Swiss Post Sets Out To Reinvent The Post Office

(MENAFN- Swissinfo) Swiss Post is one of the most lauded institutions in Switzerland, which is why efforts to reinvent it face some scepticism.

Jessica covers the good, the bad, and the ugly when it comes to big global companies and their impact in Switzerland and abroad. She's always looking for a Swiss connection with her native San Francisco and will happily discuss why her hometown has produced some of the greatest innovations but can't seem to solve its housing crisis.

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When Swiss Post CEO Robert Cirillo announced on Wednesday plans to cut a fifth of post offices across Switzerland by 2028, the reaction from some politicians and civil society groups was swift.

“With its plans, it is carrying out a clearcutting in this area [postal service] and dealing a severe blow to the public service,” Manuel Wyss from the communications trade union Syndicom toldExternal link Swiss public television, SRF.

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In many ways, the decision to eliminate 170 post offices didn't come as a surprise. Fewer people are sending letters, and even when they do, they rarely use a physical post office to do it or to buy stamps or carry out financial transactions.

The number of post offices has been on the decline for decades with the rise of email, smartphones and e-banking. There were around 4,100 post offices in Switzerland in the 1970s compared to around 800 at the turn of the century. Covid only accelerated the shift online. The latest announcement on Wednesday means there would be 600 post offices across Switzerland by 2028.

Switzerland is far from alone. The Universal Postal Union reported last year that revenue generated from letter-post services globally droppedExternal link from over 50% in 2005 to 34% in 2021. By next year they expect that to drop to 29%. The financial squeeze has led many countries to cut back on physical post offices.

For Switzerland, the demise of post offices is a bitter pill to swallow. Swiss Post holds a special place in Swiss society. The post office often occupies the most beautiful building in town and was long seen as the centre of civic life. It's hard for many people to imagine postal services relegated to a kiosk or a container in a car park.

Swiss Post is a unique institution in Switzerland. It is a state-owned enterprise, but it is financially independent. Its mandate from the Swiss government requires it“to deliver letters, parcels, newspapers and magazines Switzerland-wide (universal postal services) and provide payment transaction services in all parts of the country”.

In return, Swiss Post has a monopolyExternal link on domestic letters under 50 grams, which covers some of the cost of providing universal postal services. It makes 86% of its revenue through other services provided on the free market including parcel delivery, banking and mobility. It doesn't receive any taxpayer money for providing basic postal services.

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Last year, at the Group level, Swiss Post had an operating profit of CHF254 million ($280 million), about CHF35 million less than in 2022. A key drag on profits is falling letter volumes, which dropped 5.6% last year. The number of financial deposits made at a post office also fell by over 18% due to the widespread use of e-banking and QR codes to pay bills. It isn't a surprise that this led to a drop in visits to the post office. Compared to 2019, a third fewer customers visited a post office in 2023.

Swiss Post has already raised prices for stamps several times to try to compensate for losses. Earlier this year Transport and Communications Minister Albert Rösti suggested another solution could be reducing postal deliveries to just three days a week. The United Kingdom has been debating a similar moveExternal link following other countries such as Denmark and Australia that scaled back letter delivery schedules.

Swiss politicians and the Swiss Post CEO swiftly pushed back on Rösti's proposal. Such a move has long been viewed as a taboo in Switzerland, which has prided itself on sending a letter from one side of the country to the other in one working day.

Switzerland has consistently ranked at the top of the Universal Postal Union's list of best postal services in the world, scoring near perfect marks for reliability and relevance.

It's hard to let go of the way things have been done, especially when they have worked so well. But times are changing and so are the demands of customers.

In 2020 Swiss Post announced a new strategy to build the“Swiss Post of tomorrow” focused on“customer centricity” and providing services that“connect the digital and physical worlds”. As part of this, CEO Cirillo has insisted that this requires reducing dependency on declining business models such as letter delivery.

“We have to acknowledge that there has been a change in customer behaviour over the past four years,” he told the Swiss News Agency Keystone-SDA on Wednesday.

This doesn't mean fewer locations but less of your typical post office. The company is investing over CHF100 million in the next four years in training staff, modernising branches and creating new formats. This includes more 24-hour automated postal stations and working with third-party providers such as kiosks and grocery stores to offer postal services.

Under the plan, Swiss Post would also transform remaining post offices into service centres in collaboration with banks, health and insurance companies and other service providers. It's already taken some steps in this direction. Post offices today are already selling a range of stationery, gift cards and toys.

In February Swiss Post announcedExternal link it was partnering with local mobile phone provider Salt to sell phone subscriptions. It's also begun providing digital health services, including developing electronic patient records across Switzerland.

But these changes have raised more fundamental questions about the role of Swiss Post in society and what services it can and should provide. Under its mandate, Swiss Post can“provide services on behalf of third parties and thus make the best use of its infrastructure”. But how far it can take this is still unclear.

Some Swiss media noted that demonstrations against post office closures had dimmed over the years. Seven years ago, there were violent demonstrations in Basel when it first closed a post office. The reactions to the latest announcement on Wednesday seemed to be less about the loss of post offices and more in reaction to what comes in its wake.

“The problem is rather the state-owned company's delicate balancing act between the public service mandate and poaching in the private sector,” wrote one commentaryExternal link in the Neue Zürcher Zeitung.“This balancing act is becoming more and more difficult the more the relevance of basic services diminishes.”

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