Rural Pilot Activity Report – 2006

CONTENTS PAGE
Executive Summary 6
Developing and Testing Innovative Approaches 7
Propositions for Innovative ways of Providing Rural Services 7
Initial Findings from Pilots and Associated Analysis 9
Next Steps 10
1. BACKGROUND 11
1.1 History of the Rural Network up to 2000 11
1.2 PIU Report 11
1.3 Post Office Ltd’s Response 11
1.4 Postcomm’s Response 12
1.5 Government’s Response and Requirements for Further Pilot Activity 12
1.6 Post Office Ltd’s Rural Activity 13
2. THE RURAL NETWORK TODAY 14
2.1 Size of the Network 14
2.2 Stability of the Network 14
2.3 Trends in Sales: Growth of New Products Offsetting Loss of Benefits 14
2.4 Supply and Demand 15
2.5 Value of the Social Network 15
2.6 Customer Satisfaction 15
2.7 Current State: Description of the Current Environment 16
2.7.1 Demographic/Economic Trends 16
3. DEVELOPING ALTERNATIVE SERVICE DELIVER MODELS FOR RURAL AREAS 17
3.1 Criteria for Developing Credible Alternatives 17
3.2 The Role of Initial Pilots in Shaping the Options 17
3.2.1 Background to Initial Work 17
3.2.2 Initial Activity Undertaken 18
3.2.3 Developing the Integrated Work Packages 18
3.2.4 Implications for Subsequent Pilot Work 18
3.2.5 Developing the Integrated Work Packages and Pilots for 2005 18
3.3 Summary of the Approach to Developing the Options 19
4. DESCRIPTION OF POTENTIAL RURAL SERVICE PROPOSITION 20
4.1 Introduction 20
4.2 Commercial Branches 21
4.3 UK-Wide Direct Channels 21
4.4 The Core and Outreach Service Propositions 21
4.4.1 Profile and Role of the Core Branch 21
4.4.2 Outreach Services in General 22
4.4.3 The Virtual Services (‘Home Service’) 23
4.4.3.1 Proposition 23
4.4.3.2 Target Market 24
4.4.3.3 Operating Model 24
4.4.4 The Partner Service 24
4.4.4.1 Proposition 24
4.4.4.2 Target Market 24
4.4.4.3 Operating Model 25
4.4.5 The Hosted Service 25
4.4.5.1 Proposition 25
4.4.5.2 Target Market 25
4.4.5.3 Operating Model 25
4.4.6 The Mobile Service 26
4.4.6.1 Proposition 26
4.4.6.2 Target Market 26
4.4.6.3 Operating Model 26
Post Office Ltd – Rural Pilot Activity Report – 2006
4
CONTENTS PAGE
4.5 Conventional Branches Proposition 27
4.5.1 Profile and Role 27
4.5.2 Operating Model 27
4.6 Supporting these Service Propositions 27
5. APPROACH TO TESTING THE PROPOSITION 28
5.1 General Outline 28
5.1.1 Field Testing 28
5.1.2 Field Data Gathering 28
5.1.3 Basic Research and Analysis 29
5.2 Site Selection for Field Testing 29
5.2.1 Core and Outreach Site Selection 29
5.2.2 Site Selection for Community Support 30
5.2.3 Site Selection for the Hours Reduction Trial 30
5.3 Operational Deployment of 2005 Pilots 30
5.4 Profile of the Field Pilot Campaign: Characteristics of Pilot Sites 31
5.5 Conclusion 33
6. RESULTS AND ANALYSIS FROM THE TESTS 34
6.1 Network Shape 34
6.1.1 Home Service 34
6.1.1.1 Adoption of the Service 35
6.1.1.2 Stakeholder Response 36
6.1.1.3 Customer Response 36
6.1.1.4 Core Subpostmaster Response 37
6.1.1.5 Potential Scalability 37
6.1.1.6 Preliminary Conclusions 38
6.1.2 Partner Service 38
6.1.2.1 Adoption of the Service 39
6.1.2.2 Stakeholder Response 39
6.1.2.3 Customer Response 39
6.1.2.4 Core Subpostmaster Response 39
