Greater format choice and flexibility are vital to meet evolving customer needs in today’s challenging retail environment. Find out how Post Office is helping retailers adapt to growth in the parcels market.

The pandemic instigated profound changes in how and where we shop. Changes that have transformed the high street, established a desire to shop local and further entrenched preferences for online shopping.

Successfully adapting to these changes, while also planning for growth, is a huge challenge for retailers.

However, as the pandemic highlighted, flexibility in business planning is vital. From design to delivery, prioritising the ability to be agile in response to change has never been more important.

And it’s also crucial to understand that customers’ needs vary from community to community, and a “one size fits all” approach does not work. With the largest (and oldest) retail network in the UK, Post Office has long recognised this, and across its network of over 11,500 branches, it understands that not only do customers’ needs differ, but they evolve differently, too.

Monitoring these changes therefore is key. 

That’s why supporting franchisees to maximise the opportunities these changes offer, quickly and easily, is a priority for Post Office.


Responding to the growth in the parcels market

Changes in shopping habits, such as the increase in online shopping, has fuelled growth in the returns, collections and prepaid parcels segments of the market - highly competitive sectors, particularly in urban areas.

To support franchise partners in capitalising on this growth and enhance overall share of this important market, Post Office has developed a lighter branch format, Drop & Collect.

This is a more flexible format which, unlike other Post Office branches that can offer over 170 products and services, Drop & Collect provides only collections, returns, prepaid parcels products and bill payments services.

As a counter-less format with a smaller product offering, Drop & Collect is simple for retailers to operate. Transactions are done on a handheld device and retailers do not need to sacrifice any significant floor space from their retail business to operate the format.

Training is streamlined and conducted online, making it very easy for retail staff to complete.

Helping retailers meet evolving customer demand 

Trials of the format began in late 2021 and there are now over 150 Drop & Collect branches open across the country. Approximately 250 are expected to be open by the end of March, with customer and retailer feedback having proved extremely positive during the trial period.

To date, Drop & Collect has been exclusively operated from Payzone stores but discussions are ongoing to extend the proposition to Post Office’s retail partners in the coming months. Thereafter, there are plans in place to broaden the proposition to independent franchise partners.

The new format provides Post Office franchisees with an even more diverse range of branch formats to operate and ultimately enhances the overall sustainability of the network. Franchisees have the opportunity to quickly add the proposition to their existing estate to meet evolving customer demand – or operate multiple Drop & Collect branches – to strengthen their share of a growing market.


The benefits of Drop & Collect for retail businesses

North Wembley Drop & Collect

Pratik Shah and his team at North Wembley Drop & Collect launched the format in October 2022 after several customers requested a prepaid parcels service that accepted Royal Mail and Parcelforce returns.

Perhaps because he acted on multiple customers’ requests, Pratik was not surprised that Drop & Collect was an immediate success. He already has hundreds of customers regularly using the service each month and customer transactions continue to steadily increase.

What he has been surprised by is the advantage Drop & Collect has had on his retail business.

“I’m amazed that already – since opening just a few months ago – I have had double digit growth in footfall to my convenience store and retail sales have increased by over 10%. Drop & Collect, as a Post Office brand that is well known, has brought in new customers as well.”

Pratik is keen for the proposition to expand its offering and is pleased that Tracked 24/48 returns will soon be added to Drop & Collect. He says: “I am now considering how to make more space to extend my business, so I can make more of the benefits that operating a Drop & Collect can provide.”

Drop & Collect delivers more footfall and income

Sutton Rd Drop & Collect

The flexibility of Drop & Collect makes it suitable for a diverse range of retailers, as proven by one of the first trial locations opened in late 2021 at Sutton Road Service Station in Hull.

The Drop & Collect is situated within the convenience store of the petrol station which also has a car wash and tyre service on site. Operated by Lohith Reddy, Drop & Collect immediately appealed to him as a new way to drive more footfall and income into his retail business.

”Drop & Collect has definitely helped increase sales in the convenience side of my business,” says Reddy. ”It’s been successful in bringing in new customers and that has been fantastic. It’s not often that a customer comes in to return a parcel and leaves empty handed – they inevitably will pick up snacks and grocery items while in the shop.

”Even though we’ve been offering Drop & Collect for a while now, we still see new customers coming in each week, so it’s been a great addition for us.”

The introduction of Drop & Collect to a multipurpose retail site has proven to be a success for Lohith and his business. Customers – existing and new - frequently comment on how they appreciate the convenience of having Drop & Collect available at the service station and Lohith believes that as more services are added to Drop & Collect, his business will benefit from even more growth as a result.

“It’s a proposition that suits us and, for the growth I have seen it add to my business, I think it would benefit many retailers like us.”