Royal Mail eyes boost from retailers' quest for quality after Christmas delivery chaos

The boss of Royal Mail has claimed that 2015 is the year that “big retailers will realise that quality counts” and opt for its services after rivals City Link and Yodel struggled in the crucial run-up to Christmas.

Royal Mail delivered unexpectedly decent festive results, with UK parcels up 4%, sending it to the top of the FTSE 100.

After Jon Moulton’s rival City Link went bust on Christmas Eve and Yodel admitted it couldn’t keep up with demand, Royal Mail’s Canadian boss Moya Greene said: “Our early Christmas planning — we started on April 1 — paid dividends.”

Royal Mail delivered 120 million parcels in December, which Greene boasted was “more than the vast majority of parcel industry participants deliver in a whole year”.

She added: “This year some of our competitors unfortunately saw their networks struggling under the weight of the surge in Christmas traffic. We’re very happy that did not happen to us.

“This year, big retailers will realise that quality counts and it’s worth paying for. A good delivery partner has a halo effect. Consumers are more likely to order from them again.”

Greene hinted more firms could collapse this year: “There’s too much capacity in the market, and it’s put pressure on prices.

“I don’t want to predict the demise of other companies, [but] there needs to be a new equilibrium in this industry.”

But asked if the stronger results meant Royal Mail’s universal service was safe, Greene batted back: “I’m only going to talk about Christmas.”

Royal Mail’s UK business was flat in the nine months to December, but 8% growth at its European parcels business GLG meant group revenues rose 1%.

The shares increased by 16.7p to 446.9p.