Royal Mail to introduce parcel lockers in push to keep pace with rivals

Royal Mail is planning to introduce parcel lockers that will allow people across the UK to collect their own online shopping orders, as the company races to modernise and keep up with rivals such as Amazon.

Nick Landon, chief commercial officer, told the Financial Times that the former state-owned group was “actively working” on installing lockers that will store parcels until collection by customers, copying a service offered by the US ecommerce company and other competitors.

The proposals are the latest attempt by the 507-year-old postal service to meet the growing demand for 24-hour online shopping deliveries. Royal Mail remains the UK’s largest delivery group, but it has lost market share as postal workers resisted plans to change working practices and the company struggled to adapt to the changing market.

The lockers — which allow consumers to collect online purchases at their own convenience, rather than waiting at home for a package to arrive — could also reduce the group’s dependence on postal workers as it continues to face criticism for high vacancies and low staff morale.

The rise of ecommerce globally has led to an increase in parcel lockers, which have enabled other couriers to cut labour costs.

Landon said in an interview that both consumers and shippers were “becoming increasingly reliant” on parcel lockers, and that Royal Mail needed to ensure it was “addressing all of the market”. “It won’t be long” until they were developed, he added.

Polish group InPost, which had installed more than 4,800 parcel locker units across the UK as of last year, reported a nine-fold increase in global revenues to $1.8bn in the four years to 2022, in a sign of growing competition in the delivery sector.

Alex Irving, logistics industry analyst at Bernstein, said InPost, which unlike Royal Mail is profitable, was opening new locations “all the time”. He added that this was a “cheaper way of doing things” than hiring postal workers to deliver packages.

Royal Mail’s leading market position has weakened further after postal employees walked out for 18 days last year, prompting retailers to send more parcels through rival couriers. The company’s share of UK parcel volumes dropped from 34 per cent to 25 per cent between 2020 and 2022, according to mail services group Pitney Bowes.

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In exchange for a higher pay deal for workers, Royal Mail in April agreed changes to delivery start times and Sunday working with the postal workers’ union. But the group continues to struggle with vacancies and low service levels.

In December, industry regulator Ofcom said it was “concerned that Royal Mail’s performance has not shown any signs of improvement and . . . it has been unable to provide us with a timeline for when its performance will improve”.

Landon said the company was focusing on reaching “a position where we are profitable” and “a position where we are growing and winning back market share on the back of great service”.

He said this would be “first demonstrated with what we deliver this Christmas and then really focused service enhancements going into next year”.