Greater focus needed on creating a sustainable and viable UK post office network

Postcomm, the independent regulator for postal services, has called on the Government and Post Office Ltd to ensure that the sustainability of a viable post office network is their top priority once the current closure program is completed.

Postcomm does not regulate post offices but it does monitor and research developments in the network and provides independent advice to the Government. This is in the form of an annual report which is published today – entitled “A sustainable customer focused network” – along with supporting research on “Access to postal services”.

Among its recommendations, the regulator has identified that the network will need:

– a clear vision and a combination of commercial products and services that can attract and retain new customers – for example, Post Office Ltd has run trials with Argos, where customers were able to collect online purchases from their local post office, and is working on other propositions;
– more links with commercial partners who recognize and can benefit from Post Office Ltd’s brand strength – for example, its joint venture with Bank of Ireland to sell financial services which is attracting 50,000 new customers every month;
– stronger links with communities to identify ways in which they can work with Post Office Ltd and the Government to help sustain the provision of local postal services.

Postcomm chairman Nigel Stapleton said:

“The Government and Post Office Ltd must make the creation of a sustainable and customer-focused post office network the priority. Keeping things as they are today is not an option. Post offices need strong leadership, the right mix of products and services, and a well-motivated staff in order to create a sales environment that will attract and keep the customers they need to survive.

“Our research shows that mail is the post office’s biggest asset and makes it stand out among other retail networks. Mails business, such as the handling of internet orders, is a growth area and can bring customers into the branch to buy other products. Post Office Ltd is making some progress in product innovation and exploiting new mail opportunities such as “Local Collect” service for internet shoppers, but more must be done.”

“Postcomm would also like to see a debate about giving Post Office Ltd more freedom to seek new business and the possible merits of separating its retail business from the rest of Royal Mail. In the coming year, Postcomm will be looking at evidence to inform this debate in Government and with all those who care about the services and funding of the network for the longer term.”

Notes for editors

Key Points from the Post Office network report 2006-7:

– At the end of March 2007 there were 14,219 post offices in the United Kingdom (including satellites and sites where the mobile vans stop once a week), an overall reduction of 157 from last year.
– In the year ended March 2007, Post Office Ltd made an operating loss of GBP 99m, compared to a loss of GBP 111m in 2005-06. Post Office Ltd receives GBP 150 million from Government to offset losses on the rural network.
– Despite the 458 crown offices making up such a small proportion (3.22 pct) of the total estate they were responsible for GBP 70 million of the £99 million 2006/07 losses. This is in contrast to a GBP 50 million loss they made in 2005-06.
– Access to Postal Services – Research conducted by NERA for Postcomm
– 80 pct of people perceive themselves to be within a mile of a post office and more than – – 90 pct perceive their branch as easy to reach;
– 43 pct of people said that they used a Post Office at least once a week to access postal services; and more than 75 pct said that they expect to continue to use the same amount of postal services in future.

Reasons why people expect to use the network are mixed. Customers (particularly in urban areas) said that the things that would make them use their branch more included longer opening hours, shorter queues and more convenient locations while rural customers said they would like a wider range of services. The research also found a high level of trust amongst postal users to use the network to collect packets and parcels rather than alternative locations.

In relation to the government’s access criteria, the research found the requirements in Royal Mail’s license are based on straight line measurement, whereas the government access criteria expect Post Office Ltd to take account of local conditions such as motorways, rivers and mountains. Postcomm agrees that access should be calculated using the most accessible route and will need to agree with the company adjustments to Royal Mail’s license.