Strategy to Win in Parcel and ensure a Sustainable Mail Business
The e-commerce, parcels and communication markets are changing dramatically. This is bringing both opportunities and challenges. PostNord’s strategy focuses clearly on our core business – parcels and mail.
As our customers’ needs change and competition gets tougher, an attractive offering, higher productivity, better cost-efficiency and a stronger brand will be needed to assure success. At PostNord, a major transformation to realign the Company with changes in customer needs in e-commerce, parcel distribution and falling mail volumes has been under way for several years. Against this background, our focused strategy aims to create the conditions for continuously improving our e-commerce and logistics offering through digital initiatives. At the same time, the mail business needs to be adjusted in line with the need for postal services and the level of service that is reasonable given the costs involved. Our updated Sustainability Agenda is a key enabler for us to execute on the strategy and thereby achieve our business objectives and make a significant difference for people and the environment.
Our strategy is built on two strategic priorities and six enablers that form the framework for the work of our transformation programs. The goals in each area determines how the Company operates. In addition to the two strategic priorities, our other businesses, third party logistics (TPL), groupage cargo and PostNord Strålfors, are important in complementing and supporting the Group's core activities.
Win in Parcel
Market and cost leader
PostNord currently holds a leading position in e-commerce and parcels, which we are working to strengthen by leveraging our unique network and by further developing our offerings and customer relationships. To meet the growing competition and be the largest or second largest presence in all the markets we operate in, we need to be constantly ready to improve our offering and customer experience.
We also need to take an even more structured approach to our work to become the cost leader. The target of becoming cost leader involves us having the lowest cost per parcel in our core business in all delivery channels – to the home, to parcel lockers and at distribution points.
Sustainable Mail Business
USO return and mail transformation
PostNord’s goal for the mail business is to operate a financially sustainable business that is adapted to our customers’ needs. We perform our universal service obligation with pride in order to create value for our customers and recipients of letters, but we face a challenge in dealing with the volume decline. We are in several ways addressing the trend of falling mail volumes and challenges in profitability. For some time now, mail covered by the universal service obligation in Denmark has been delivered within five working days and PostNord receives compensation from the Danish state for performing the universal service obligation. In Sweden, PostNord introduced alternate-day deliveries during the year. In 2022, the new delivery model for mail distribution will be extended to cover the entire country. Price increases for mail products have been implemented in both Sweden and Denmark.
Enablers
Brand loyalty
Brand loyalty is crucial to our growing parcels business. E-commerce, where we face strong competition, is no exception. A strong brand also has a positive lever effect on how the general public views us.
Leadership and culture transformation
A rapid pace of change also demands a continued and sharpened focus on leadership at all levels of the organization. To succeed, it is important that we maintain a culture that supports our strategy.
Distinct sustainability agenda
Our ambitious agenda clearly states the most strategic sustainability issues and is linked to the UN’s Sustainable Development Goals. One key area here is climate leadership, where our aim is for PostNord to be fossil-free by 2030.
Digital transformation
Optimizing our business demands an increasingly high degree of digitalization, automation and use of advanced analysis. The transformation will create the conditions for a stable production environment, business decisions based on data and insights, and faster development of our services.
Cash management and courage to invest
The ongoing decline in mail volumes demands a clearer focus on cash flow, and means that we have to have the financial wherewithal to invest in our growth areas.
Structured transformation set-up
To deliver on our transformation programs, we have in place a structured process and organization for progress, reporting and monitoring. We update the content of our transformation programs on an ongoing basis in order to deliver optimally on our strategy.
Other operations
Profitability and the implementation of the Group's distinct sustainability agenda are key factors in our work to realize the strategy. Other important but not defined aspects of PostNord's business are PostNord Strålfors, third party operations, TPL and groupage cargo handling, and international distribution.
