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Highlights of the April 2017 Issue


Not Just Another Grocery Store


Joyce Raezer, Executive Director of the National Military Family Association (NMFA), recently testified before the Senate Armed Services Committee’s (SASC) Personnel Subcommittee regarding military quality of life and a host of issues affecting military family members. E and C News followed up with Raezer and NMFA Government Relations Deputy Director Eileen Huck for a deep dive into issues affecting the commissary and exchange benefits …

E and C News: Can you tell us a little about NMFA’s membership and the membership’s present concerns?

Raezer: First of all, we’re a membership organization but also a charity that supports all military families. Military families are concerned about this drip, drip, drip of benefit losses and budget cuts. Servicemembers and their families are still very busy — we have over 200,000 troops deployed all around the world, completely invisible to most of America. Our families are tired, they’re seeing changes proposed and implemented in some of the benefits they hold most dear: health care, commissaries, how housing allowances are calculated, and so they’re real apprehensive and concerned for the future of those benefits and support programs that are so important.

E and C News: You recently testified before the SASC Personnel Subcommittee regarding military family matters. You asked Congress to preserve the savings military families reap by shopping at the commissary and to oppose measures that might reduce the value of the benefit. How important do you feel the commissary is to the military family?

Huck: Families consistently tell us that the commissary is one of their most valued benefits; and we know that while not every servicemember and military family member shops exclusively at the commissary, we do know that most military families do take advantage of the commissary regularly over the course of their careers. They tell us that they appreciate the savings and the reliability that they get from shopping at the commissary and knowing that they are getting a good value — particularly for junior servicemembers, who are maybe struggling financially, it’s a real benefit. Also, our retired population really depends on the commissary, so really, across the board, this is a benefit that servicemembers and family members tell us is important to them, something that they rely on, and that they use regularly.

Raezer: I think the other piece to this is that our families want this to be the best experience possible. Yes, they want to keep the savings; but they want the commissary to improve in terms of customer service, in terms of the cleanliness of the stores; they have high hopes for the commissary system to do what is necessary to deliver a high-quality DeCA experience and savings.

Huck: I think that’s a really important point and I just want to echo what Joyce said. While we talk a lot about the savings and the value of the benefit, the value isn’t just in the savings. It is in the shopping experience, and military families rightly expect and deserve a positive and high-value shopping experience when they go to their commissary.


BCG-Inspired GAO Findings Echo Back to the Future


• WASHINGTON — For the second time in less than five months, the Government Accountability Office (GAO) has focused a spotlight on the Defense Commissary Agency (DeCA) at the behest of Congress.

Responding to a 2015 Senate request for a report on commissary savings methodologies and on some of the differences between commissaries and commercial supermarkets, GAO made a series of recommendations, some of which have already moved into the pilot phase, including addressing what it described as “limitations” in DeCA’s long-standing savings methodology, and changing the way DeCA selects merchandise for sale in commissaries.

The report, issued March 23 and bluntly titled — as GAO reports often are — with an imperative phrase, “DoD Needs to Improve Business Processes to Ensure Patron Benefits and Achieve Operational Efficiencies,” echoes a number of concepts and recommendations — variable pricing, private label products and in-house shelf stocking, for example — put forward in recent years by the Boston Consulting Group (BCG) and/or the Military Compensation and Retirement and Modernization Commission (MCRMC).

Some of the details of the current report may be seen as having been overtaken by events, as they rely on data from fiscal 2015, already six fiscal quarters past at this point, and refer to the commissary system largely as it existed before current efforts at transformation.

IG Calls on Agency to Remedy Pacific Produce Concerns


• FORT LEE — Trying to solve produce pricing and quality problems in its Pacific Area commissaries has been a tough nut to crack for the Defense Commissary Agency (DeCA) in recent years. A litany of customer complaints, however, drew Congressional scrutiny last year leading to the generation of an Inspector General (IG) Report.

The agency has agreed to address these issues — including customer complaints — in line with recommendations made by a recently-released IG report which reviewed these processes. The agency will reportedly put at least some of these recommendations into place this month.

During April, Pacific customers are expected to begin to see lower prices on the bagged salads that they purchase, with the agency paying for the cost of shipping these items, lifting a burden that had been transmitted to patrons, giving rise to reports of sometimes eye-popping produce prices in some Pacific Area stores. Produce quality will also receive an increased focus.

The first of a series of such planned audits reviewing current contracts used by DeCA in its Pacific stores was prepared to satisfy a response to a reporting requirement contained in House Report 114-537 to accompany the Fiscal 2017 National Defense Authorization Act (NDAA).

$10-Million Option Extends Pilot Programs


• FORT LEE —The Defense Commissary Agency (DeCA) has exercised the one-year option in its task order to The Boston Consulting Group placed last May for Contractor Advisory and Assistance Services (CAAS) to assist in DeCA’s business transformation — specifically “to develop plans, implement and assess results of pilots of variable pricing models, which also develop, design and introduce a private label program into the commissary product mix.”

