The Co-op’s decision to remove and downgrade some Post Office (PO) branches has been blamed on ‘challenges of the current economic climate’.

Messages from the PO to customers sent between April and June, seen by Better Retailing reveal Co-op is closing full branches in eight of its stores, equivalent to approximately 3.5% of its total PO branches. Seven will close completely, with one to be replaced by PO’s ‘lighter’ Drop & Collect services.

While most of PO’s messages did not provide a reason, PO’s message for one of the latest closures stated: “Our retail partner, The Co-operative Group, who operate Kelsall Post Office branch on our behalf, have advised that due to the challenges of the current economic climate, they have made the difficult decision to resign.”

The move coincides with other Co-op efforts to cut costs known as ‘Project Lunar’. First revealed by Better Retailing, the plan will introduce lone-working in less profitable stores during ‘quieter’ daylight hours.

EXCLUSIVE: Co-op’s ‘Project Lunar’ to introduce lone-working in quieter stores

The Co-op’s PO branch closures are underway, with the last of the eight scheduled to shut in September. All Co-op sites impacted  remain open.

Increases to wage costs announced in the Spring Budget have been blamed for staff hour reductions in some other retail chains, though messages from MPs about Co-op’s PO closures suggest decisions were made before the increases to employment costs were announced in the Spring Budget.

The Co-op’s PO closures due to cost pressures come as the PO battles to improve the profitability of its branches for partnered retailers. It plans on increasing remuneration to branch owners by £120m in the current financial year, equivalent to a 30% pay boost. Approximately £86m of the £120m total has been ring-fenced so far.

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