546 18,000 16,676 15,574 15,545 14,764 12,534 Royal Mail end- 10,629 to-end 12,000 9,502 8,299 7,523 Royal Mail 6,105 6,906 7,166 7,228 access 6,000 5,003 7,185

Other operators 12 11 9 18 56 0 end-to-end 2008 2009 2010 2011 2012 2013 letters Source: Royal Mail Regulatory Financial Statements, Royal Mail Wholesale, operator returns to Ofcom, Ofcom estimates. Royal Mail calendar year volume figures are derived from Ofcom calculations based on financial year figures in Royal Mail’s Regulatory Statements and unaudited submissions to Ofcom, and are therefore not directly comparable with Royal Mail’s published accounts. Royal Mail figures relate to the "Reported Business”. Royal Mail end-to-end refers to Royal Mail total mail volumes, excepting access. Other operators’ end-to-end letters included in ‘Total mail’ since 2009. Prior data are not comparable. 9 Figure 6.9

Proportion of access in total mail: 2008-2013 Year on year growth rate of access volumes 39.1% 20.3% 14.8% 2.2% 0.8% -0.6% Proportion of access in total mail volume 50%

40%

30% 46% 49% 20% 40% 43% 33% 10% 25%

0% 2008 2009 2010 2011 2012 2013

Source: Royal Mail Wholesale, Royal Mail Regulatory Financial Statements, Operators’ returns, Ofcom estimates

10 Figure 6.10

Other operators’ end-to-end letter volumes: 2009-2013 Volume (million items) 60

30 56.1 20

10 18.0 11.8 11.3 8.5 0 2009 2010 2011 2012 2013

Source: Ofcom analysis of operators’ returns

11 Figure 6.11

Mail volumes by type: 2008 – 2013 Proportion of type of mail in total volume (%)

100% 5 6 6 6 5 5 6 6 6 6 5 5 8 11 80% 8 9 10 12

29 28 29 29 Social mail 60% 29 28 Publishing 40% Parcels Direct mail 51 52 51 50 50 49 20% Transactional

0% 2008 2009 2010 2011 2012 2013 (estimate)

Source: PricewaterhouseCoopers, The Outlook for UK Mail Volumes to 2023, July 2013 Note: 2013 is PwC estimate.

12 Figure 6.12

UK direct mail advertising spend and share of total advertising: 2009 - 2013 Spend (£m) Share of total advertising spend (%) 17.8% 2000 15.9% 18% 14.9% 14.5% 14.1% 1500 12%

1000 1,798 1,720 1,648 1,570 1,490 6% 500

0 0% 2009 2010 2011 2012 2013 Spend on direct mail Direct mail share of advertising spend

Source: AA/Warc Advertising Expenditure report / Nielsen. Figures are nominal.

13 Figure 6.13

Share of direct mail expenditure, by sector: 2009-2013 Share of spend (%) 40%

31.6% 31.8% 31.3% 29.3% 28.7% 30% Retail Financial 21.2% 20.5% 20.2% 19.2% 20.1% Government 20% Services 18.4% 16.2% 16.8% 17.4% 17.6% Industrial 10% Durables Consumables

0% 2009 2010 2011 2012 2013

Source: AA/Warc Expenditure report / Nielsen

14 Figure 6.14

Value of UK e-commerce sales, 2008-2013 Value (£ billion) 91.0 90 78.2 68.0 58.8 60 49.8 43.8

0 2008 2009 2010 2011 2012 2013

Source: Interactive Media in Retail Group, January 2014

15 Figure 6.15

Service types used for the fulfilment of e-retail: 2012 and 2013 Proportion of parcels (%) 100%

80% 57% 67% Economy 60% Specified day (including next 40% day) Specified time 40% 20% 30%

0% 3% 3% 2012 2013

Source: Ofcom analysis of IMRG / Metapack Delivery Index, January 2012-December 2013. Note: Specified time includes: AM, PM, before 10am, evening and school run. Specified day includes same day and next day. Proportions rebased to exclude international.

16 Figure 6.16

Magazine subscription circulation: 2008-2012 Average subscription circulation (thousands) Share of total circulation (%) 14.7% 14.9% 14.7% 15.1% 15.4% 14.9% 7,500 15

5,000 10

6,112 6,046 6,148 6,229 6,110 2,500 5,462 5

0 0 2008 2009 2010 2011 2012 2013 Subscription circulation Share of total circulation

Source: Mediatel/ABC, 6-monthly net average circulation and subscription sales

17 Figure 6.17

First and Second Class stamp prices Price (p)

100 90 90 93 First Class 80 75 73 66 69 69 Large Letter 61 62 58 60 60 Second Class 60 52 51 48 47 46 Large Letter 42 41 40 39 53 First Class 40 34 36 50 50 36 32 20 30 Second Class 24 27