Award of the option, a $10,674,833 firm-fixedprice modification to the task order, placed against a General Services Administration (GSA) contract, was announced on March 20. It activates contract line item 1006, which covers pilot implementation and operation support at DeCA headquarters for “six additional categories,” which, at the time the original task order was placed, had “not yet been determined.”

Defense working capital funds have been obligated for the work, which is expected to be completed by March 2018. This was the only remaining unexecuted option clause included in the original task order.

The total funded amount for this task order has grown from an initial value of $6.85 million to at least $34.5 million, as performance incentives of $17.02 million had been added in an earlier award-fee modification.

Tillotson Cites Resale as Part of DoD Savings Solution


WASHINGTON — Fielding rapid-fire questions from a House Committee on Government Oversight and Reform panel led by Rep. Jason Chaffetz (R-Utah), on March 21, Defense Department (DoD) Acting Deputy Chief Management Officer (DCMO) David Tillotson III cited a series of efficiencies and initiatives under way at the Pentagon, including ongoing efforts by military resale system organizations to reduce overhead, as part of an effort to address some of the potential savings highlighted in a Defense Business Board (DBB) task group study that some on the panel believe had been suppressed by DoD.

The department, Tillotson said, aimed to save $7.9 billion during the next five years using “opportunities for actionable streamlining and efficiency actions” culled from the task group’s recommendations that he said had been “discussed at the highest levels.”

By “capitalizing on the core business concept,” Tillotson explained, “the Department added two additional lines of business: Defense Resale and Information Technology (IT),” to the task group’s focus on “six core lines of business within the Department: human resources management, health care management, financial flow management, supply chain and logistics, acquisition and procurement, and real property management.”

Military Resale Tops $15 Billion In Sales During Fiscal 2016


With changes forthcoming in the way some military stores do business, the basics are still clear: authorized patrons continue to prize their shopping benefit, and use their local commissaries, exchanges and PatriotStores to stretch their shopping dollars. With fiscal 2016 cumulative sales of well over $15 billion in military stores, the resilience of military exchanges in particular tells a much stronger story than the retail narrative coming from many brick-and-mortar and hybrid retailers outside the gate.

Cumulative sales of the Defense Commissary Agency (DeCA), the Veterans Canteen Service (VCS) and the four exchange services — the Army & Air Force Exchange Service (AAFES), the Navy Exchange Service Command (NEXCOM), the Marine Corps Exchange (MCX) and the Coast Guard Exchange (CGX) — were $15.55 billion, a 3.69-percent decrease from the prior fiscal year’s $16.15 billion tally.

DeCA Names Moffett East Area Director


FORT LEE — On Jan. 22, Bonita Moffett became the Defense Commissary Agency’s (DeCA) East Area director. Moffett, who has more than 30 years of commissary operations experience and had previously served as Store Operations chief in the agency’s Store Operations Group since October 2013, succeeded Michelle Frost as East Area director. Frost became West Area director on Nov. 10 (see E and C News 11/16).

The East Area encompasses 48 commissaries in 13 states from New England to the Mid-Atlantic, also including the District of Columbia and Puerto Rico. The area accounted for sales in excess of $1.4 billion during fiscal 2016, or 26 percent of the agency’s $5.3 billion in sales, and handled 19.6 million transactions, or 23 percent of DeCA’s 86.7 million transactions for fiscal 2016.

“Bonita has the depth and breadth of commissary operator experience and know-how that makes her ideally suited to oversee the East Area,” said Keith C. Hagenbuch, DeCA’s executive director of Store Operations. “Her relentless pursuit of excellence and attention to detail will serve the area well as it, and the rest of the agency, adapt to our transformation initiatives in the coming months.”


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MCAS Miramar Produce Manager Recognized for Merchandising


• WASHINGTON — Stephanie Peter, produce manager … at MCAS Miramar, Calif., Commissary, was one of 25 winners of the United Fresh Produce Association’s 2017 Retail Produce Managers Awards program.

In its 13th year, the program pays special recognition to produce managers working every day on the front line to increase sales and consumption of fresh fruits and vegetables. Since the program began in 2005, nearly 300 retail produce managers, representing more than 90 different retail banners including Defense Commissary Agency (DeCA) commissaries, have been honored for their contributions to the industry.

“Produce managers are the face of our industry to the consumer,” said Tom Stenzel, United Fresh Produce Association’s Chief Executive Officer (CEO). “Their creative merchandising and positive approach to customer service directly correlates to the growth of sales and ultimately, consumption of fresh fruits and vegetables. We are grateful to Dole for once again sponsoring this program and for their partnership in recognizing these 25 deserving honorees.”

Mars Named on ‘Best Companies to Work For’ List


• HACKETTSTOWN, N.J. — For the fifth consecutive year, Mars, Incorporated was named to the “2017 Fortune 100 Best Companies to Work For” list, compiled by Great Place to Work, an organization that measures and builds better workplace culture through a certification process. The achievement recognizes Mars’ commitment to its associates and the dedication, passion and creativity they bring to work each day.

