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Royal Mail dropped by Currys as strikes threaten Christmas deliveries

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Currys has dropped Royal Mail as a delivery provider to avoid damage from one of the country’s most bitter industrial disputes in the crucial run up to Christmas.

The FTSE 250 electricals retailer has taken the decision to stop using Royal Mail ahead of its most important trading period, according to City sources.

The move is likely to be a temporary one and relates to smaller goods sold by the group, which enjoys a 25pc share of the retail market for technology products and services.

But sources added the decision was not taken lightly, as it imposes upheaval on Currys’ online business during the busiest time of the year. Last year it reported £2.5bn in online sales in the UK, equivalent to 45pc of its domestic total, as a mix of home delivery and click-and-collect.

Most large retailers have contracts with multiple logistics partners. Some of those that are sticking by Royal Mail are understood to have shifted some demand to rivals in fear of a Christmas logjam.

Currys’ more radical decision comes with a dispute between the Royal Mail board and its 150,000-strong workforce at boiling point.

The Communication Workers Union (CWU), whose general secretary Dave Ward claims in a Telegraph interview on Sunday that Britain faces a “de facto general strike”, is resisting demands from Royal Mail for significant reforms to working practices.

Royal Mail has been forced to bring forward its final Christmas posting dates by as much as a week because of the strikes. 

More walkouts are planned on Dec 9, 11, 14, 15, 23 and 24 December.

Royal Mail chief executive Simon Thompson has vowed to ram through changes to tailor its network for parcel deliveries without the blessing of union chiefs if necessary. Some 10,000 job losses have already been earmarked, with Mr Thompson warning that more redundancies will be necessary if the strikes continue for any longer.

Along with chairman Keith Williams, the former British Airways chief executive, the Royal Mail board are under pressure from shareholders to transform the former nationalised company so that it can compete with tech savvy rivals such as Amazon.

Bosses want to move from a more rigid six-days-a-week letters operation to focus on delivering parcels seven-days-a-week. Saturday letters deliveries also could be axed. Changes to working practices include pushing back morning rounds so that staff have finished shifts later and a greater dependency on sorting post automatically rather than by hand.

The company is losing more than £1m-a-day and the former FTSE 100 company’s shares have halved since the start of the year.

The share price slump has wiped £3bn of Royal Mail’s market value – and triggered a paper loss of more than £500m for its biggest shareholder, Vesa, the investment vehicle owned by Daniel Kretinsky, the “Czech sphinx” energy tycoon who also owns large stakes in Sainsbury’s and Premier League football club West Ham United.

One of Royal Mail’s top five shareholders said: “It is very clear that Royal Mail is in desperate need of modernisation in order to become more efficient and therefore competitive in a market which is increasingly focused on parcels rather than letters.

“This will set the business on a sustainable path to profitability which will benefit both employees and shareholders and we are fully supportive of the management’s efforts to achieve this.”

A spokesman for Royal Mail said: “We have been clear with the CWU from the start that industrial action undermines the trust of our customers. We operate in a competitive market, and our customers have choices. Continued strike action will force our customers to make those choices sooner rather than later.

“Strike action has already cost our people £1,000 each and is putting more jobs at risk. The money allocated to the pay deal should be going to our people, but it risks being eaten away by the costs of further strike action.”

Currys declined to comment.

Read More: Royal Mail dropped by Currys as strikes threaten Christmas deliveries

2022-12-03 19:00:00

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