This program involves the conversion of traditional sub-post offices to new post office models: Post Office Local (PO Local), Post Office Local Plus (PO Local Plus) and Post Office Main (PO Main). Citizens Advice supports the objectives of the Network Transformation Programme, which is designed to allow the post office network to be maintained. PO Mains often also offer a smaller range of post office services at regular retail boxes.
This research was designed to assess the views of operators of the new postal models that have been developed under the programme. How the new postal models are introduced and operate will determine how the Post Office restructuring works and the consumer experience of the new models. While Citizens Advice is a consumer organisation, in this research study we speak specifically to Post Office operators.
This research study evaluates the introduction of new mail models and their main aspects, against the concept. In all parts of the research we examine new mail models against a range of measures, asking how the operation of the Network Transformation Program is impacting customers. Providing Post Office services for longer hours throughout the week is a central feature of the Network Transformation Programme.
In addition, longer opening hours are expected to increase post office traffic.
Customer experience
Interplay with retail
Refurbished premises
Interaction with staff and privacy
Queues
Some operators believe that 5 queues in their branches have increased, partly because customer visits are not spread over the longer opening hours. Operators also tell us that simply combining retail and postal services at the same counter can result in long queues. In addition, some say queues can clog the store, making it difficult for customers to access other parts of the store.
Queuing at post offices, where there are not enough customers for 2 boxes and too many for 1 box, is highlighted as a particular concern by many of the many retailers and umbrella organisations. They indicate that problems tend to occur in medium-sized post offices and give varying ranges of between 500 and 950 post office customers per week as difficult to handle. Operators report that post office transactions take longer on average than retail transactions, according to operators.
Operators say retail customers, for example in convenience stores, do not tend to expect long waits to make their purchases. Some various retailers and umbrella organizations report that operators are losing customers, especially retail customers, due to long queues. The Rural Shops Alliance says some of its members have resigned from their Post Office because of the impact of queues on shop business.
As a result of concerns about queue lengths, some retailers and individual operators say they no longer operate combined queues. If there is a queue and a customer is undertaking a long Post Office transaction, retail customers will leave.' 5 Citizens Advice, Fixing the Foundations, September 2015 (p.39-40) - while queue times at PO Locals remain broadly good (60% of shoppers served promptly) for shoppers who have had to queue , queue times have increased significantly over 4 research waves, from 45 seconds in 2012 to 2 minutes 21 seconds in 2015.
Delays in completing transactions
Range of services
Quality of service
Recent research shows that consumers regard the quality of service as the most important characteristic of a post office. Our previous research shows a mixed picture with the quality of service being a concern in some local POs, although the forthcoming citizen advisory shows improvements in some areas.
Staff knowledge
Initial staff training
Ongoing training and support
Some operators also say that in traditional post offices, fewer people manned the Post Office counter, and therefore fewer staff had to be trained. If you look at the list of where they are, it is difficult to get there by public transport, as some of my staff do not have cars.'. Previously under the traditional post office model, Post Office compliance training was undertaken by 2 people in each store.
Under the PO Local, each store can have about 12 people who need this training - this is a financial problem.”
Complexity of transactions
A central part of the concept of the new post office models is that the operators save, as ordinary retail employees deliver the postal service. However, several and individual operators report that the complexity of post office transactions can cause them problems in recruiting and retaining staff. This is especially the case when staff are only looking for retail jobs and are paid the same as regular staff without additional post offices.
Operators told us of the challenge of needing staff who can deliver exceptional customer service, are financially competent and can understand and sell the post office's wide range of products and services - all at minimum wage. How am I supposed to compete when a chip shop pays £7.20 an hour and the Post Office needs you to sell home, life and travel insurance to customers, handle money and talk to the elderly for the minimum wage. We have a recruitment challenge with the local population, as the staff are looking for jobs primarily in retail and do not want to look after the postal service.
Because of the complexity of conducting postal transactions, umbrella organizations say that many carriers do not allow all of their retail employees to provide mail services to customers. This may limit the availability of postal services to customers, as in these cases the services will not be available if, for example, the operator himself is not present.
Outside core opening hours
What this means for the future
Where we are now?
Customer numbers
Retail sales
A key goal of the Post Office restructuring program is to ensure that post offices are financially sustainable for POL and its operators, enabling them to remain open and provide services to consumers at 11,500 locations. The remuneration fell partly due to the disappearance of the fixed part of the post office remuneration, but also due to declining wages for some individual transactions, a smaller number of transactions and declining customer numbers at Postkantoor. However, most individual operators say they are not seeing enough increase in retail revenues to offset the post office's loss of revenue.
Most of the individual PO Main operators interviewed report that retail revenues have remained flat or decreased since they started running a PO Main. Some PO Local operators report no change in retail revenue and some say it has increased. Where there is an increase in revenue, operators believe this is driven by positive customer experiences, the convenience of the combined offer, the location, increased traffic through the improved appearance of the branch and the additional retail area.
Many of the retailers we interviewed told us that they were making losses with their postal services and that they were cross-subsidizing postal services from their retail operations. We have decided to keep the post offices (for now) and run them at a loss for the business because they are a great community service.'
Staff numbers
The interviews with PO Local operators show that changes in staffing differ per PO Local branch since the conversion. Some report increasing staff numbers, while others have reduced staff numbers or kept them the same.
External factors
Pressures on high street retail and increased competition
National Living Wage
Both individual operators and several retailers told us they were concerned that the Living Wage would result in higher costs without additional revenue. Operators say that while retail prices can be adjusted to reflect the Living Wage, Post Office prices cannot.
Post Office transaction rates
Medium to long term
Mains’ transition payment
The recent and future increase in the national minimum wage is putting pressure on companies that were not there before - at least 25%. A number of multiple retailers and umbrella groups are expressing concern about the impact on PO Mains once this payment runs out. We are concerned that after 3 years there will be a shortfall for some Mains when the Parachute Payment runs out, due to the loss of the Base Tier Payment which previously made up about a third of the Post Office Fee.
Operator profile
Operators’ strategic review
Difficulties selling post offices and future uncertainty
When locals come to the market, in many cases they take 2 to 3 years to sell. In some cases, very dedicated people have to close the post office to sell the store business...when the business changes hands, that's the pinch. Over the next 10 years, given the age profile of operators, many post offices will change hands.'.
Some operators are uncertain about POL's future commercial strategy and whether models will become more viable. Operators are also expressing fears about the current contract in Royal Mail running until 2022, and wondering when this will be certain. Some feel unsure about POL's plans for future products and how it plans to attract the next generation of customers.
Conclusion
Appendix A - research method
Multiple retailer and umbrella organisation interviews
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