This is my old Peugeot folder

I putz around the city or do simple errands like going to the grocery down the street with it.

I've been using a plastic box on the rear fender rack, but it has a pannier clip... which get's me wondering... would traditional panniers actually work on a bike this low without having the feet hit the bags while pedaling?
Any ideas, recommendations or upgrades for a bike novice idiot like me that only uses a bike for practical purposes?

Not pictured is I've ordered a Soubitez dyno light set for the few times I might be out at dusk.