The decision to proceed with privatisation was made last week, following the latest report from Richard Hooper, chair of the Postal Services Sector Review Panel.

Hooper argued that private sector capital was needed to complete the modernisation plan at Royal Mail, which also needs to be relieved of its £10bn pensions deficit.

Alastair Smith, sales director at NEMC, agreed with Hooper’s assessment and added that the consensus within the mailing industry was that change has been needed for some time.

"Since the industry was deregulated it has become much more of a service provider," he said. "With privatisation that journey can only continue and it will become much more relevant at delivering that service."

Ian Mackintosh, managing director of Print Direct, which is part of Wyndeham Group, added that carrying on the same way "is not and cannot be the way forward".

"If the sector relies on the same mechanism in the face of declining volumes, companies will move their campaigns to other forms of communications such as email," he said.

However, Smith warned that there were still significant hurdles to a successful sale of Royal Mail, due to the restrictions that currently leave the operator at a disadvantage versus downstream access (DSA) providers, like TNT Post and UK Mail.

"I think they will have to remove the universal pricing structure that has been enforced on Royal Mail at a time when its rivals have been allowed to benefit from zonal pricing," he said.

Zonal pricing involves varying the price of delivery depending on the population density, such that rural areas are the most expensive and inner cities are the cheapest.

Smith claimed that, while this would lead to an increase in the cost of post for private letters, it tends to "flatten out from a mass mailing point of view" and will therefore not hurt the DM sector.

"From a DM point of view, you tend to end up with a mean unit price that is not that different to what Royal Mail charges now," he said.

Despite backing the move, Sam Neal, managing director of Geoff Neal Litho, said the proposed sale was "sad" for the operator, which suffered from "over bureaucracy" and too much management.

"It needs a shake-up and anything that can help the direct mail sector can only be a good thing," he said.

However, NEMC’s Smith cautioned that the privatisation could make mailings more costly for financial institutions and charities, both of which spend a lot of money on print.

"Royal Mail has always had a concession on VAT and privatisation would have to level that off," he said.

"That’s going to affect charities and financial institutions that can’t claim VAT back, but as long as the industry shows a return on investment, I don’t think that will have an impact on volumes."

Responding to Hooper’s report, business secretary Vince Cable welcomed the findings at a time where Royal Mail is facing "a combination of potentially lethal challenges", including its pension deficit, which the taxpayer would take on as part of any sale.

"We are determined to safeguard Royal Mail for the future and help it tackle these challenges. We will come forward with new legislation in the autumn," he said.

Print Direct’s Mackintosh argued that any such shake-up must keep disruption to the DM sector to a minimum so not to "hasten the decline" of mail volumes and encourage clients to look elsewhere.

"Maintaining the status quo is not an option as it is simply not sustainable but conversely, any changes need to minimise disruption to the service," he added.