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Highlights of the January 2017 Issue

 

NEWSMAKERS:
Actress Alba, The Honest Company Join with NEX to Meet Customers, Families

 

• JB PEARL HARBOR-HICKAM, Hawaii — The impact of a celebrity who truly understands the military way of life was part of the excitement at NEX Pearl Harbor on Sunday. Dec. 4. Jessica Alba greeted Navy Exchange Service Command (NEXCOM) patrons who came to the NEX to meet the actress, businesswoman and cofounder of The Honest Company. The event also demonstrated how NEXCOM, military service organizations and base leadership can successfully join efforts to build sales which directly feed Morale, Welfare and Recreation (MWR) programs.

Noting interest in “cleaner” and “healthier-for you” options in child and baby care among military consumers and their families, NEXCOM’s Associate Divisional Merchandise Manager (DMM) for Ladies, Intimates and Children’s Stephanie Fox, and The Singer Group’s Christy Olsen came together in early 2015 to collaborate on a program to meet this demand. In choosing a brand, the pair saw opportunities in the NEX for The Honest Company, which while a young organization, was making a significant impact on the naturals market, Olsen said. The Honest Company “Takes the boring out of healthy living,” she added, and aims to simplify lifestyle decisions and the shopping process, while offering patrons peace of mind with safe and healthy products. The options of cute patterns, refreshing scents and delightful packaging were attributes Fox and Olsen believed would be well received by NEXCOM patrons. ...

OSC’s Draper Recognized with Smucker ’s Most Prestigious Award

 

• JB PEARL HARBOR-HICKAM, Hawaii — In 2016, The J.M. Smucker Company awarded its highest honor to Tommie Draper, Vice President, National Accounts for Overseas Service Company (OSC). ...

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NEWS:
‘Business Model Update’ Describes ‘Next Foundational Change’ for Commissaries

 

• FORT LEE — The Defense Commissary Agency (DeCA) recently issued a business model update explaining recent changes to its ongoing transformation and the rationale behind them. Among the topics covered in the handout labeled “Talking Points,” that emerged early this month, were variable pricing, private label, offsetting operating costs, DeCA’s forthcoming new regional savings methodologies, differences in apparent before-and-after savings, and so-called category “improvements.”

Following notification of Congress this month, the timeline for commissary transformation included projects launching in February or March 2017, with the private label program introduced in the May time frame.

Cited among the “factors” leading to DeCA’s ongoing transformation in the document were, “military-facing budget cuts and downsizing;” “fiscal environment tightening restrictions on military benefits;” and the “expectation for DeCA to continue to be a responsible steward” of taxpayer dollars.

“The pressure on DeCA as an agency,” the update noted, “is to look at different ways we can transform so that in the future we can generate revenue to offset some of the operating costs.” ...

DeCA Discontinues Value Brand Program

• FORT LEE — On Dec. 29, the Defense Commissary Agency (DeCA) notified industry that it was discontinuing its once-vaunted Value Brand program, effective four days later, on Jan. 2. The notice came as the agency prepares to pilot a private label program that is slated to create shelf space for and to offer DeCA store brands, using for-profit/variable pricing. In a subsequent operational alert, DeCA said, “Patrons should be made aware that we will continue to offer those items at competitive pricing. However, commissaries will no longer be required to maintain the Value Brand labels on the shelves. Consequently, stores are instructed to remove the Value Brand labels from the shelves and any promotional danglers, signs, or posters that may be displayed throughout the store.”

The new private label program officially commenced on Dec. 16, 2016, according to a notice to the trade, but products were not expected to reach commissary shelves until later this spring.

The Value Brand program — which had its roots in the commissary’s “Best Value Item” (BVI) program that DeCA rolled out in July 2000 — had been a familiar source of extra savings to patrons for 16 years, and was initially intended to compete with commercial stores’ private label offerings. ...

NDAA OKs Military Star Card For Commissary Purchases

• WASHINGTON — Now that the 2017 National Defense Authorization Act (NDAA) has been signed into law by President Obama in one of his last major acts as commander in chief, the Military Star Card has been officially authorized for acceptance in Defense Commissary Agency (DeCA) stores.

Section 662 of the conference report authorized the acceptance of the Military Star Card at defense commissaries, with “any financial liability of the U.S. relating to such acceptance as payment be assumed by the Army and Air Force Exchange Service.” The measure means not only an added convenience to exchange and commissary patrons, but also a direct savings to the government in processing fees.

Regarding considerations to be addressed prior to the card’s acceptance in commissaries, an AAFES spokesman said, “DeCA previously had shared with us their progress on updating their POS system to ensure this would be a potential solution for integration. Discussions between all of our teams are already underway.” ...

