Making the Post Office a complete package in new era of ecommerce

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https://www.thetimes.co.uk/article/maki ... -bcz98qn0r

Making the Post Office a complete package in new era of ecommerce
The boss of the nation’s venerable counters business is looking to pick up the pace


Robert Lea
Friday January 15 2021, 12.00pm GMT, The Times

Pudo. It sounds like a board game, or maybe a pavement cleaning contraption for dog walkers, or a joke, but when people are saying that it might be the saviour of the Post Office, you can be sure that they are taking it deadly seriously.

Nick Read is. The Post Office boss thinks that “this is our huge growth opportunity. Pudo could be worth anything up to £400 million a year in five years and a very achievable ambition would be to get 30 per cent of the market share, or upwards of £100 million, by 2025-26.” When you have revenues of nearly £1 billion a year, as they were before the pandemic, an extra £100 million or so is a prize that can’t overlooked.

Pudo isn’t a mystery, either — it’s simply the industry acronym for “pick up, drop off”, the self-explanatory step up from click-and-collect — but few doubt that it can be the next big thing in the evolution of ecommerce.

The alternative, of an ever-growing number of vans delivering online shopping orders door-to-door, has implications for the environment, traffic congestion and a sector rendered fragile as courier companies struggle to make financial sense of running so many vehicles. The Post Office thinks it can be the solution, or at least part of it, and that is a game-changer in several ways.

First, there is the simple effect on the business itself. The largest portion of its income is in the letters and parcels it handles for Royal Mail, the collection, sorting and delivery giant that was hived off and then floated in 2013, leaving behind its post office counters. Its other main businesses are cash and banking, payment services for households settling bills and travel, including holiday currency, which is currently in Covid-enforced hibernation.

According to Mr Read: “Our core strategy is to double down and invest in those parts of the proposition that are hugely popular and crucial to the Post Office’s longevity. Mails and parcels, cash and banking, bill payments and travel are the four pillars of the Post Office and we want to simplify that.”

It seems unlikely that the government-owned Post Office will follow the Royal Mail to privatisation, not least because of the 4,000 unprofitable rural post offices that ministers want to keep open to ensure that 99 per cent of the population is never more than three miles away from a post office counter.

The size of the future taxpayer subsidy has yet to be settled, but Mr Read aims to attract external private investment and develop the business. Which is where pudo comes in.

The key is the recent end of the Post Office’s historic agreement to act exclusively for Royal Mail. It is negotiating with “all the major online [shopping] players and all the major carriers”, such as Amazon, DHL, DPD, UPS Hermes and Yodel, to act as their click-and-collect partners.

As the economy returns to normal and people go back to the workplace, Mr Read anticipates retailers and carriers undertaking fewer home deliveries, for three reasons: people will not be available to take their deliveries; the cost of final-mile van delivery; and society’s reaction to proliferating, pollution-emitting vans. It will mean longer opening hours for post offices and the development of new formats, such as storage lockers, but the customer, he believes, will come, because “we are convenient and we are trusted”.

Which brings us to the second game-changer. Trust is something that the Post Office acutely aware of, dogged as it has been by one of Britain’s biggest consumer business scandals. Its Horizon automated payment systems was a fiasco, failing to log a range of transactions around the country. Its response was even worse, opting not to look for flaws in its IT system but to accuse sub-postmasters of theft and fraud. Although successive investigations indicated IT failings, the Post Office compounded its errors by cover-up, duplicity and a campaign to convict sub-postmasters and postmistresses. Its actions led to criminal records, prison sentences and personal bankruptcies. The collateral damage was widespread job losses across the network.

In late 2019 the Post Office made a £58 million legal settlement and last month the process of overturning dozens of convictions began. Yet there are 2,500 unresolved cases of Post Office employees claiming recompense and the total bill is expected to be “significant.”

Into this maelstrom walked Mr Read, a sometime British Army tank commander and disciple of Tesco’s Sir Terry Leahy. He became the Post Office’s chief executive in late 2019, an unenviable job even before the past ten months of the Covid-19 pandemic.

“Resetting the business is clearly a critical component of what we have to do, not just for the postmasters that have suffered at the hands of the Post Office, but as a start point from which to move the Post Office forward.

“Being transparent about what the Post Office got wrong, how we fix it and making sure that nothing like this could ever happen again is at the root of everything we are doing.” Changes have included the appointment of two postmasters to the organisation’s board, improving the remuneration of those running its 11,500 outlets and adjusting “the imbalance in power and moving toward a partnership model” for the 55,000 people who are employed in the network.

Mr Read, 54, has been here before. Until 2017 he ran Nisa, the convenience stores group owned by its members, during a turbulent turnaround before its acquisition by the Co-op. Before that, he had a peripatetic career in retail, banking and travel, and before that he was in the army. The son of a soldier and the youngest of three brothers, he was educated at Ampleforth, the “Catholic Eton”, and at Sandhurst, from where he became a captain in the Royal Dragoon Guards. A “strong Christian ethic” from school was reinforced at the military academy, “where you learn to serve to lead”. The army gave him “the principles of communication, how you take people with you, things that I deploy now, 30 years on, that business school is unable to teach”.

His leadership also has been informed by those who he worked for, including Sir Terry during Tesco’s glory years: “His ability to distil data and simplify it for a large organisation of 500,000 people was astonishing.”

All those lessons are now being put to good use at the Post Office. Leading a physical community business in the age of Covid lockdowns hasn’t been easy, particularly one in need of transformation, but “being out and about, being visible is where you need to be”. Rebuilding trust, perhaps, if you are looking backwards; and positioning the business for a very different post-Covid world, one that is evolving with each lockdown, if you are looking ahead. Given his new love of pudo — not poo-doh, nor an obscure version of Cluedo — there can be little doubt that Mr Read is, at the very least, doing both.

Q&A

Who is your mentor? Two that stand out are Terry Leahy at Tesco and Harriet Green at Thomas Cook

Does money motivate you? Only in so far as it allows me to pay the bills and provides choice

Which person do you most admire? Sir Winston Churchill. Enormous personal courage in the face of adversity, resilience and inspiring a nation to respond so positively over such a prolonged period

What is your favourite television programme? My children would say I only watch News at Ten and Match of the Day, but over Christmas I enjoyed Black Narcissus

What does leadership mean to you? The ability to inspire people to go beyond what they thought possible and achieve seemingly impossible outcomes

How do you relax? Exercise. I cycle, swim, go to the gym and spoil a good walk by playing golf

CV
Education: Ampleforth College, Sandhurst, MBA at Cranfield

Career: 1989-93: captain, British Army; 1993-98: purchasing director, Aldi; 1998-2001: manager, Deloitte Consulting; 2001: senior role at Tesco and then the following groups; 2005: Lloyds Banking Group and HBOS; 2012: Vodafone; 2013: Thomas Cook; 2015: chief executive, Nisa Retail; 2018: chief executive, Extra Energy; 2019: chief executive, the Post Office

Family: Married with three sons