Supply Chain

Royal Mail strikes could cost retailers £8m

A possible Black Friday Royal Mail strike could force retailers to attempt to pass on 8.5 million parcels, or 105,000 van loads of parcels to other carriers – which could cost them around £8m in higher postal costs.

That is according to management consulting company Bearingpoint, who revealed that if the Communications Workers Union (CWU) opt for a Royal Mail strike, the first in over a decade, to coincide with Black Friday other parcel carriers “may not cope” – as they don’t carry the level of additional capacity or infrastructure to respond to a strike at such short notice.

The dates of the strike are yet to be announced, but there are “mounting fears” that the union could opt to cause the most chaos possible by targeting either the Black Friday sales, or the Christmas post, Bearingpoint said.

As a result, it warns that “millions” of retail orders will remain undelivered until after the strike ends, or parcels that can be delivered by other parcel carriers will cost retailers “significantly more”.

For instance, it said even if carriers could deliver around half of the Royal Mail parcels (circa 4 million parcels) from Black Friday, this could cost them an additional £8m, which it added would be “impossible” to recoup from customers.

Stuart Higgins, a partner at BearingPoint, said: “A Black Friday strike could represent a major threat to UK retail at a time when the sector is desperate for a much-needed sales boost following a very lacklustre performance this year.

“Let’s not forget that this final quarter of the year is the biggest single sales period by far for UK retail and the majority of UK retailers generate all their annual profits during this three-month peak period, which includes the critical Black Friday / Cyber Monday weekend.”

He added: “Under normal circumstances, it might be expected that other parcel carriers could absorb the volume that Royal Mail would normally distribute.

“However, most parcel carriers simply do not carry that level of additional capacity to be able to respond at such short notice as they’re already operating at peak, with every sinew of their operating model straining to deliver on time for this concentrated peak of activity.”

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