E and C NEWS

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Highlights of March 2014 Issue


With fiscal 2013 in the rear-view mirror and fiscal 2014 in their immediate sights, exchange chief merchandixers Ana Middleton (AAFES), Anita Roberson (MCX), Tess Paquette (NEXCOM) and Sarah Malbon Mikus (CGX) discuss new product offerings, retail and systems initiatives they expect to drive success in the coming year.


AAFES Chief Merchandising Officer
Ana Middleton –
'We Truly Are Family Serving Family'


In her role of chief merchandising officer (CMO), Ana Middleton has her finger firmly on the pulse of the Army & Air Force Exchange Service's Merchandising Directorate (MD). In this exclusive interview with E and C News, Middleton talks about the directorate's sales and merchandising goals, branded products and store-in-store success stories, and the MD's areas of focus today and into the near future.

On the Merchandising Directorate’s most successful recent initiatives …

The SIS concept shops have been an overwhelming success and have resonated with Exchange customers. Our Childrenswear pricing strategy continues to drive sales and increase margins through strong unit growth. The assortment and price points provide unparalleled selection and value for military shoppers.

An active lifestyle has always been essential to the military customer. One way the Exchange addresses this is by focusing on the Operation BeFit! initiative. This effort is in line with who our customers are and how they live.

Knowing how important it is to maintain an active lifestyle, the Softlines division pays special attention to athletic wear and footwear. The Exchange is offering brands that align with customers' needs. The Hardlines division is supporting active lifestyles by offering a BeFit! line of fitness accessories and equipment to include wearable technology.

The Consumables division is bringing more healthful food options, to include a dedicated BeFit! endcap, into Express stores.

On sales goals in Hardlines, Softlines and Consumables in 2014 …

We'll focus heavily on eCommerce in 2014. Unlike our competitors, our customers must be authorized to utilize the benefit of their Exchange. With the additional challenge that the majority of our customers live 20 miles or more away from an Exchange, it is clear that the assortment on shopmyexchange. com must be comprised of our best brand portfolio. Building parity into the online assortment with our brick-and-mortar assortment allows customers not living on or near a post or base to be able to take advantage of the same national brands — at fiercely competitive prices — as those who live on base or on post.

So far, we've accomplished 16 percent parity, and our buyers are continually working to further match online assortments and store assortments.

The communication of the new “branded” online assortment will be critical. We'll need the support of every Exchange associate to help spread the word and invite customers to shop our new and improved online store. We are looking forward to the launch of the new website, as these changes will help us remain competitive far into the future. ...



Semper Fit and Exchange Services Division Merchandising Branch Head
Anita Roberson —
'Enhancing the Customer Experience'


Semper Fit and Exchange Services Division Merchandising Branch Head Anita Roberson is upbeat about the coming year. The Marine Corps Exchange (MCX) had numerous successes to point to in fiscal 2013, and the future looks sharp thanks to a slate of aggressive retail system changes on the menu in 2014. Like the Marines it serves, the MCX approaches business as an organization on the front lines of the retail battlefield — after all, it literally is. Deployed MOS Marines run MCX operations in Afghanistan, while headquarters and store-level staff confront the toughest realities of delivering a benefit in the form of a compelling and competitive retail enterprise on the homefront and overseas.

On the biggest areas of change or adjustment for the MCX in 2014

We continue to see our transaction counts increasing year over year. Over the past eight years, we have seen significant growth. Although all store types are increasing, we have seen the most growth in transactions in our main store category, which has increased 73 percent in the past eight years. In that same time frame, our average sale continues to grow year over year as well, so our traffic is stable.

Our military patrons continue to be more and more knowledgeable of the products they are shopping for before they enter the MCX. This certainly drives us to ensure our sales associates and sales managers have a good depth of product knowledge in their tool box, and that we continue to focus on product education and training so that they are comfortable with their interaction with the customer, no matter what the product is.

Providing options for our sales associates has been a focus of our merchandising team over the year and will continue to be a priority throughout 2014. ...



NEXCOM SVP and Chief Merchandising Officer Tess Paquette —
A Benefit Navy Families Can Count On


It's hard to imagine a busier year than the one the Navy Exchange Service Command (NEXCOM) and Chief Merchandising Officer and Senior Vice President Tess Paquette took on in 2013. They stood up the supply chain team and integrated it with the buying group and IT, to improve the ways product gets to the shelf, at the right prices, when customers expect it. The “A Better You” program has expanded system-wide, defining the NEX as a destination for a healthy lifestyle. And right after a successful Navy Blue Holiday event, both ashore and afloat, NEXCOM launched a major new “everyday low price” program on essential family products, cementing NEXCOM's identity as a price leader for Navy patrons. In this exclusive interview, the NEXCOM CMO explains the thinking behind the merchandising and supply chain groups' new strategies.

E and C News: Although the year is still not quite complete, looking back, what have been some of the most rewarding moments of fiscal 2013??

Tess Paquette: Obviously, the one that stands out the most is the execution of a detailed plan for our Navy Blue Holiday.

In 2012, we didn't have as much time to plan as well as we would have liked. This year, however, we were able to apply lessons learned from 2012 to create multiple engagement components for the program and truly get the enterprise on board, including Ships Stores. We created a Ships Afloat event that was strictly for the Sailors at sea.

