Last year the Post Office embarked on an ambitious three-year modernisation scheme with a massive £1.34bn-worth of funding from the government. Network Transformation Programme director Neil Ennis talks exclusively to Convenience Store about how the initiative is progressing and what the Post Office has learned so far from the pilot schemes.

What’s the current status of the Network Transformation Programme and how is it set to progress?

”It’s just coming out of the pilot phase now and we’re hoping to start rolling out the programme at the end of August. We’re planning to modernise about 1,200 branches in the first 12 months, with the rest of the modernisation taking place over the following two years. By the end of the third year of the programme there will be 4,000 Main branches and 2,000 Local branches throughout the UK.”

How has the pilot scheme worked out?

”There have been 29 Main model pilots and 189 Local model plots, and consumer satisfaction has been 95% for both. For the first time I can remember, the Post Office is gaining new customers, with a 4% increase in Post Office sales in the Main model and a 9% increase in the Local model. Retail sales in stores that have piloted the scheme have also increased 8% and 9% in Main and Local models respectively. The Local model has attracted a lot of interest as it encapsulates most of the Post Office services in a 1.2m spot at the till, freeing up space elsewhere in the store.”

If you are interested in the Network Transformation Programme and would like to put your store forward for consideration, contact the Post Office at www.postoffice.co.uk/ find-out-more/about-us/register-your-interest

How will the Local model differ in terms of products and services?

”Having a Local model means that a store will be able to offer Post Office services whenever it is open. If a store is open 24 hours a day then it can sell postal services 24 hours a day. It will bring new customers to the Post Office - those who can’t necessarily get to it during normal office hours. The Local format post offices will offer a selection of Post Office services, rather than all of them. We’ve limited the services to those that can be completed quickly and are somewhat automated. We won’t be offering services that will take up a lot of time at the till and create a queue in stores.”

Recent Consumer Focus reports drew attention to privacy and service issues with the Local model during the pilot phase. How have you addressed these concerns?

”We’ve taken a whole new approach to training, especially with part-time staff. We’ve increased the amount of time we spend training people and have extended the window in which they can be trained. During the pilot scheme we realised that not all staff are present for normal working hours, and that some might be in the store only in the evenings or weekends, and we’ve adapted to meet that challenge. Through the pilot scheme we learned that privacy is an issue. To help customers feel more at ease, we’ve introduced a marking system that will ‘hold’ the next customer back. Perspex screens are now included as part of the Post Office Local model and they’ll help provide more privacy for the customer and more security for the retailer.”

Network Transformation Programme: the facts

The Post Office plans to transform about 6,000 branches, just over half of its 11,500 estate, to either Local or Main models. With £1.34bn support from the government, the Post Office plans to adapt 1,200 outlets in the first year and the rest over the following two years. The scheme is voluntary and the Post Office insists that anyone who doesn’t want to undergo the transformation won’t be forced to.

It is also making a compensation package available for any retailer who feels it is time to leave the Post Office. It says it will not close any branch before securing another location in the same area, though. Since news of the programme was announced 1,100 Post Office agents have expressed interest in leaving the network, compared with the average figure of about 700 every year.

Retailers who do decide to convert to the new models will be given financial incentive to help with the process. Those who convert to a main branch, which has a dedicated Post Office counter as well as offering services at the retail counter, can receive up to £45,000. Those interested in taking on the Local model, with Post Office services sold solely through the retail counter, can receive up to £10,000.

The programme has attracted a lot of interest, but what about retailers who are happy as they are, or who may want to leave the network?

”We are modernising only half of the network in this programme so that if anyone doesn’t want to change that’s no problem. We’re not going to force anyone to. Neither are we going to force anyone to stay with the Post Office if they don’t want to. So far, 1,100 of our agents, mostly independent retailers, have expressed an interest in the voluntary leaving scheme, which offers compensation. However, on an annual basis there are usually about 700 subpostmasters doing the same, so it’s not an inordinate number just because of the scheme. Nothing has been confirmed as yet, but I would expect everyone to want to explore all of the options available to them. We won’t close a branch before a replacement location has been found, but given the level of interest in the Post Office I don’t expect this to be an issue. If anyone does leave, it will simply create an opening for someone else to join the network.”

There have been concerns that the Local model could be installed in all 617 Tesco-owned One Stop stores, prompting the National Federation of Sub Postmasters’ George Thomson to warn against “getting into bed with Tesco”. Should independent retailers be worried?

”We won’t be offering the Local model on this basis. It will be a completely fair and transparent process involving the best store -regardless of whether they’re an independent, member of a symbol group, or part of a multiple operator. We expect some competition to offer these models, but we’ll be making decisions on the basis of the store being the best fit. This is a voluntary scheme for everyone, including us, and we won’t be putting it in any store that we don’t think can support it.”

Less than a decade ago, the Post Office was experiencing widespread branch closures and was under fire from the public and subpostmasters. To what do you attribute this turnaround?

”We’re on a growth agenda right now. For the first time in a decade we’re on a growth plan and we don’t foresee any major branch closures. We’re actively seeking more work, not just government contracts, and are looking to expand our services in all 11,500 branches. We won’t be closing any branches without ensuring that another will open in the same area and that communities are provided for. We hope to have the most stable Post Office network ever.”