It is easy to be critical of POL – far too easy. Incompetence reigns supreme in that organisation and the inability of management to recognise that crucial weakness labels them as incompetent as the others.
Yet I do recognise that they are trying to do what they think is best for the network. Paula has her vision and I have mine. They are not a million miles apart either. The goal for instance is the same – a viable and sustainable network with a reduced dependency on a Government subsidy and we both believe in the central role a post office plays in the community it supports.
But there were many roads to achieving those goals, not just mine or Paula’s, other’s have different ideas as well. Sadly Paula chose the wrong one and I pretty sure my ideas will be full of holes that can be picked on but I offer the following at least to show that there were other ways of transforming the network and ultimately achieving the required targets.
A Sustainable Network
I guess we need to define what makes a sustainable network. I think perhaps Paula and I disagree on this. The large majority of the network of branches are owned by independent self employed businessmen and women. As sure as they bought into the Post Office franchise in the beginning they will ultimately have to sell it in the end through illness, retirement or other. For the network to be deemed sustainable there as to be a willingness in similar minded small businessmen to invest into the franchise when one becomes available.
But more than that I think is the ability of the network to attract the right sort of business person. The less you pay the less you get unfortunately. We only have to look back a few years to find Subpostmasters making a reasonably substantial income from their business. Now, and I’ll discuss this in detail later, the very low pay is no longer an incentive to operate a post office to the best of one’s ability.
Secondly, one of the problems Paula faced from the beginning was the political agenda of the government to enforce an unsustainable network size on her of 11,500. There comes a time when you really have to stand up to politicians and explain to them the commercial realities of falling footfall and weakening margins. There are far too many Post Offices, particularly in the urban environment that are cutting their own throats by competing against each other.
My first move towards making the network more sustainable would be to reduce the size of it yet again – just imagine the mess we would be in if some bright spark had suggested NT when there were still 20,000 branches!
A One SIze fits all approach
Well some might call NT a 3 size fits all approach. It doesn’t work. If there is one thing that is unique among Post Office branches (is that an oxymoron?) then it is the fact that they are all different. Different location, different size, different products and different customer mix and most importantly different subppostmasters. This creates the biggest headache of all, particularly for consumer focus groups, inconsistency in delivery of the franchise.
The network now needs to be split into two with completely different agendas. One part will focus on rural outlets while the remainder will form a true Post Office Standardised Franchise focusing on the Brand and the Customer.
This rural post office network will embody the quintessential traditional concept of a village shop and post office. The minimal management required to control the network will be also responsible for the fair and equitable distribution of the government subsidy. The key concept that needs to be taken on board here though is that the subsidy supports the shop as well as the Post Office.
As for the remainder operating under a true franchise set up well NT gives us a clue where to take that. It is all about retail supporting the Post Office. POL have never ever embraced retail. You just need to go into one of their Crown Offices (Last one I was in was York – heaven help us what a mess) to see their feeble attempts. Subpostmasters on the other hand have always embraced retail as a little bonus on the side and over the years they have come to provide a fairly standard offering of cards and stationery. Yes there are lots of other retail choices but cards and stationery I would say are in the majority.
So just as a rough example – let’s say POL as a wholesaler provided cards to its network on a 10% margin. Say there were 8,000 offices in the franchise each turning over £500 per week in cards and stationery that equates to over £40m a year! If POL were to involve themselves in providing a wholesale solution to the retail offering of a Post Office Franchise outlet the could make a considerable amount of money. I don’t know why they have never considered this before – many years ago I worked for Shell Select Stores central office in South Africa and they were one of the largest Convenience Store retailers in the country – in fact they were the largest retailer of Coke in the World for a long time – although they always remembered people came to them for petrol first!
With 11500 outlets POL operate the largest retail network by far in the UK – something they keep boasting about but have never exploited. With so many outlets you get some serious discounts put your way and they could certainly compete with Londis and the like on buying power.
Protecting the Brand
When you walk through the door of a shop that has a Post Office sign above it you really need to be able to buy items to do with Post first and foremost. I see no future in over the counter financial products under a post office umbrella – NS&I can do without OTC availability and you don’t see many High St shops selling insurance these days. I must point out that I am not talking about banking transactions as they must remain part of the Post Office provision.
You protect the brand also by ensuring it is the main form of income for the franchisee. It is something that both parties to the franchise are as keen to promote as they would be unwilling to lose. That ensures branch standards as well as a consistent offering across the network.
If Post Office were to become the cheapest wholesaler in town then it would also be another reason for the Franchisee to protect the brand.
Protecting the Franchise
The franchisee has to get something in return and that is protection of the asset they are prepared to invest in. Standard practice in all real franchise operations and best delivered through demographic protection. The bizarre idea that Paula has to bring in PO Basics – while I understand the commercial rational – beggars belief that she is unaware of the impact that will have from both a financial and motivational viewpoint on her operators.
And of course a standard franchise opens the way to a mutualisation process that can see ownership of the master franchise pass to the collective of franchisees. It could work both ways.
I do have a vision of what my network(s) would look like but I don’t seem able to put it across as well as others – this is just a blog – it takes more than this to describe it in detail – but what I do see is a tremendous opportunity to make it all a lot better than the current mob are doing for the benefit of the operator and the consumer and not just the bonuses of head office staff.