6.1.2.5 Partner Response 39
6.1.2.6 Potential Scalability 40
6.1.2.7 Preliminary Conclusions 40
6.1.3 Hosted Service 40
6.1.3.1 Adoption of the Service 41
6.1.3.2 Customer Response 42
6.1.3.3 Core Subpostmaster and Host Response 42
6.1.3.4 Stakeholder Response 43
6.1.3.5 Cost to the Core of Running the Service 43
6.1.3.6 Sales Generated by the Service 43
6.1.3.7 Potential Scalability 43
6.1.3.8 Preliminary Conclusions 44
6.1.4 Mobile Service 44
6.1.4.1 Adoption of the Service 45
6.1.4.2 Customer Response 46
6.1.4.3 Core Subpostmaster Response 46
6.1.4.4 Stakeholder Response 46
6.1.4.5 Cost to the Core of Running the Service 46
6.1.4.6 Sales Generated by the Service 47
6.1.4.7 Overall Commercial Impact 47
6.1.4.8 Potential Scalability 47
6.1.4.9 Preliminary Conclusions 48
6.1.4.10 Overall Conclusions on Core and Outreach 48
Post Office Ltd – Rural Pilot Activity Report – 2006
5
CONTENTS PAGE
6.1.5 Conventional Branches 48
6.1.5.1 Profile of Current Conventional Branches 48
6.1.5.2 Current Post Office Ltd Initiatives 49
6.1.5.3 Proposed Initiatives 51
6.1.5.4 Conclusions 51
6.2 Network Economics (Post Office Opening Hours and Retail Environment) 51
6.2.1 Opening Hours – Current Situation 51
6.2.1.1 Implications 52
6.2.2 Network Economics – Retail Environment 52
6.2.2.1 Objectives of the Rural Branch Retail Survey 53
6.2.2.2 Approach for the Rural Branch Retail Survey 53
6.2.2.3 Findings of the Rural Branch Retail Survey 53
6.2.2.4 Objectives of the RSA Rural Retail Study 54
6.2.2.5 Approach of the RSA Rural Retail Study 54
6.2.2.6 Findings 54
6.2.2.7 Comparison of Findings from the Two Surveys 55
6.2.2.8 Conclusions 55
6.3 Revenue Generation 55
6.3.1 Introduction 55
6.3.2 Promotional Campaigns and Sales Initiatives 56
6.3.2.1 Opportunities to Increase Sales in Rural Consumer Markets 56
6.3.2.2 Key Findings 56
6.3.2.3 Conclusions 57
6.3.2.4 Actions 57
6.3.2.5 Opportunities to Increase Sales to Small Rural Businesses 57
6.3.2.6 Findings 57
6.3.2.7 Conclusions 57
6.3.2.8 Actions 58
6.3.3 New Services 58
6.3.3.1 Police Services Proposition 58
6.3.3.2 Police Services Progress to Date 59
6.3.3.3 Niche Rural Products – Implications for the Future 59
6.3.4 Community Support 59
6.3.4.1 Preliminary Conclusions 59
6.3.5 Grant Schemes 60
6.3.5.1 Uses of Funding by Subpostmasters 60
6.3.5.2 Conclusions 61
6.3.5.3 Actions 61
6.3.6 Overall Revenue Generation Conclusions 61
6.4 Infrastructure Costs 62
6.4.1 Information Technology (IT) – The Current IT Support Structure 62
And Cost Base
6.4.1.1 Approach to Redefining the Support Required 62
6.4.1.2 Remote and Mobile Communications – Findings 62
6.4.1.3 Remote and Mobile Communications – Conclusions 63
6.4.1.4 Downsized Portable Equipment 63
6.4.1.5 Downsized Portable Equipment – Conclusions 63
6.4.1.6 Simplified Technology 63
6.4.2 Cash Management 63
6.4.3 Infrastructure Conclusions 63
6.5 Overall Conclusions to Date from Pilot Activity 64
6.5.1 Operational Conclusions 64
6.5.2 Customer Service Conclusions 64
6.5.3 Stakeholder/Social Impact Conclusions 64
6.5.4 Commercial Conclusions 65
6.5.5 Overall Conclusions 65
7. NEXT STEPS 66
P:LibraryPostalRoyal MailRural Pilot Activity Report.pdf