Data Laws Deliver New Blow to Ailing Royal Mail Letters Business

(Bloomberg) -- Royal Mail Plc, Britain’s 500-year-old postal service, said it expects rules designed to rein in the abuse of personal data to weigh on letter volumes as companies are forced to scrap targeted marketing campaigns.

The introduction of the European Union’s General Data Protection Regulation from May 25 means postal demand may suffer an accelerated decline, Royal Mail said Thursday. The slump will be at the top end of a 4-to-6 percent range already forecast as people switch to email, and could exceed it.

“There is a risk that some of our customers will reduce volumes of marketing mail as they get themselves into a state of compliance with the regulations,” Chief Executive Officer Moya Greene said in an interview, adding that the slide in volumes may go beyond the predicted range for “a month or two.”

Royal Mail fell 6.6 percent, the biggest intraday drop since November 2016, after issuing the warning on Thursday with its full-year results. The shares were trading 5.1 percent lower at 567.4 pence as of 10:28 a.m. in London.

Data Laws Deliver New Blow to Ailing Royal Mail Letters Business

The new regulations don’t mean that so-called junk mail is about to go away and it may even provide a workaround for marketeers: letters addressed simply to “The Householder” should still get through as the GDPR affects only those communications bearing the name of a property’s occupants.

Royal Mail has been actively telling clients that unaddressed mail can still have an impact, since the mere act of picking up a letter from the mat secures “mind space” for the item, Greene said. The company adds on its website that research has shown such letters stay in the home for an average of 38 days and are “frequently revisited.”

The new regulation applies to any entity “processing” personal data by collecting it, storing it or disseminating it. That means it will affect not just social networking sites, search engines and online retailers but also schools, chat rooms and even Scout groups.

Greene said Royal Mail’s U.K. parcels operation presents a brighter picture, delivering its best performance since the company was privatized in 2013. Adjusted pretax profit rose 1 percent to 565 million pounds ($765 million).

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