0 2007 2008 2009 2010 2011 2012 2013 2014

Source: Royal Mail. Figures are nominal. Prices refer to Royal Mail First and Second Class Standard and Large Letter list prices for letters up to 100g,

18 Figure 6.18

Number of items sent per month Mean number of items sent per month 6.7 4.3 7.4 8.4 Items of post sent per month (% of respondents) 100% 1 6 43 7 7 8 9 11 80% 20 26 Don't know 27 30 21+ items 60% 19 11-20 items 19 19 5-10 items 40% 25 18 21 3 or 4 items 19 17 20% 1 or 2 items 29 20 17 16 None 0% Adults 16+ 16-34 35-54 55+ Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QC1. Approximately how many items of post – including letters, cards and parcels – have you personally sent in the last month? 19 Figure 6.19

Number of parcels sent per month Mean number of parcels sent per month 0.9 0.8 1.0 0.9 Parcels sent per month (% of respondents) 100% 1 31 1 41 4 6 5 Don't know 6 8 5 80% 19 17 21+ parcels 19 20 11-20 parcels 60% 5-10 parcels

40% 73 3 or 4 parcels 70 71 65 1 or 2 parcels 20% None 0% Adults 16+ 16-34 35-54 55+ Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QC2. And how many of these items sent in the last month were parcels rather than letters or cards?

20 Figure 6.20

Types of mail sent in the past month Proportion of consumers (%)

71 63 Personal mail 70 79

58 16+ 54 16-34 Formal mail 63 56 35-54 55+ 39 42 Parcels 43 33

0 10 20 30 40 50 60 70 80 90 Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All who have personally sent any items of post in the last month (n = 3817 adults 16+, 899 16-34, 1357 35-54, 1561 55+) QC5. Which of these types of mail would you say you have personally sent in the last month by post? (MULTICODE) 21 Figure 6.21

Types of mail sent in the past month Proportion of consumers (%) 80 62 60 54 55 46 42 45 40 38 39 40 41 40 34 34 37 30 31 31 31 32 25 24 22 22 19 20

0 Formal letters Payments for Personal letters Invitations/ Larger parcels Smaller parcels bills greetings cards/ postcards Adults 16+ 16-34 35-54 55+ Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All who have personally sent any items of post in the last month (n = 3817 adults 16+, 899 16-34, 1357 35-54, 1561 55+) QC5. Which of these types of mail would you say you have personally sent in the last month by post? (MULTICODE) 22 Figure 6.22 Percentage of respondents reporting an increasing or decreasing amount of post sent in the past two years Proportion of consumers (%)

Increase Decrease 30 25 23 25 21 22 20 15 14 15 12 12 10 5 0 Adults 16+ 16-34 35-54 55+ Net increase: 6pp -8pp -11pp -13pp Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QC10. Compared with two years ago, would you say that the number of items you send through the post has... increased greatly, increased slightly, stayed the same, decreased slightly, decreased greatly?

23 Figure 6.23

Methods of communication being used instead of post Proportion of consumers (%) 100 80 80 76 65 60 47 38 40 36 32 27 29 26 29 25 20 19 19 22 17 16 16 14 20 12 9 10 8 9 12 9 4 6 7 3 7 0 Email Text Mobile Landline Social In-person/ Instant None in messaging/ phone calls phone calls networking face-to-face Messaging particular SMS sites/ apps Adults 16+ 16-34 35-54 55+ Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All who say that the number of items sent by post has decreased, compared to two years ago (n = 1030 adults 16+, 180 16-34, 368 35-54, 482 55+) QC13. As your use of post has decreased compared with two years ago, which, if any, of these other forms of communication are you using more instead of post? (MULTICODE) 24 Figure 6.24

Number of items received per week Mean number of items received per week 8.7 7.3 9.7 9.1 Items of post received per week (% of respondents) 100% 6 43 7 7 8 9 11 80% 20 Don't know 26 27 30 21+ items 60% 19 19 11-20 items 19 40% 25 18 5-10 items 21 3 or 4 items 19 17 20% 1 or 2 items 29 20 17 16 None 0% Adults 16+ 16-34 35-54 55+ Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QD1. Approximately how many items of post – including letters, cards and parcels – have you personally received in the last week? 25 Figure 6.25

Number of parcels received per week Mean number of parcels received per week 0.8 0.9 0.9 0.5 Number of parcels received per week (% of respondents) 100% 3 3 4 52 Don't know 6 6 9 80% 19 21+ parcels 22 25 22 11-20 parcels 60% 5-10 parcels

40% 74 3 or 4 parcels 67 64 64 1 or 2 parcels 20% None 0% Adults 16+ 16-34 35-54 55+

Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QD2. And how many of these items received in the last week were parcels rather than letters or cards?

