Royal Mail sets its sights on delivering more junk mail

By Russell Hotten
Business reporter, BBC News

Royal Mail wants more junk mail contracts to boost revenues

Royal Mail has always had a difficult relationship with junk mail.

In 2006 a postman called Roger Annies was suspended for telling customers on his round about the best way to opt out of receiving junk mail.

Delivering junk mail is a nice earner for the Royal Mail, and postal bosses objected to staff telling people how they could get around it.

Indeed, one of Royal Mail management's big frustrations was that there was a cap on the amount of unsolicited junk that postmen could deliver.

Well, this could be about to change.

On Monday Royal Mail and the postal union declared peace in a long-running dispute over pay and modernisation that had sparked a series of strikes.

But buried in the 79-page agreement - which still has to be voted on by its members - is a pledge from both sides to lift restrictions on deliveries of what the Royal Mail calls "unaddressed mail".

Many people find junk mail extremely annoying Nigel Woods, Consumer Focus

It is a big concession by the Communication Workers' Union, which was previously adamant that postmen deliver a maximum of three junk items to each household each week.

The reason for the limit? The CWU wanted to ensure that mailbags did not get overloaded.

Now the "three items per week cap will be removed", says the agreement, and delivery "will be spread across six days". In other words, junk mail will also be delivered on Saturdays, unlike currently.

Deluged

Householders are notoriously hostile to junk mail, and Nigel Woods, postal expert at Consumer Focus, probably summed up the public mood, saying: "Many people find junk mail extremely annoying.

"Royal Mail must approach this responsibly and ensure that customers aren't deluged with unwanted mail," he said.

But as Royal Mail and CWU point out, direct mail is an important revenue stream.

And in an age when the Royal Mail is saddled with increased competition, under-investment, and a £10bn-black hole in its pension fund, the organisation must fight for every bit of business it can get.

According to the CWU: "Royal Mail and CWU recognise that the unaddressed door-to-door market provides an opportunity to grow volume which will potentially help to protect jobs and bring additional revenue into the business."

Postal strike

Royal Mail does not strip out in its accounts how much revenue junk mail generates from contracts with commercial organisations.

But a possible illustration of the importance of these contracts were newspaper reports that, during the postal strike at Christmas, postmen were encouraged to clear the backlog of junk mail before standard letters.

Royal Mail, however, says the reports were "completely untrue".

According to latest figures from the Direct Marketing Association (DMA), some 9 billion items of unaddressed mail were sent in 2008.

We are looking to increase our market share, not increase the total number of items Royal Mail spokeswoman

These include things like pizza flyers and items from local authorities. About 3.3 billion items of junk mail that were addressed were also sent.

It is this unaddressed market that the Royal Mail is now targeting. The company does not disclose how many unaddressed items it delivers, though it is thought to be a tiny fraction of the total.

A lot of unaddressed items - restaurant flyers, for example - are delivered by one-man-band operations.

Other unaddressed items might be delivered by UK Mail, the fast-growing Royal Mail rival that now handles 17% of Britain's post and parcels.

Lucrative deals

Royal Mail is not necessarily looking for contracts to deliver pizza flyers, but there are plenty of other lucrative deals to be had.

During local and general elections, the amount of unaddressed mail soars. Says Royal Mail: "Often people involved in elections don't want to buy electoral lists and print huge numbers of labels. We can deliver things for them."

It insists that removing the cap on junk mail deliveries will not lead to householders receiving more items.

It points out that health and safety rules mean postmen still have weight limits on the amount they can carry. Increasingly, though, postmen do use trolleys rather than bags.

Royal Mail also emphasises that the number of unsolicited items being delivered is falling. "We are looking to increase our market share, not increase the total number of items," the company said.

'Carpet-bomb'

The DMA argues that an important reason why junk deliveries are falling is that "companies are becoming more sophisticated at targeting householders. They no longer just carpet-bomb them," said a spokeswoman.

However, Consumer Focus's Mr Woods believes the fall has more to do with the recession, than better targeting. "Now that the recession is over, I'm hearing evidence that direct mail is back on the rise," Mr Woods said.

Whatever the growth trend, Royal Mail should certainly be able to snatch more business away from rivals.

After all, the organisation already delivers to most houses most days. "It has the economies of scale to offer a cheaper service," Mr Woods said.

And for householders dreading the thought of more unsolicited mail, what is the answer?

"Just putting sticker on your door saying, 'no junk' is unlikely to be enough," Mr Woods said. "Look for [information about] the opt-out schemes on the Royal Mail and DMA websites."

Mr Annies, it seems, had it right all along.