Howe Named NEXCOM’s Command Master Chief

• VIRGINIA BEACH — The Navy Exchange Service Command announced in mid-December that MCPO (SW/NAC) Shannon T. Howe, USN, has been assigned as its new command master chief. She succeeded CMDCM (AW/SW) Bobby T. Anderson, USN, who was reassigned as command master chief at Naval District Washington, D.C. Anderson had served as NEXCOM’s command master chief since July 2015. Howe fills a billet that had been vacant since Aug. 11, 2016. ...

NEXCOM Opens First Navy Workplace PEV Charging Station

• VIRGINIA BEACH — The Navy Exchange Service Command (NEXCOM) opened a plug-in electric vehicle (PEV) charging station here at its headquarters building for use by associates, vendors, government vehicles and guests.

“We are excited to open the first workplace PEV charging station within the Department of the Navy and in Virginia Beach,” said Rear Adm. Robert J. Bianchi, SC, USN (Ret.), NEXCOM’s Chief Executive Officer (CEO). “The opening of this charging station is an important consideration for our associates who may be in the market for a PEV. It will help NEXCOM recruit and retain employees by helping them with their transportation needs, and it helps build the NEXCOM brand as a socially and environmentally responsible organization. Also, in the future, we may include a PEV in the NEXCOM vehicle fleet, which will reduce our reliance on petroleum and save money on fuel.”. ...

AAFES, DLA Bring Turkeys to Troops for Holidays

• BAGHDAD — While families around the world gathered for the holidays, servicemembers deployed to Iraq were thousands of miles away from friends and family. The Army & Air Force Exchange Service (AAFES) and the Defense Logistics Agency (DLA) brought “a taste of home” to American troops serving in the Middle East during the holidays, deploying frozen turkeys from the U.S. to the Baghdad Diplomatic Support Center (BDSC) and Baghdad Embassy Complex (BEC) Exchanges.

Thirty-six turkeys were delivered to Baghdad exchanges in time for troops to enjoy a traditional Thanksgiving dinner, and stores reportedly had plenty of turkeys in stock for the end-of-the-calendar-year holidays, too. According to AAFES, the program included stores in Iraq, the BDSC and BEC exchanges, and the Exchange ordered turkeys offered in Iraq from the Defense Commissary Agency’s (DeCA) Europe Area.

“It means the world to have the Exchange stocked with turkeys for the holidays,” said Army Sgt. 1st Class Michael Buelna. “I have spent many holidays away from my family during my military service and have been impressed with the commitment that the Exchange demonstrates to the armed forces.” ...

AAFES Named ‘Military Friendly Employer’

• DALLAS — For the fifth consecutive year, the Army & Air Force Exchange Service (AAFES) was named a “Military Friendly Employer” by Victory Media, publisher of G.I. Jobs and Military Spouse magazines. The Exchange was featured along with other companies earning the “Military Friendly Employer” designation in G.I. Jobs magazine’s December 2016 edition.

The 14th annual list honors companies based on their long-term commitment to hiring veterans, having retention programs for veterans and acting on policies on National Guard and Reserve service.

“The Exchange is family serving family, and part of that is recognizing the experience and talents that veterans bring to the table,” said Air Force Chief Master Sgt. Luis Reyes, Exchange senior enlisted advisor. “Having been our customers, veterans bring a unique perspective to the Exchange team. We are honored to be recognized as a military friendly employer, and will continue to recruit and hire from this pool of qualified candidates.” ...

 

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EXCHANGE THANKSGIVING SALES ROUNDUP
Early Holiday Shopping Kicks Off With Sales Gains for Exchanges

 

Military resale experienced peaks and valleys in early holiday shopping and Black Friday Weekend sales — which varied in intensity by service and day of the week. Some exchanges also enjoyed surges in online sales while their brick-and-mortar stores, where the bulk of sales took place, generally held their own compared with outside-the-gate counterparts.

With many consumers appearing to begin their holiday shopping earlier than ever, the Army & Air Force Exchange Service (AAFES) took the approach of including Veterans Day in its overall sales narrative for the period. The Navy Exchange Service Command (NEXCOM) also places a strong emphasis on Veterans Day as the beginning of its Navy Blue Holiday period, extending through the end of the calendar year. A study by CFI Group — which also conducts customer satisfaction surveys for military resale organizations — bore this out, finding that 45 percent of respondents intended to seek the best deals before November.

In other instances, shopping patterns pointed to shoppers doing some of their exchange shopping early in the week of Thanksgiving, while in others, reports surfaced of strong sales activity on Black Friday itself, whether system-wide or at individual stores.

Taken together, the Veterans Day and Thanksgiving weekend shopping periods added up to more than an 8-percent gain for AAFES, even though Black Friday itself was down slightly. NEXCOM stores saw sales jump more than 2 percent early in the Thanksgiving week only to drift later in the week, while Marine Corps Exchanges (MCX) had a strong Black Friday, up more than 3 percent. Sales for the entire weekend, plus Cyber Monday, in Coast Guard Exchanges (CGX) climbed 3 percent, while the Veterans Canteen Service (VCS) enjoyed a stellar 12-percent increase for the Friday-through-Sunday period. ...

