In October 2002, the Post Office launched its bid to reinvent itself and return to profit. With government support, it set about closing 3,000 urban branches and investing £30m into those that remained. At the same time the European Commission approved a £450m three-year package to keep rural post offices branches running.

Plans were set out to launch a number of new products and financial services including unsecured personal loans, insurance, internet access and the ability to sell euros and dollars through post office counters.
Nearly three years and 2,500 branch closures later, the reinvention programme is complete. The target figure of 95% of the public living within one mile a post office has been exceeded by 4% and the government has pledged to spend a further £150m a year until 2008 to help rural branches.

The traditional post office is being eased back into health, but with an operating loss of £110m from 2004/5 the company knows there’s still a long way to go. A Post Office spokeswoman said: “The reinvention programme was launched because the potential for the company to move forward had, up to that point, not been tapped into fully. By taking a step back with the closures, adding new services and giving sub postmasters more tools and incentives, we believed we could bring the Post Office into the 21st Century.”
Back in 2003, retailer David Sands, who runs 16 Nisa stores in Scotland, three of which house post office counters, hoped the new services would bring back a sense of confidence to the organisation. He believes the company is on the right track.

He said: “The more services and products we can offer customers the better because it allows sub postmasters to be competitive. We’ve had a good response to the financial services launched over the past three years and it has definitely made the stores in which we house a post office counter more of a destination point for customers.”

The Post Office has also announced plans to launch an improved non-food offer in its branches. The new proposition, developed with Sainsbury’s supplier ISA Retail, includes a greater and more professional range of greetings cards and stationery entitled ‘plug & play’ plus the addition of DVDs, CDs, toys, books and electrical goods. Aimed initially at the company’s 540 directly managed outlets, the new offer is expected to be launched in some form in all of the Post Office’s 14,600 branches.
Post Office sales and marketing director Gordon Steele said: “Post Office branches occupy some of the best retail space in the country. Through offering value-for-money products, we will set a challenge to high street retailers.”

However, a sub postmaster and c-store owner from Scotland who wished to remain anonymous believes the new Post Office services are not competitive enough to help rural and urban branches compete with the multiples. He told C-Store: “The Post Office is forcing these services on us but they are not competitive enough. And when you can’t sell them, it threatens to take the post office counter out of the store. For example, I went somewhere else to get quoted for car insurance and was given a quote that was half of what the Post Office was quoting. If you try the hard sell, you feel you’re alienating your customers. The company needs to re-assess the services it has launched because it is a tough environment to compete in without complete support.”

Steele acknowledges that with so much activity, new services and products entering post offices, there will be teething problems but he remains confident that the company and its outlets have a positive future.
He said: “The retail transformation we are undertaking will strive to give customers great value everyday product choice, which will include competitive convenience purchases.

“We are providing sub postmasters with highly competitive and comprehensive retail product ranges. The feedback we’ve received from some sub postmasters is encouraging but we realise this process cannot happen overnight and will involve a learning curve with what works from store to store. By the end of 2006 we are confident all sub postmasters will be able to reap the benefits of the transformation plan.”

Special delivery.
Two thirds of consumers have highlighted having a post office in-store as a determining factor in choosing to shop there, according to a recently released study.
Harris International Marketing (HIM), for the Post Office, questioned 950 shoppers last year. The responses revealed 89% of consumers visited a c-store more often because it had a post office counter, while 48% said they visited the store especially to use the post office, with 21% using both store and post office.
In addition, the research highlighted that average spend went up from £5.26 for an average c-store shopper to £7.06 for a c-store/post office shopper.

HIM chief executive Mike Greene said: “Customers now welcome the fact that when they go to a post office within a store it allows them to buy other products. This is a reflection of the time-pressed 21st Century consumer that they want and prefer the one-stop shop which provides them with all their everyday needs.”