Royal Mail (RMG.L) is introducing a Sunday parcel delivery service for major retailers as consumers increasingly turn to online shopping amid coronavirus restrictions and there is a surge in demand “for more frequent and more convenient deliveries.”
“The trial is the first salvo in Royal Mail’s move to tap into the seven-day-a-week delivery market as more and more consumers expect Sunday deliveries as part of their online shopping experience,” Royal Mail said.
In the last year, Royal Mail said it has processed “unprecedented parcel volumes,” delivering 496 million parcels in the third quarter ending 27 December 2020.
The seven-day delivery service for major retailers is one of the ways it believes it can respond to the marked increase in parcel volumes and changing customer expectations.
Nick Landon, chief commercial officer at Royal Mail, noted that "the last year has reset so many customer expectations and the desire for even more convenient and even more frequent parcel deliveries has certainly been one of them.”
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Meanwhile, the construction of Royal Mail’s second parcel hub is underway in Daventry in Northamptonshire.
Once complete, the hub will be the size of “more than 10 football pitches” and have the capacity to process over 1 million parcels per day, making it the largest Royal Mail parcel hub in the UK.
Earlier this week, Royal Mail said profits are likely to be higher than previously expected. Revenues are now set to be £900m (£1.3bn) higher than last year – at around £8.6bn – and, for the entire group, adjusted operating profits will hit around £700m, compared with £325m a year ago.
The cost of a major restructuring is also expected to come in below expectations, costing around £90m instead of an original estimate of £140m.
A major restructuring announced in June 2020 is nearing completion and is expected to save £15 million this year, with targeted annual savings of £130m after that.
The update comes just a month after another profit upgrade, when bosses said they would retain around 10,000 of the 33,000 temporary workers who helped Royal Mail out over the festive period.
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