“Creating a great place to work has to start with offering an environment of respect and inclusiveness where associates can be themselves and thrive,” said Grant F. Reid, Chief Executive Officer (CEO), Mars, Incorporated. “On top of that, we need to be agile in addressing the changing ways business gets done and the evolving needs of the talented people we hire.”

With more than 25,000 U.S.-based associates serving the Petcare, Chocolate, Wrigley, Food, Drinks and Symbioscience segments, Mars has placed an emphasis on associate development and the possibilities it provides associates to build lasting and rewarding careers.

SpartanNash Exceeds 2016 Volunteer Hours Goal


GRAND RAPIDS, Mich. SpartanNash reported that its associates collectively volunteered 20,234 hours in 2016, exceeding the corporate goal of 15,000 volunteer hours by 35 percent. The company recently made available its 2016 Volunteer Impact Report — which can be viewed at spartannash.com/ volunteering — which provides an overview of these volunteering efforts and recognizes associates who gave back to the communities where they live and work.

According to the company, associates “gave their time and talents to 465 different nonprofits and community partners, with 1,167 different associates reporting 2016 volunteer time,” said Meredith Gremel, Vice President of Corporate Affairs and Communications. “They supported a variety of causes, from longstanding SpartanNash and SpartanNash Foundation partners like Special Olympics and Habitat for Humanity to local partners like schools, churches, food pantries, Boy Scouts and Girl Scouts and so many more.”

DeCA’s Former Top Commissary Reopens in Larger New Facility


• FORT BELVOIR, Va. — On March 30, the Defense Commissary Agency (DeCA) held the grand opening of its new commissary here. One of the agency’s major sales volume locations, the new store, which commenced construction in May 2015, rose on the site of the installation’s former Army & Air Force Exchange Service (AAFES) exchange and is positioned next to the new replacement Exchange facility.

The new $38-million commissary, with a sales area of 82,600 square feet, is significantly larger, more energy efficient and more environmentfriendly than the commissary it replaced: a facility dating from 1981 with a sales area of 57,029 square feet that was the agency’s No.-2 store, behind the Pearl Harbor Commissary, JB Pearl Harbor- Hickam, Hawaii, in terms of sales during fiscal 2016, generating $87.70 million in volume based on 967,567 transactions.

Previously, in a typical year, Fort Belvoir was capable of generating around $100 million in sales, which it last achieved in 2013, when patron purchases reached $101.1 million. It last was the system’s top store for sales volume in 2015, when it generated $93.3 million.

DeCA Announces 2017 Healthy Lifestyle Festival


FORT LEE — With “healthy living” growing in profile in the lives of servicemembers and their families, the Defense Commissary Agency (DeCA) advised industry in late March about the details of its 2017 Healthy Lifestyle Festival.

The event, with the added catchphrase “Live Healthy and Save Big!,” is considered to be “one of our largest partnership events of the year,” noted DeCA Sales Director Tracie Russ.

“By working with our produce houses for the Farmers Markets as well as with you, our industry partners, who are offering healthy food products, commissaries and their customers should benefit greatly from this summer sales event,” she said.


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Flavor and Variety a Must for Corps Snackers


Marine Corps Exchange (MCX) Food, Candy and Gourmet Items Buyer Ashley Davis has become very familiar with the distinct flavor preferences of Marines in her years of procuring snacks, confectionery and other foods. Marines may be renowned for their attention to detail in presentation and combat, but they also pay close attention when they recon the snacks and candy aisles.

“New is exciting,” Davis noted, looking ahead to new items entering the assortment for fiscal 2017. “New items for the food category tend to have a 90-percent sell through or higher, which tells me that Marines like to try new things.”

Davis said that the flavor variety “is very important” in the snack category. “Marines like to have options, so we ensure that the unique flavor profile is available in as many categories as possible,” she explained.

In the candy category, Davis noted, “Sour is a profile Marines can’t go without. Year over year, we continue to increase this footprint.” ...



Staying in Stock During the Heat of the Summer


With sales of more than $230 million generated by non-alcoholic beverages in Army & Air Force Exchange Service (AAFES) stores during fiscal 2016, the category not only represents almost 4 percent of overall retail sales in Exchange stores but also plays an important role in keeping servicemembers and patrons hydrated during the summer heat and year-round.

Staying on top of store shelf and cooler re-stocking needs — both via direct store delivery (DSD) and warehouse auto-replenishment — and the continued integration of newer, trend-sensitive items into the assortment during the busy summer period are high category priorities in fiscal 2017. ...

Ilic noted that several factors influenced category sales in fiscal 2016. “Worldwide troop reductions, a decrease in deployments, and a sales decrease in the tobacco category have had a negative impact on non-alcoholic beverages,” she explained. The attachment rate between tobacco and other convenience consumables categories plays a significant role in category sales. “Research shows that in 30 percent of the cases, the customer buying tobacco would also purchase a non-alcoholic beverage,” Ilic explained. ...





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