07 Pickave Wik Koenigswinter November 2008

Wolfgang Pickavé, 11th Königswinter Seminar, November 25, 2008

Transformation of the Retail Network:Deutsche Post’s Face to the Customer

11th Königswinter Seminar | November 25, 2008

How a Deutsche Post retail outlet today definitely does not look like…


Agenda

1. The Transformation Process

2. The Challenges

3. How Deutsche Post meets the Challenges


1.The Transformation Process


Transformation of Deutsche Post’s retail outlets was part of the overall restructuring of the company

Letter82 state-of-the-art mail sorting centers3,700 delivery bases

Parcel33 standardized parcel sorting centersMax. 3 handling steps

Retail Outlets~ 14,000 outlets

Letter328 sorting stations11,000 delivery bases

Parcel140 sorting centersUp to 9 handling steps

Retail Outlets29,299 outletsInsufficient opening hours

Postal Services in GermanyLow qualityPoor customer serviceLow automationNo IT support

~ 750 Deutsche Post outlets855 Postbank Finance Centers

~ 3,800 Post Service outlets~ 7,200 Partner outlets~ 940 Postpoints *)

100 Business Mail Access Points *)100 Access Points for large volumes340 Sales Points for letter and parcel stamps *)

• 2 -3 m customers/day• High quality

• Long opening hours(Ø 42 h /week)

• High customer satisfaction and loyalty

*) Pilot project


Deutsche Post’s retail network strategy at a glance

“First Mile” Initiative

Completing the transfor-mation of Deutsche Post operated retail outlets into partner-operated outlets (by the end of 2011) Improving ubiquity both in terms of geographical coverage and opening hoursFurther improving quality

Broadeningthe sales base

Improving the sales performance regarding financial services and new services Employing and training financial consultantsLaunching the “Retail Outlets Quantum Jump-Program” for furthercost reduction

Cost reduction andquality improvements

Reducing the number of retail outletsStarting to transform Deutsche Post-operated retail outlets intopartner-operated outletsImproving service quality

• average opening hours

• waiting times

1

2

3

1990 - 1997

2006 - 2012

1998 - 2005


2.The Challenges


At least three challenges are impacting Deutsche Post’s retail strategy

1. Universal service regulation

Comprehensive set of provisions re the retailnetwork

Provision which services to be offered in the outlets

2. Evolving competition in postal markets

High market shares of Deutsche Post’s competitors

Evolving retail networks of Deutsche Post’s competitors

3. Changing customer behavior

Competition in the broader market of communicationservices

The “web 2.0” experience shaping customer expectations

Impact on

• Services and sales

• Outlet formats

• Retail network

• Regulation (?)


When defining its retail strategy Deutsche Post has to find the right balance between regulation and market driven decisions

Networkdensity

Customer demand

Retail network driven by regulation only

Retail network driven by market forces only

!

!


Deutsche Post’s retail network has to comply with a comprehensiveuniversal service regulation

Scope

Access

Letter mail up to 2,000g (incl. direct mail)Insured, registered, expedited delivery, cash-on-delivery itemsParcels up to 20kgPress items (newspapers, periodicals)

Retail outlets- Minimum of 12,000 fixed-location facilities in which all universal services

for letter mail and parcel mail are offered

- At least one outlet in municipalities with > 2,000 inhabitants

- In municipalities with > 4,000 accessible at a distance of max. 2,000 meters

- In rural districts at least one outlet for each area of 80 square kilometres

- At least one outlet in urban areas of 2,000 inhabitants (self commitment)

Letter boxes- At least 108,000 letter boxes (self commitment)

- Max 1,000 meters to reach a letter box in urban areas

- One clearance per working day and - in line with demand - on Sundays and bank holidays

Mobile post service in all cities without fixed-location facility


Letter Mail Market in Germany:Competitors have already gained significant market shares

9,839 10,041 10,266 10,237 10,164 9,900 9,994 9,863 10,073 10,060

9,751 9,920 10,092 9,988 9,859 9,512 9,462 9,118 9,017 8,786

1,274

88 121 174 249 305 388 532 745 1,056

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Revenues (in m €)Market share (in %)

Total market Deutsche Post Licensees

(0.8%) (1.3%) (1.7%) (2.4%) (3.0%) (3.9%) (5.3%) (7.6%) (10.5%) (12.9%)

Source: NRA


Competition in the German letter mail market is already more intensive than in other European countries

80%

UK*

100%

Finland

92%

SpainGermany

86%

Netherlands

since2008

by 2011

2011(Intra-city open)

since2006

since1995

Market shares incumbents

Market shares competitors

100%

France

2011

91%

Sweden

FMO

89,6%

since1993

Source: ECORYS

(14%)10,4% 9%

< 1%

8% 20%

incl. magazinesand periodicals

Collection(downstream access)

End-to-End

Market shares addressed letter mail services in 2007 (volume)


DPD

PickPoint

Packeteria

Competitors continue to expand their retail network in Germany

2005/2007: “PIN” and “Sparkassen-Banks” start co-operation (e.g. in Leipzig & Siegen)

14,016 13,042 DPAG **

23,321 16,347 Total

61 0

816 0 PIN

1,306 1,432

173 137UPS

2,918 1,044

4,654 3,486 GLS

13,393 10,248 Hermes

03/2008 12/2006 Provider

* incl. Otto-Shops

** Sum of Postbank-, Deutsche Post -, partner- and Post-Service-outlets, large customer and business customers acceptance points, pilot of Postpoint and Sales Point for stamps

