Postal Contract Helps Deliver More Customers : Growing Number of Shop Owners Operate Mail Stations to Boost Business

Business has been kind of slow in Kay Corey’s Santa Ana gift shop, despite a constant flow of customers through the store.

Unfortunately for Corey, the post office she runs as a nonprofit service at one end of her shop is drawing more customers than the gift items she sells to make a living.

But one of these days “these same people will also be customers in the other end of the store,” Corey said as she doled out postage stamps and money orders behind the counter of the “cubbyhole” postal station she recently opened.

Corey’s is one of 25 privately run contract post offices in Orange County that are licensed by the U.S. Postal Service to do almost everything that regular post offices do--and usually without the lines.

The low-profile contract stations have been around for some time, but savvy consumers recently have discovered that these storefront operations are a convenient way to buy stamps or mail domestic letters and parcels without paying the premium charged by private mailing services.

Demand is growing so fast, postal authorities say, that as many as 30 more contract stations are being planned for the county over the next year or so.

The Postal Service profits from the contract operations because it gets the revenue they generate but doesn’t have the expense of building and maintaining facilities or hiring staff.

Private operators, in turn, are supplied the necessary equipment and receive a yearly fee from the Postal Service--usually between $5,000 and $10,000. But the greatest lure to acquiring a postal contract, postal officials and store owners admit, is the extra customer traffic that a station draws.

Corey asked for and received $6,800 to run her station the first year. She said she believes a post office had long been needed in her neighborhood to serve the area’s large senior citizen population, merchants and the general public. “But it’s no secret I bid for the station to help the gift shop,” she said.

Santa Ana Postmaster Fred Florence said he believes Corey’s motive for opening the station is justified.

“What we want to do is provide neighborhood postal outlets, so contract stations are one way to accomplish that,” Florence said.

While most stations are located in card or gift shops, some are larger free-standing units such as the one operated in and by The City Shopping Center in Orange. It is the busiest contract station in the county, taking in about $500,000 a year. A station on the UC Irvine campus grosses about $300,000 a year. Corey said she expects her tiny operation to take in $100,000 in its first year.

Florence said county postal officials envision the need for 25 to 30 more contract outlets. “As soon as we identify the areas, we’ll solicit door to door, if necessary, to find merchants willing to operate them. We’re looking for demonstrated needs,” he said, such as in Laguna Hills, where four contract facilities already have been established near the Leisure World retirement community to augment a main post office and one substation.

Hector Godinez, manager of the Postal Service’s Southern California district, said he wants to add about 150 stations to the huge district within the next year.

“Our district will record $850 million in revenue this fiscal year,” he said, “and in 1986 I want that to reach $1 billion. The new stations will help us reach that mark.”

Nationwide, according to William B. Thomas, contract postal station administrator in Washington, D.C., “there will be increases in those areas that are showing growth, such as Orange County.” He said there are 5,200 contract stations throughout the country.

Some opposition is being voiced by the Postal Service’s unionized clerical workers. But an officer of the Orange County unit of the letter carriers union said her group does not envision privately run contract stations as a threat because they cannot deliver the mail.

Successful bidders for a contract station are those who ask for less money from the government than their competitors. To win a license, a contractor must also provide at least 100 square feet of floor space and agree to attend daily two-hour training classes for three weeks.

Besides training operators in the functions of the post office, “we help them with advice and recommendations on how best to use the station to their benefit,” said Ferrel McKee, the Postal Service’s consumer services director for Orange County.

“For instance,” she said, “we tell them to put the station in the back of the store so customers have to pass through their entire stock. If it was in front, customers most likely would just walk out after conducting their postal business.

“Besides convenience,” said Santa Ana Postmaster Florence, “contract facilities provide a homeyness and individual attention not usually available in regular post offices.”

Thelma Courie agrees. She said she drives three miles to buy stamps at Corey’s contract post office because the regular Fountain Valley post office near her home “is crowded like it’s Christmas every day. It’s a real zoo. I’ll never go back. This is a pleasure.”