Post Offices: Delivering the benefits

The British public are very attached to the Post Office. On average, 17 million visits a week take place at offices across the country. And if there is one thing that is virtually guaranteed to turn normally mild-mannered elderly residents into an angry howling mob, it is the possibility that their local PO is going to be closed.

But a decade ago, closures or the threat of closures became a strong possibility. Huge losses were reported within the Crown network, questions were being asked in Parliament, and serious doubts raised about the viability of the entire system. Government subsidies were secured to keep the counters afloat, but transform or die was the message, and thousands of POs were earmarked as at risk.

But over the past 10 years, it has been the c-store industry that has come to the rescue and presented a model for a sustainable future.

The two amenities are already closely linked, with a recent survey by ComRes for the Association of Convenience Stores showing that post offices are considered by the public to be the form of retail that has the most positive impact on the local area, with c-stores at number two, ahead of pharmacies, coffee shops and restaurants. And services are very much in demand. According to HIM, 2% of shoppers visiting their chosen c-store on a given day say that using the post office was their main reason for visiting, rising to 4% for services in general, and as many as 20% of shoppers in a c-store with a post office are intending to use one or other of the services that a PO counter can provide.

With c-stores’ longer hours and wide range of merchandise creating a sustainable environment for post office services, and new PO retailers reporting an average 16% increase in sales, all looks set fair for the two trade sectors to enjoying a mutually beneficial relationship for years to come. Post Office network transformation director Neil Ennis is in no doubt about c-stores’ importance.

“C-stores are vital to the modernisation of the Post Office,” he says. “Our customers want a great value service locally and at a time that suits them, on the way to work or on the way home for instance. Traditional post office hours are a thing of the past: c-stores are open when customers want them, while a post office in a c-store is a brilliant footfall driver for the store and a great way of keeping post office services in the community.”

Ennis points out that in many cases post office opening hours double as a result of moving the franchise into the local shop.

“In many communities, for the first time ever people can use the post office in the evening and on a Sunday. We’ve now got over 3,000 branches that open on a Sunday. And retailers get the benefit of having the post office on the retail till, as well as the opportunity to sell retail products to the post office customers. The two businesses work so well together, any ambitious c-store owner really should look into taking on a post office.”

The main benefits are two-fold - increased footfall and commission on sales - but Ennis points out that stores can benefit in other ways. “A customer who comes in to take cash out from the post office counter - and virtually any bank account holder can do this - is taking the cash out to spend, and will spend some of it in the store. So the store owner not only gets commission from the post office for the cash transaction, but also increases their basket spend. And other great Post Office products such as parcels, e-top-ups and foreign exchange, also bring customers in.”

All of which is why c-stores are at the heart of the PO transformation programme, which is on track to have 8,000 offices modernised by 2018. In fact, the 5,000th modernised office opens this week, at Ramesh Shingadia’s recently-acquired store in Horsham, West Sussex. Ramesh and family are a classic example of the new partnership, having taken on their first PO in 2014 at their original store in nearby Southwater.

“The post office was first offered to us in 2012 when the local office went into administration, but at that point our store wasn’t right for it, as it was only small and we thought adding a post office would have compromised the retail side,” he explains. “But last year we expanded the store by 1,000sq ft and that gave us the opportunity to incorporate the post office as an asset rather than a liability.

“We did some number crunching with the previous postmaster in Southwater and saw that we would benefit from the extra footfall, plus the additional income stream. It also gave us a new focus in store and the opportunity to convert post office customers into retail customers; 18 months later, we don’t have a single regret.”

As part of the store expansion, Ramesh created a two-position fortress at the back of the store, plus a dual-purpose Local counter, which can process both Post Office and store transactions, at the till point. His plan was that the investment into the new office and staff would be paid off by the additional footfall driving sales in the rest of the store, but it required some creative thinking to achieve this.

“We did some customer tracking work with Unilever, and initially we found that two out of every 10 post office shoppers bought something from the shop as well. Now we’re up to four in 10, so we’re starting to see a real benefit to the retail side.”

The challenge was to tackle some of the negatives associated with visiting the post office. “Shoppers can think of the Post Office in terms of queues, particularly in December when 40% of all post is sent out, and it can get really crowded,” observes Ramesh. “In the run-up to Christmas, as the queues were getting longer, we offered customers free sausage rolls and hot drinks. It helped to change the mentality of the Post Office customer, and changed the image of our store, proving they can get good service here. And we’ve managed to retain customers in the longer term.”

Long-term thinking is definitely necessary for post office installations, as applications take time to process and a formal public consultation is required when a post office changes location. Romi Mediratta of Londis Lane End in Buckinghamshire had to wait about a year from initial application to opening day.

“There was far more paperwork and forecasting than I had anticipated, and then the community consultation took about eight weeks,” he recalls. “People don’t like change and are defensive of their local services, so we had to spend a lot of time and effort explaining the reason for moving the post office into our store. The subpostmistress who ran the previous post office was retiring, so we were not taking the business away from her, but we had to make this clear to people. It helped that she attended the ‘grand opening’ in our store on 27 April and was able to reassure people.”

Ramesh’s new store is a so-called ‘white site’, meaning that there was no existing post office in the area, and Ramesh’s positive experience in Southwater encouraged him to apply for one in Horsham. In an area where 20% of residents are over 65, the potential was obvious. “The local community are really excited about the development,” he says.

At 1,500sq ft the shop is not big enough for a fortress installation as in Southwater, but the Local counter will be able to serve customers the entire time the shop is open.

“The advantage of the combi (Local) counter is that it is open all hours, and seven days a week,” continues Ramesh. “One slight challenge is whether customers have the same confidence in the combi as they would in a main post office. We tried to overcome this by making sure all staff who might use the counter wore the post office uniform while working at the store, in order to make them look as professional as possible. If you go to a bank all the staff are smartly dressed, and I think it’s the same for the post office. I also think it’s a good idea to keep the combi counter slightly separated from the other till points, with a separate queuing system for the post office and for the retail counter.”

And in the same way, separate but inextricably linked together, post offices and convenience stores can thrive on the back of a mutually productive partnership.