26 Figure 6.26

Proportion of consumers reporting delivery of parcels, by company Company parcels delivered by (% of all who have received a parcel in the past week)

80 % Only Royal 71 Mail 60 % 10% Royal Mail 40 % and any 19% other/s 20 % 9 8 7 50% Only other/s 6 6 4 4 4 0 %

21% Don't know

Source: Ofcom Residential Postal Tracker, Q4 2013-Q1 2014 Base: All who have received a parcel in the last week (n = 796 adults 16+) QD17. Thinking of the parcels that you have received in the last week, which of these companies delivered the parcels? (MULTICODE) Chart shows companies mentioned by more than 1% of those receiving any parcels in the past week 27 Figure 6.27

Categories of mail received in the past week Proportion of consumers receiving each type of mail (%) 100 87 82 82 80 72 72 76 67 56 60 51 16+ 45 45 44 44 48 46 39 39 42 38 16-34 40 31 35-54 20 55+

0 Personal mail Direct mail Transactional Parcels Publications mail Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QD4. Please think about items that are addressed to you personally rather than leaflets or charity collection envelopes or bags that may come through your letterbox. Which of these types of items would you say you have personally received through the post in the last month? (MULTICODE) 28 Figure 6.28

Types of mail received in the past week Proportion of respondents who have received each type of mail (%)

Bills/ invoices/ statements 82 Standard circulars 53 Letters from organisations you know 48 Addressed direct mail 46 Catalogues/ brochures 38 Larger parcels 32 Invitations/ greetings cards 32 Smaller parcels 24 Personal letters 24 Subscription magazines 17 0 20 40 60 80 100 Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QD4. Please think about items that are addressed to you personally rather than leaflets or charity collection envelopes or bags that may come through your letterbox. Which of these types of items would you say you have personally received through the post in the last month? (MULTICODE) 29 Figure 6.29

Awareness of the price of a First Class stamp Proportion of respondents (%) 100% Don't know 31 32 80% 34 39 Incorrect price 10 60% 13 14 - over 60p 15

40% 38 Correct price - 35 28 39 60p

20% Incorrect price 18 19 20 16 - under 60p 0% Adults 16+ 16-34 35-54 55+ Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QF1. As far as you know, how much does it currently cost to send a standard letter by first class using a stamp? (SINGLE CODE) 30 Figure 6.30

Awareness of the price of a Second Class stamp Proportion of respondents (%) 100% Don't know 80% 42 49 56 49 Incorrect price 60% - over 50p 6 5 4 40% 5 Correct price - 22 22 29 15 50p 20% Incorrect price 24 24 24 23 - under 50p 0% Adults 16+ 16-34 35-54 55+ Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QF1. As far as you know, how much does it currently cost to send a standard letter by second class using a stamp? (SINGLE CODE) 31 Figure 6.31

Perception of value for money of First and Second Class stamps Total who agree First or Second Class stamps are good value for money 54% 46% Proportion of respondents (%) 100% 10 12 Don't know 80% 19 22 Very poor 60% 17 17 Fairly poor 40% Neither good 36 32 nor poor Fairly good 20% 18 14 Very good 0% First Class Stamp Second Class Stamp

Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+) QF3/4. It currently costs 60p/50p to send a standard letter First/ Second Class within the UK. How would you rate the Royal Mail's First/ Second Class service in terms of value for money? (SINGLE CODE) 32 Figure 6.32

Attitudes to post: proportion of consumers agreeing with each statement

Adults 16-34 35-54 55+ 16+ I love to send and receive letters and cards 60 53 59 69 I prefer to send letters or emails to companies rather than make a 61 63 65 56 phone call, so that I have a written record I prefer to send emails rather than letters whenever possible 55 71 61 33 I only use post if there is no alternative 40 49 41 31 I send fewer letters by post now due to the cost 27 24 28 29 I would feel cut off from society if I can't send or don't receive post 53 45 51 64 I only send my mail First Class if it needs to get there the next day 48 44 44 56 I trust Second Class post to get there in a reasonable timeframe 62 61 58 69

Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QH2A-H. Agreement with statements about sending/ receiving post

33 Figure 6.33

Reliance on post as a way of communicating Proportion of respondents (%)

100% 6 6 7 5 Don't know 17 16 16 80% 19 Not at all reliant 11 13 9 11 60% Not very reliant 38 41 42 40% 43 Neither

Fairly reliant 20% 32 25 19 23 Very reliant 0% Adults 16+ 16-34 35-54 55+

Source: Ofcom Residential Postal Tracker, Q2 2013-Q1 2014 Base: All respondents (n = 4823 adults 16+, 1294 16-34, 1617 35-54, 1912 55+) QE1. How reliant would you say you are on post as a way of communicating? (SINGLE CODE)