Retail reinvention

In an exclusive interview conducted in 2007, World Mail Review discovered the challenges facing Alan Cook, managing director of the UK’s Post Office Network Chief executives running post office networks across the world are facing increasing challenges in trying to balance the books as they respond to customers changing the way they shop.

You obviously like a challenge, what were the other contributing factors that attracted you to the job?

Throughout my career I have always worked for major trusted brands. The Post Office brand is one of the strongest trusted brands in the UK but it has serious problems. The network is currently losing £4 million a week, and the business model is in danger of going out of date as our customers are changing the way they shop. There is a pressing need for reinvention and turnaround, this was the ultimate appeal.

You have now completed your first year in charge. What have been the major challenges that you have faced?

Establishing exactly what the Post Office is for was a good starting point and then developing a five year recovery plan branded internally as forward:five2eleven.

A major challenge was to secure agreement to the plan from both the Royal Mail Holdings Board and the British Government and agree the financing. As a result we are proposing to close 2,500 post offices over the next two years as the network is now simply too large and uneconomic. It is not sustainable even with the Government’s annual subsidy of £150 million.

Much time has been spent on recruiting a new top team. Five out of the seven of the Post Office Board of Directors are new to the business. We now have a top class team ready and able to transform the business.

Please can you explain the thinking behind the forward:five2eleven strategy?

It is all about focus. Previously we were trying too many different things in parallel–we currently offer over 170 different products and services. The product focus going forward will reflect the four pillars of Mails, Financial Services, Telephony and Government Services.

We need to offer these services in a bright, customer friendly and modern retail environment. This will require significant investment which has been agreed by Government. We also need to provide better training for our staff, agents and sub postmasters and, importantly, strive to give our customers a first class excellent service.

With customers changing their shopping habits and buying more online, should the Post Office Network concentrate its efforts on building a multi channel platform and, at the same time, look to reduce its expensive physical retail network?

We have already developed a truly multi channel offering and expect 20% of all sales to come from the internet or phone. In one typical week we sold over 10,000 car insurance policies and 60% of those sales were from the internet and telephone.

Our unrivalled retail network enables us to truly differentiate ourselves by offering the ultimate multi channel experience – transactions could begin on the internet and be completed in the branch or sub post office or vice versa.

We have seen the rapid growth of joint venture alliances between post office networks and European banks. How do you see retail financial products and other joint ventures developing?

In the UK, consumers have largely lost faith in retail financial services providers. The big supermarkets have been so successful in the retail financial market place because their customers trust their brands. The level of trust in the Post Office brand exceeds that of the main supermarkets and the relevance of the brand to financial services, particularly savings, is far greater. The Post Office is therefore well placed to exploit this opportunity with our joint venture partner, The Bank of Ireland.

The most likely areas of success will be in foreign currency, savings, personal lines insurance and credit cards. The Post Office here in the UK took over £7 billion in savings products in the last financial year and is now the fastest growing car insurer selling in excess of 10,000 policies a week, with over 350,000 motorists insured through the Post Office.

We also believe we can become a significant player in the telephony market. We already have 400,000 HomePhone customers and will be launching a broadband service later in 2007.

Since most post office networks share the same issues and challenges, is there a need for more collaboration and sharing of information?  Have you already started building relationships with other post offices?

Most definitely, sharing and collaboration make real sense. In the short time I have been here, I have already visited La Poste and Deutche Post. We have also welcomed representatives of other post office networks to visit us here in the UK.

Unlike our mail counterparts, we are not competing for the same business. We are all focused on our internal markets, and are often faced with the same issues and business pressures. This is why there is a willingness to share information and learn from other networks that are innovating and doing things better.

The new initiative from Triangle to set up a Global Retail Benchmarking Group is therefore a good idea and I know will be well received by post office networks around the world.

Finally, looking into your crystal ball, where do you see the future for post office networks globally, and what words of advice would you offer your fellow directors?

In most countries, post office networks are not just a trusted retail chain but also a national institution. This customer trust can be applied to new markets where customers are unsure or nervous about existing product suppliers.

Stay true to the core reasoning behind a post office, mail products and services, but exploit other opportunities such as financial services. Always keep it simple, do not over complicate the offer and, finally, focus on what the customer needs rather than what you might like to supply.