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Friday, 22 December, 2000, 12:57 GMT
Price cut 'threatens post offices'
Rural post office
Post offices are closing at the rate of almost two a day
By BBC News Online's Mike Verdin

Postmasters are demanding a ban on cut- price stamp offers, after warning that a pre-Christmas promotion by Safeway has threatened post offices, already closing at a rate of two a day.


Discounting stamps is sharp practice in my view

David Heath, MP for Somerton and Frome

The National Federation of Sub Postmasters (NFSP) has backed a call for shops and supermarkets to be held by the same rules as post offices, which are forbidden by contract from selling stamps at less than the face value.

The demand follows a month-long promotion by Safeway in which second class stamps were sold for 18p, 1p cheaper than face value, and a book of 10 first-class stamps offered for 2.50, 20p below the cover price.

The offer has affected takings at post offices which are already struggling to survive, the federation said.

Competition from general retailers, and tough settlements over earnings gained from processing government benefits and utilities' bills, has trimmed post office profitability in recent years.

The industry faces further uncertainty with European Commission plans that could see an end to the Post Office's monopoly on letter deliveries over a certain weight.

'Unfair'

"Safeway's offer represents unfair competition," federation general-secretary Colin Baker told BBC News Online.


The impact, even a small one, of supermarkets selling stamps at cut-price is something post offices really do not need

Colin Baker, National Federation of Sub Postmasters

"We can't sell stamps at cut-price rates so why should they? And the offer was particularly depressing coming at a time when so many post offices are already struggling."

Some 5,000 of the UK's 18,000 post offices are facing financial difficulties, with outlets closing at the rate of almost two a day, Mr Baker said.

Stamp sales, on which post offices take a 7% cut, account for about one fifth of profits at the average outlet.

"The impact, even a small one, of supermarkets selling stamps at cut-price is something post offices really do not need."

Christmas woe

Nigel MacCormack, sub postmaster at Wincanton sub-post office in Somerset, said the timing of Safeway's offer, which ended last week, was particularly unfortunate.

"The run-up to Christmas is the busiest time for post offices," Mr MacCormack told BBC News Online.

"They make a good percentage of their profits then. They make a bit of money to get them through the rest of the year."

He was unable yet to assess the impact of Safeway's promotion on takings at his sub-post office.

MPs' petition

Somerton and Frome MP David Heath has gained cross-party support for a move to ban discounting of stamps.

David Heath, Liberal Democrat MP for Somerton and Frome
David Heath: "Protect post offices"

"Discounting stamps is sharp practice in my view," Mr Heath said.

"When we are trying to preserve the rural post office network, which provides such a valuable service, this kind of thing really doesn't help."

His petition, supported by 30 MPs, calls on the Royal Mail and the Department of Trade & Industry to "better protect the interests of small retailers and sub-post offices".

Demand

Mr MacCormack urged Safeway to give an undertaking it would not repeat its discount offer.

"The worry is that you could have not just Safeway but all kinds of retailers doing the same thing next Christmas," he said.

But Safeway, which has introduced discounts to boost its share in the competitive UK supermarket sector, declined to give a guarantee.

"We would not give any assurances of future offers," a Safeway spokesperson told BBC News Online.

The stamp offer was a "short term" promotion. "Our strategy is to offer short term good deals," the spokesperson said.

Legal issues

Royal Mail, which has come under attack from the NFSP and MPs for failing to protect the interests of post offices, supported Safeway's right to sell stamps at a discount.

"It is perfectly legal practice," a Royal Mail spokeswoman said.

Royal Mail would be willing to look into discounting if the practice looked to present a real threat to post offices, the spokeswoman said.

"But we also have to look at the business as a whole," she said.

Deregulation of stamp sales some years ago had, rather than seeing sales at post offices fall as many observers had feared, prompted overall expansion in the market, she said.

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See also:

22 Dec 00 | UK
Letter monopoly could end
21 Dec 00 | Business
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23 Nov 00 | Business
Safeway gains a million shoppers
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