 

Read more EARLY HOLIDAY SHOPPING KICKS OFF WITH SALES GAINS FOR EXCHANGES ...

EXPRESS BREAKFAST AND SNACKS
Breakfast and Great Coffee — Just the Beginning …

 

There’s a lot more to business than meets the eye when it comes to military patrons’ simple gas/ convenience store fill-ups and coffee stops. Using data mining, Army & Air Force Exchange Service (AAFES) executives have learned more about how their customers shop, what they buy in a single trip, and perhaps more importantly, about what other types of items they are interested in buying when they come in for a simple cup of coffee or breakfast sandwich.

For today’s Express stores, the foundational cup of coffee has become more of a hub around which “armfuls” of additional potential purchases revolve. What this means for AAFES c-store operators is starting with a great premium coffee and breakfast program and building a full complement of special offers and combo deals around it. AAFES’s Paul Olney, buyer, C-Store Food Service and Randy Demster, buyer, Direct Store Delivery (DSD), Dry Grocery, Meat Snacks, Bakery, and David Arens, divisional merchandise manager, Retail Food, discuss why building the basket begins with more than just a “cup of Joe,” and ends with a full day’s worth of supplies and a loyal customer for the duration.

E and C News: As AAFES is revamping its Express stores, what are your plans for breakfast solutions in Express and convenience stores?

Paul Olney: There are a lot of things we really want to emphasize with breakfast. We follow the industry trends and we see that when a customer comes in for breakfast, typically they will also come back multiple times per day — that happens because we have become known to them as their stop for prepared food and other meal solutions. ...

E and C News: When it comes to marketing and promotion, what’s important for AAFES and its suppliers regarding supporting these plans and products?

Demster: We are really getting behind the “buy more, save more” concept. Multiples encourage customers to trade up and buy more to save more. We are doing a lot of promotions on those items in the Expresses. Starting this year and going into next year, we’re going to be focusing on buy more/save more, product demos and new item introductions. Because a lot of these new items are impulse buys, we want to pass along those deals and encourage the customer to buy more and save more to take advantage of the savings.

In-store demos and sampling are two of the important things we emphasize to our brokers and vendors especially when there is a new item introduction. We want that excitement, and we want that excitement in the store, and most importantly, we want the customers to taste the product and see how good it is. In-store sampling is very important for us.

On the marketing aspect of that promotion we talked about earlier, we have a beautiful coffee program. The beans are very premium, and we need to do a better job in telling the story. That’s one of the things we are going to do in 2017. It’s key because once the customers are in the store buying coffee, they’re buying other products too.

At the Express, every quarter we have new combo deals, and we have two options in the morning for breakfast, two for lunch and two for snacking. Those combo deals are also an excellent value for the customers. It’s typically a breakfast sandwich, coffee and a piece of fruit. ...

 

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DeCA FISCAL 2016 STORE RANKINGS BY RETAIL SALES

 

DeCA’s worldwide network of commissaries generated more than $5.2 billion in patron purchases during fiscal 2016. Here is a comprehensive chart chronicling the sales and transactions for each commissary during fiscal 2016. ...

 

Click Here for DeCA FISCAL 2016 STORE RANKINGS BY RETAIL SALES ...

DeCA FISCAL 2016 MILLION-DOLLAR VENDORS

 

A listing of the 207 companies that received more than $1 million in payments from DeCA during the past fiscal year. ...

 

Click Here for DeCA FISCAL 2016 MILLION-DOLLAR VENDORS ...

NEXCOM TACTICAL
Strength in Numbers

 

Sales of tactical products in Navy Exchange Service Command (NEXCOM) stores are generally doing well as the exchange service moves through the final quarter of fiscal 2016, with the merchandising group putting a strong emphasis on working closely with suppliers to support pivotal sales opportunities in the calendar, for example the NAVY’s ‘RIMPAC’ multinational maritime exercise.

NEXCOM Tactical Buyer Lisa Matthews reported that year-to-date dollar volume through Nov. 19, 2016, in key tactical categories — hydration, knives, lights, accessories, packs/ organizers and tactical wear — totaled $8.05 million, a 1.3-percent increase from the prior year. Unit volume, however, fell 1.62 percent to 434,975 units. Sales were impacted by the sales decreases in hydration and tactical wear. ...

 

Click Here for DeCA FISCAL 2016 MILLION-DOLLAR VENDORS ...
Snapshot
RESALE SNAPSHOT — OCTOBER 2016

 

Click Here for “RESALE SNAPSHOT” Totals