We also created an enterprise-wide giveaway event featuring $100 gift cards for 1,000 customers across all of our channels, which was wonderful. This encompassed CONUS and OCONUS, and also included our hospitality segment, the Navy Lodge, which extended its sites into the marketing piece of it. They were connected. Our Telecommunications Program Office (TPO), with its free WiFi, also promoted the event. So we leveraged the entire NEXCOM enterprise channel to market the Navy Blue Holiday. ...



CGX Director of Merchandise Sarah Malbon Mikus —
A 'Very Busy Year' Ahead


Despite having a multitude of new initiatives and system rollouts on the front burner, Coast Guard Exchange (CGX) Chief Merchandising Officer (CMO) Sarah Malbon Mikus and her headquarters and store-level teams never lose sight of the fact that they deliver the exchange benefit to the men and women of the Coast Guard and Homeland Security, among other eligible government patrons. During the past three years of guiding the CGX's merchandising operations, Malbon Mikus has reshaped many of the exchange service's product offerings and improved the shopping experience, with not only a keen eye for innovation and differentiation, but also with a view to keeping the business on a sustainable tack. The “newness” is far from over. Get ready for more retail fireworks as CGX goes live with upgraded merchandising and planning systems, an expanded eCommerce assortment, and a full slate of store renovations in 2014!

On fiscal 2014 sales goals and other objectives …

2014 is going to be a very busy year for CGX! We are continuing to expand our eCommerce assortment, implementing a new enterprise resource planning (ERP) system, and continuing with our aggressive rollout of store renovations … all while our buyers are challenged with managing very broad product categories.

We are going live on our new merchandising system, MI9, this month and will begin implementing our new planning system, Maple Lake, in May 2014. As I am sure you know, implementing one of these systems is challenging enough, so you can imagine how stretched our team is this year implementing two systems back-to-back.

These new systems will vastly improve our replenishment, planning and analytical capabilities and will achieve efficiencies in our current workflow. Our merchants and stores are very excited about the enhancements these systems will offer!

Our efforts to renovate our stores continue. In January 2013, we opened a new store in Petaluma, Calif. Now, we have remodeled CGX locations in all five training centers of the Coast Guard and completed this in five years. We renovated our flagship store in Chesapeake in August 2013. We are opening a new store at the new Department of Homeland Security headquarters at St. Elizabeth's in Washington, D.C., this month, and will open new stores in Galveston and Houston, Texas.

We are planning sales conservatively in 2014 with a 2.7-percent increase. We expect the reduction in Coast Guard active duty personnel, sequestration, and a very challenging retail environment to pressurize sales in 2014. ...





Procter & Gamble, through a promotion with the Defense Commissary Agency, will bring a once in a lifetime experience to 1,500 military children worldwide this year through its activation of ProCamps. This experience will celebrate military children, support the Department of Defense Healthy Base Initiative and enable the commissary to execute on the mission of bringing the military community together. This program is a great example of how the Commissary joins hands with industry partners to accomplish so much more than it can alone for these military families. Procter & Gamble is presenting this program under their Family Unit platform, which is a partnership with the USO to provide resources, information and offers to military families. ...


Read more PROCAMPS ...

Delivering Extreme Value


The Marine Corps Exchange (MCX) health and beauty care (HBC) assortment put up another excellent sales performance in fiscal 2013.

“Our two biggest growth areas were baby care and vitamins,” noted Bob McLaughlin, divisional merchandise manager, Consumables, Semper Fit and Exchange Services Division.

“In baby care, we are continuing a commitment to expand the category, and to being a one-stop destination for our Marines and families,” he said. “We include diapers and formula in the ‘Extreme Value’ Program, where we guarantee our everyday prices will beat the competition, i.e., Wal-Mart and Target. Our patrons have come to expect we will have the necessities that they need, when they need it and at a great value.”

In vitamins, McLaughlin said that the MCX partnered with Pharmavite, “the industry-leading vendor,” to bring a new assortment to exchange customers. “They provide the full line of vitamins, and at a low price, with great promotional opportunities for our customers,” he explained. “We have reset the planograms in all of our main stores and have revitalized a business that was down-trending.” ...



Adapting to a Changing Environment

The current atmosphere of regulation and deglamorization is among the factors having a major impact on sales of beer in Army & Air Force Exchange Service (AAFES) stores.

“Alcohol was removed from some facilities as a result of installation command requests,” noted David “Kye” Corn, the exchange service's senior buyer for beer (see E and C 12/13). “This was in addition to troop drawdowns,” the buyer noted, as force repositioning has also taken a toll on store traffic, where some patrons have returned Stateside but may no longer live on base, or in such close proximity to an exchange. ...



Maximizing Sales, Optimizing Replenishment


The Navy Exchange Service Command (NEXCOM) General Merchandise Group (GMG) has had to adjust to the latest rules and regulations governing the sale and availability of alcoholic beverages on Navy installations (see E and C 12/13).

Working in concert with affected locations, the exchange service hopes to ensure that these required changes are in force while minimizing their impact, as much as possible, on business.

“We worked closely with all affected locations, during the summer and fall months, as required changes occurred,” noted NEXCOM Wines and Spirits Buyer Debbie Scher. “We are sensitive to the stores' requests and accommodate their needs. Fiscal 2014 sales plans for the wines and spirits department have been scaled back based on the 2013 directive, and we have experienced initial sales results [that have been impacted by these adjustments] through the back half of 2013.” ...


RESALE SNAPSHOT — December 2013


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