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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 Page 2
How a Deutsche Post retail outlet today definitely does not look like…
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Agenda
1. The Transformation Process
2. The Challenges
3. How Deutsche Post meets the Challenges
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1.The Transformation Process
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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
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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
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2.The Challenges
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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 (?)
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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
!
!
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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
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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
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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)
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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)
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Deutsche Post
Hermes
Deutsche Post must meet universal service requirements both in urban and rural areas, competitors seem to prefer urban areas
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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 %
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3.How Deutsche Post meets the Challenges
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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
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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
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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
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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
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• 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)
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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
page
Sales points:Additional convenience formats for private customers
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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
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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
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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
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Thank you for your attention.