Handelsblatt 13.03.08: Hermes gets wind of new chances at letter mail market …

GLS Logistic plans 16,000 parcel acceptance points within the up-coming years

Financial Times 28.04.08: “Paketeria” and the “Volksbank-Group” start co-operation (up-to-now 5 new outlets in Lower Saxony)


Deutsche Post

Hermes

Deutsche Post must meet universal service requirements both in urban and rural areas, competitors seem to prefer urban areas


Growth of E-mail volume is far ahead of domestic letter mail volume

Development of domestic letter mail and e-mail volumes (in bn items)

Letter mail E-mail

Source: GfK Private customer panel, Basis 64m Germans older than 10

2,2672,731

3,2094,053

4,551 4,861

6,110

1,6061,6461,6351,5911,5491,5281,5561,629 1,622

2000 2001 2002 2003 2004 2005 2006 2007

+ 25.7 %

- 2.5 %


3.How Deutsche Post meets the Challenges


Five established outlet formats guarantee the nation wide universal service

Deutsche Post AG - Retail Outlet

Provides all postal products and services of Deutsche Post as well as financial services of Postbank. Usually telecommunication and stationary products are also available

Postbank AG – Financial Outlet

Provides all postal products and services of Deutsche Post as well as customized financial services of Postbank. Usually telecommunication and stationary products are also available

Post Service Outlet

Provides selection of basic postal products and services however, no financial services of Postbank

Partner Outlet

Provides nearly all postal products and services of Deutsche Post. Usually they also offer financial services for Postbank

Post Office For Large Volumes Of Mail

Provides a selection of postal products and services especially for the needs of business customers however, no financial services of Postbank


Deutsche Post has to adapt its services and retail outlets to a changing customer behavior

… which have an impact on postal products and services

… which have an impact on postal products and services

“Web 2.0” and competition shape customer expectations …

“Web 2.0” and competition shape customer expectations …

Competitors enter the market successfully via low prices

Due to flat rates consumers perceive e-mail communication as free of charge

Proximity, easy and convenient accessibility, even together with other services

Long business hours of outlets especially during the evenings

24/7 access to self-service facilities

Low prices

“Market place internet” provides advice, services and sales 24/7


Specific services for …

• private customers and small business customers as well as for

• large business customers

with

• improved accessibility in terms of location & business hours

• customer oriented range of products

• short waiting time

and consequently

• significant cost reduction

The answer:Improvement of ubiquity and availability as well as further cost reduction

For private customers and small business customers:

• POSTPOINT:Sales and acceptance of basic day-to-day postal products as e.g. stamps (letters and parcels)

• Sales Point: Sales point for the most requested stamps(letters & parcels)

For large business customers:

• Acceptance Point for Business Mail:Acceptance of business mail, especially for larger volumes of mail

Further stepwise migrationfrom own-operated to partner-operated retail outlets


Postpoint:Additional convenience format for private customers (I)

POSTPOINT

an additional outlet format(in addition to those required by regulation)

• In areas with a high customer demand (city centers, districts, local centers)

• Sales and acceptance of letter mail and parcel products as day-to-day demand

• Implementation as an agency at retailers

• Target 2008: ~ 1,100 Objectives:

• Proximity, business hours like retailers, short waiting times

• Enhancing Deutsche Post‘s presence

page


• Letter mail products- Sets of letter mail stamps and single stamps- PLUSBRIEF and PLUSKARTE (pre-paid envelopes and cards)- EINSCHREIBEN-Set, NACHSENDESERVICE-Set and LAGERSERVICE-Set

(self-service pack for registered mail, for redirecting and for storage service)

• DHL-products- Stamps for small parcels, parcels and for further weight steps- PACKSETS (cardboard boxes)- PLUSPÄCKCHEN (pre-paid cardboard boxes for small parcels)

• Services- Acceptance of stamped and unstamped letters and small parcels/parcels- Acceptance of items to be returned- Information about products and postal rates- Hand-out of white pages

page

Postpoint:Additional convenience format for private customers (II)


Sales points

as an additional service

• Sale of stamps for letters and parcels

• Operated by retailers (agency)

• Target 2008: ~ 2,000

Objectives:

• To further increase of the availability of postal services for private customers (combined with street-letter-box and parcel-box)

• To further enhance Deutsche Post‘spresence in the retail sector

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Sales points:Additional convenience formats for private customers


Acceptance Point for Business Mail:Additional format for larger volume of mail

Acceptance points for business mail:

• Acceptance of business mail (especially large volumes)

• Locations with high business density

• Operated by Deutsche Post

• Target 2008: > 100

Objective:

• Proximity to business customers with high volumes


Paketbox

Self-service (I):Available around the clock

Acceptance and hand-out of parcels and small parcels

Number of PACKSTATIONStarget 2008: 1,400

Acceptance of pre-paid parcels, small parcels and items to be returned to sender

Number of Paketboxes:target 2008: 1,000

page

PACKSTATION


Self-service (I):Available around the clock

- Stamp dispenser- letter-box- PACKSTATION or Paketbox, - at some locations an ATM

Post 24/7

Currently in pilot phase: 50 Post 24/7-facilities

page


Thank you for your attention.

07 Pickave Wik Koenigswinter November 2008

Education

Transcript of 07 Pickave Wik Koenigswinter November 2008