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Transformation Health Check - An operator perspective on how new post office models are affecting consumers

5 Ionawr 2017

Transformation health check, full report [ 310 kb]

The post office network is undergoing the biggest restructuring programme in its history, with the aim of maintaining its size and financial viability. The majority of the UK’s 11,500 branches are being converted to new models alongside other retail facilities.

As the consumer champion for post, Citizens Advice is undertaking a comprehensive research programme to understand how this change is affecting consumer access to mail services. We have conducted mystery shopping, consumer polling and mapping research, and our initial evidence suggests that the transformation programme has been successful in preserving the number of post offices and extending opening hours.

This report provides one interim health check of the transformation programme. All findings are based on interviews with post office operators, who have a unique perspective and understanding of how the transformation programme could affect consumers. None of the findings relate to Crown Post Offices.

Operators report that many consumers like the convenience of being able to access Post Office and other retail services at the same time. Customers are enjoying refurbished open plan premises with more space, improved physical accessibility and better communication with staff.

Many smaller post offices have achieved efficiency savings and longer opening hours by converting to PO Locals, combining with other retail services such as newsagents and petrol stations. Operators report that many customers like the longer opening hours and that the model is working well in those branches that are either large and busy or small and quiet.

But some operators of mid-sized PO Locals report facing longer waiting times as customers queue for both retail and post services at the same time. Some operators are themselves not happy with the customer queues but cannot find an economically feasible way to pay an additional member of staff to run another counter.

Some operators have concerns that not all retail staff have sufficient knowledge, experience or training to provide the required range of Post Office services. Others report that the reduced range of services in PO Locals can be inconvenient for customers.

Our research also highlights potential future issues that could affect consumer access to mail services. For example, some Post Office Mains (the conversion for larger branches) could face problems when their income guarantees - which run for 3 years following transformation - expire. Other operators have broader concerns linked to what they see as falling pay for Post Office transactions and competition in post and retail services. These concerns are raised despite a broader picture of fairly flat total operational revenues for Post Office Ltd. They reflect uncertainties about the level of future earnings following the transformation programme.

It is important to take these findings in the context of the network’s biggest ever transformation. Both operators and consumers are still adjusting to the working of new models. Some operators still view the Post Office as the primary offer within their business, and are having to adapt to a new approach to retail. And some customers are getting used to accessing postal services alongside other products and in new environments.

We recommend that Post Office Limited should:

  1. Ensure staff can conduct Post Office transactions confidently. It could improve its training and support for operators, and should consider simplifying Post Office transactions particularly to help staff in PO Locals.

  2. Consider adding greater flexibility to branch model types. More flexibility around opening hours and product range would help branches respond better to local demand. This could build on the success of the Post Office Local Plus model.

  3. Continue monitoring the medium term financial viability of new models. This should include comparing POL’s own financial records with operator experiences, with particular focus on the futures of branches with multiple operators and PO Mains after their 3 year parachute payments cease.