UPS did homework on rebranding Mail Boxes Etc.

Michelle Swafford

Wednesday, March 10, 2004 | 11:17 a.m.

A store name must communicate much more than the location of a business, especially when it's re-branding.

That's one of the many lessons United Parcel Services Inc. learned when it acquired Mail Boxes Etc. Inc. in 2001. The company had to find a way to appease consumers, franchisees and UPS shareholders, so it conducted a study to see which well-known company name attracted more customers while reflecting the new ownership.

A decision was made last year to entice franchisees to convert the Mail Boxes Etc. stores to The UPS Stores and lower UPS shipping prices in the stores by 20 percent. Today, 3,300 of the 4,700 stores in 40 countries have converted to the new store name. Sales and market share have increased significantly in many markets, said Stuart Mathis, president of The UPS Stores.

On Tuesday, Mathis and Rocky Romanello, vice president of retail services for UPS, shared their stories and advice to franchisees and franchisers during the 44th annual International Franchise Association conference held in Las Vegas.

Sales in the 54 Las Vegas stores doubled and tripled after the brand and pricing changes, said Carl DiGennaro, Las Vegas-area franchise developer for The UPS Stores. There are 51 UPS-branded stores and three Mail Boxes-branded stores, some of which will soon transition to the new name.

"Mail Boxes Etc. was well-known, but UPS has taken it way beyond that," DiGennaro said.

He said Las Vegas is a huge growth market for The UPS Stores because of the increasing population. An additional 35 to 50 stores are planned for the valley within the next five to 10 years. Some of those stores could open in Las Vegas Strip hotels if negotiations prove fruitful, DiGennaro said.

He said The UPS Store does not plan to locate in grocery stores like some of its competitors have.

The Las Vegas Valley averages one UPS or Mail Boxes Etc. store per 25,000 to 28,000 people, DiGennaro said.

He said there is a continual waiting list that averages 15 people looking to open stores in the Las Vegas Valley.

Nationally, franchise sales and UPS shipping volume doubled in 2003, Mathis said.

He said everyone benefited from the changes: Consumers receive lower prices, franchisees have increased volume and profitability and shareholders receive additional revenue from the increase in UPS shipping.

The UPS Store plans to open 500 additional franchise stores this year. By 2007, the company plans to increase its U.S. store count from 3,600 stores to 5,000.

"Leads from potential franchise owners have grown exponentially," Mathis said.

He said the biggest challenge so far has been informing consumers that the company provides the same services as before, which include mailbox rentals, photocopying, shipping and other business services.

The target customer is the small, home-based business owner and the soccer mom who needs to make photocopies, Mathis said.

The company is looking at bundling services at a discounted rate to increase its presence with larger businesses.

Looking forward, UPS plans to persuade existing Mail Boxes Etc. stores to become UPS Stores. Franchisees that didn't re-brand had multiple reasons including they preferred their current name and they're able to set UPS shipping prices within their stores, Mathis said.

Internationally, franchises will continue to be called Mail Boxes Etc. because the process of re-branding is more difficult and UPS isn't the major shipping provider in all countries, Mathis said.