WASHINGTON — The Postal Service, which has proposed closing 3,700 offices, is setting up services inside small grocery stores as it tries to maintain service while trimming billions of dollars in costs.
The agency has been losing $35.7 million a day, and 85 percent of its 32,000 offices do not make enough to cover their expenses. So it is hoping that working with retailers to put stamps and a modicum of mailing services alongside beer and lottery tickets will help put a dent in its growing deficit.
The Postal Service has long allowed retailers to sell postage. But now it is arranging to provide some basic mailing services in stores in rural areas like Brant, Mich., a town of just more than 2,000 about 30 miles southwest of Saginaw.
The post office there closed last year because it did not have a postmaster and another post office was nearby.
In October, the Postal Service contracted out services to Nixon’s Grocery, a store known primarily for its produce and fresh meats. Although it does not provide the full range of mailing services, residents can mail letters, buy stamps and send packages. There are also 20 post office boxes for rent.
The store’s owner, Gary Nixon, said he received about $500 a year from the Postal Service for the setup.
“We didn’t do it for the money,” Nixon said. “It’s a service for our customers. People really appreciate it.”
There are currently 10 stores across the country serving as village post offices. Two more are expected to open this week, and an additional 26 are under contract but waiting for equipment. The Postal Service said it had gotten more than 600 inquires from other communities that are interested.
Efforts to trim
The village post office is one of the many ways the Postal Service is seeking to cut cost as revenue declines. The agency said it could not tell how much it would save by setting up shop in small groceries and hardware stores, but it did say it expects to save $200 million annually by closing branches.
The agency is also looking to offer products in other places where customers are already shopping, like drugstores and retail chains, and to expand its services at office supply stores.
Sue Brennan, a spokeswoman for the Postal Service, calls the arrangements with stores a win-win for local communities and the service.
“We want to have a presence in these communities, but we simply can’t continue to do what we are doing,” Brennan said. “These village post offices save us money and still provide needed services in the communities.”
Sen. Thomas Carper, D-Del., said the Postal Service should consider using major retailers like Walmart.
“It works for banks and pharmacies,” Carper said. “There is no reason why you couldn’t have a post office branch in a Walmart store. They are located all across rural America.”
The volume of mail has plummeted with the rise of email, online coupons and electronic bill-paying. Volume is down 25 percent from five years ago, and projections show even further declines, said Postmaster General Patrick Donahoe. But federal law prevents the Postal Service from raising postage rates faster than inflation.
Meanwhile, the agency has had a tough time cutting costs to match the revenue drop, with a history of labor contracts offering generous health and pension benefits and no layoff provisions, and laws that restrict its ability to cut the frequency of deliveries.
Congress plans to begin work on several postal bills in the next few weeks that are aimed at restructuring the Postal Service’s finances.
Postal Service officials say that a major factor behind the agency’s $20 billion in losses over the past four years is a 2006 law requiring it to pay an average of $5.5 billion annually for 10 years to finance retiree health costs for the next 75 years. One bill pending in Congress, co-sponsored by Carper, would lower the payment and stretch it out over a 40-year period.
Postal Service officials say village post offices in grocery stores and other locations will not save the agency, but will help reduce costs while maintaining services.
“Any savings we can get helps us move toward financial stability,” Brennan said.