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Ecommerce growth prompts £75m Parcelforce expansion

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The Parcelforce Worldwide depot network is to expand as part of a four-year, £75m investment programme that will equip it for a future in which online sales will continue to grow.

The investment in the UK express parcels business will create 1,000 new jobs in the UK, its owner Royal Mail said, in a market currently worth £5.8bn a year and predicted to grow as ecommerce flourishes.

The expansion will see a new parcel processing centre open in Chorley next autumn, new depots in Cornwall and Hampshire, and the expansion or relocation of nine further depots over the next four years. Royal Mail will also invest in Parcelforce’s IT in order to replace legacy systems.

Making the announcement, Royal Mail cited Boston Consulting Group figures that suggest online retailing will account for 12.4% of UK GDP and 23% of overall retail spending by 2016. UK consumers spent around £76bn online in 2011-12, according to the IMRG Capgemini e-Retail Sales Index, which represented growth of 20% on the previous year.

“Our £75 million investment is part of Royal Mail Group’s strategy to grow its parcels businesses in the UK and overseas,” said Royal Mail Group’s chief executive Moya Greene. “Our strategy is to convert the rise in parcel volumes in to profitable growth. That means becoming a much more customer-focused company being run on commercial lines and investing in new, vital technology.

“The investment will enable Royal Mail Group’s express parcels business to

meet the rapid growth in demand in the business-to-business,

business-to-consumer and consumer-to-consumer markets.”

Royal Mail said that ecommerce growth had already seen its UK parcels business grow revenues by 10% and volume by 6% in 2011-12. In its last reported financial year, Royal Mail Group’s parcels businesses turned over £4.2bn, 48% of total revenues, excluding Post Office Ltd.

Parcelforce Worldwide is one of three Royal Mail Group parcels networks in the UK. The others are Royal Mail’s UK parcels operation, which also works with a range of online retailers, and Royal Mail Specialist Services.

Clare Gilmartin, vice president of eBay Marketplaces, Europe, welcomed the decision. “Royal Mail’s announcement underlines the importance of online commerce,” she said. “Despite the challenging retail environment, online and mobile commerce is growing and, to put eBay’s contribution into context, the number of live listings on the UK site has increased by 200 percent since 2009, up to 60 million today. Another way of looking at this is that we welcome to as many visitors each month as London’s Oxford Street.”

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