By Emily Stephenson
WASHINGTON (Reuters) - Grocers, gas stations and general stores could become "Village Post Offices" as the U.S. Postal Service looks to shutter thousands of traditional post offices to save money.
The Postal Service, which is bleeding cash due to declining mail volumes and private-sector competition, said it is studying more than 3,600 sites for possible closure.
It hopes to enter contracts with about 2,500 community retailers across the United States, which will be called Village Post Offices, in the next year to sell stamps and provide flat-rate packaging services.
"When you think about it, Village Post Offices provide some really nice options for people in terms of access and convenience," Postmaster General Patrick Donahoe said on Tuesday.
"It's a very good opportunity for a lot of small businesses ... many of these general stores have been hanging on for dear life out there."
The agency is preparing to review 3,653 facilities in 49 states -- all but Delaware and Washington, D.C.
Closing or replacing offices with low traffic and falling revenues could save the agency up to $200 million, Donahoe said.
The Postal Service has frequently seen backlash from community leaders and Congress when it tried to close offices. This time, the agency has reached out to communities under review and local input will be expanded, said Dean Granholm, vice president for delivery and post office operations.
The review is expected to take four to six months, and the Postal Service has not determined exactly how many of its 32,000 offices, stations and branches to shutter, Granholm said.
Falling mail volumes as consumers increasingly use email and pay bills online, coupled with competition from United Parcel Service and FedEx, have hurt revenues.
The agency, which receives no tax money, reported a $2.2 billion net loss in its second quarter and said it might be unable to pay its debts by September.
Various members of Congress have introduced legislation to reduce employee costs, which the Postal Service says have been burdensome, cut Saturday mail and other measures. The Postal Service last month suspended some payments to employee retirement funds.
The agency on Tuesday touted a revamped website and said it hoped to use quick response, or QR, codes to encourage smartphone users to take advantage of postal services.
"With mail volumes declining at a dizzying rate, we need a Postal Service that is leaner, more efficient and less expensive," said Art Sackler, chairman of the Coalition for a 21st Century Postal Service. "These avenues must be explored to ensure that the Postal Service and the 8 million private sector jobs that rely on it are able to survive."
(Reporting by Emily Stephenson, editing by Bernard Orr)