Post office sector trends

Red post office sign sticking out of beige wall

(last updated July 2019)

What has been happening in the Post Office sector

Over the last ten years or so there has been a steady fall in the number of post offices. Post offices in many rural areas have found it difficult to survive, along with other types of retail outlet, because rural communities have changed in nature and many local residents work and shop in nearby towns.

Demand for Post Office services has also fallen as a result of:

  • benefits and allowances being paid direct into customers' bank accounts as part of the government's decision to phase out payment of benefits by order books and Giro cheques. Many people choose to have their benefits paid into their normal bank account instead of the Post Office account
  • customers paying their bills online, by cheque or direct debit, or at a PayPoint outlet
  • stamps becoming available from other retail outlets, and more people using email instead of writing a letter
  • the opening up of the postal services market to competitors
  • the Post Office losing the TV licensing contract
  • traditional Post Office business, such as vehicle licensing, becoming available online
  • Royal Mail losing parcels business to competitors and click and collect services

To compensate for this the Post Office introduced a range of new services, such as bureau de change and travel insurance, financial services, Lottery tickets and scratch cards and so on. Banking services have also been introduced which mean that customers can now access almost every UK bank account. The whole Post Office network has now been computerised so that offices can undertake transactions electronically.

To preserve the national network of post offices, the government embarked on a programme of planned post office closures from 2007. The Network Change programme resulted in 2,500 post offices closing down, although 500 new 'outreach' offices were opened at the same time. The industry called for new work to be allocated to post offices so the network could survive into the future.

Following a period of uncertainty over its future, the continuation of the Post Office card account was confirmed at the end of 2008. Although Post Office Ltd won the contract in 2010 when the card was renewed, payments for setting up an account and handling transactions fell.

The National Federation of SubPostmasters (NFSP) urged the government to establish new work for the network to help businesses to remain open. The Postal Services Bill, which received Royal Assent in June 2011, contained measures designed to protect the current network of around 11,500 branches, together with £1.34 billion of new funding.

Under the Post Office Transformation programme, new post office models were created so that it is easier for post offices to open for longer hours and on Sundays and to run post office business and retailing activities together. The new style post offices include Main Post Offices and Local Post Offices. There are also Community Post Office branches where the post office has been retained under the old model because it is the only outlet in a community.

Most Local Post Offices are now run from a retail business, like a newsagent or convenience store. However, the Association of Convenience Stores say that more support is needed because the model is unsustainable as an increasing number are becoming loss-making

Despite the changes the NFSP has expressed concern that the government is not doing enough to make more government services available through post offices. Although the government's decision to renew the Post Office card account when it expired in March 2015 was welcomed by the NFSP, the Federation pointed out that government services provided through the Post Office continue to decline. The new contract runs until 2022.

When thinking about buying a post office, you will have to decide whether:

  • your retailing activities will be able to compete against other local retailers
  • demand for post office services, and therefore the Post Office transaction fees, will be high enough in the area in which you propose to operate
  • you're prepared to put in the longer hours needed to make the business a success

A government consultation on whether the existing access to the post office network was appropriate concluded that the 'three mile' rule 'provides an appropriate and convenient level of access for rural communities'. From April 2018 the government is investing £160m to protect rural post offices from closing and a further £210m over three years to modernise the existing 11,600 branches (of which 6,185 are rural branches).

Keeping up to date with the Post Office sector

Joining a trade association is an excellent way of staying up to date. The National Federation of SubPostmasters represents the interests of sub-postmasters throughout the UK. The Federation produces a helpful fact sheet for those considering buying a post office and also publishes the monthly journal The Subpostmaster which contains articles and features of interest to those operating in the sector. The Federation's website contains a great deal of useful information.

Contact the Federation at Evelyn House, 22 Windlesham Gardens, Shoreham-by-Sea, West Sussex BN43 5AZ.

Post Office Ltd produces information for prospective subpostmasters on their main website, including details of how to apply for an advertised post office online. The Post Office also provides information specially for subpostmasters on a dedicated website, One Post Office, as well as details of how to become a sub-postmaster on the Run a Post Office website.

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