Post on 24-Feb-2021
1 Proprietary & Confidential 1
The Military Market 2015
(FY 2014)
2 Proprietary & Confidential
Overview
Military Resale Market
DeCA
Mission
Profile
Business Drivers
Exchanges
Profile
Business Drivers
Branches (AAFES, NEX, Marine Corps,
Veterans Canteen, and Coast Guard)
Mission
Profile
Photos: Courtesy of the ALA
3 Proprietary & Confidential
The Military Resale Market
4 Proprietary & Confidential
The Military Resale Market
12.4 Million Authorized Patrons
$17.1 Billion in Retail Sales
DeCA - worldwide presence, regulated by Congress
5 Proprietary & Confidential
Combined FY 2014 Sales = $17.12 Billion
Exchanges - $11.493 Billion; Commissaries - $5.625 Billion
The Military Resale Market
0.44% 4.3%
5.5%
-6.8% -4.2%
*Exchange Sales - Includes Vets and Coast Guard $ Billions
6 Proprietary & Confidential
The Military Resale Market
Military Market
50 States
5 U.S. Territories
26 Foreign Countries
Source: ALA Military Market Facts
7 Proprietary & Confidential
Military Patron Demographics
Military Demographics
8 Proprietary & Confidential Source: Wikipedia
20.0
13.212.4
9.5
6.9 6.4 6.0 6.0 5.9 5.64.7
0
5
10
15
20
25
New
York
Los Ang
eles
Milita
ry M
kt
Chi
cago
Dallas/
Ft. W
orth
Houston
Philly
DC/V
A/M
D
Mia
mi/F
t. La
uderdale
Atla
nta
Bosto
n
Po
pu
latio
n in
Millio
ns
12.4
2014 Metro Markets by Population
Military Demographics
9 Proprietary & Confidential
Military Demographics
2014 Total Armed Services Active Duty Personnel = 1.43 million
41,362 (2.9%)
322,900 (22.6%)
539,675 (37.8%)
198,415 (13.9%)
326,684 (22.8%)
10 Proprietary & Confidential
2014 Demographics by Age Range
Source: Statisticbrain.com
Military Demographics
Photo: Courtesy of the ALA
11 Proprietary & Confidential Source: Statisticbrain.com
A Thumbnail Sketch of Active Duty Personnel
• 91% are under the age of 40
• 70% of officers are married; 15% of officers are female
• 52% of enlisted are married; 14% of enlisted are women
• 73% of military children are under the age of 11
• 74.6% Caucasian; 17.8% African American; 7.6% other
Education
• 93% of enlisted personnel have a high school diploma
(compared to the general population of 87%)
• 90% of active duty personnel have a BA/BS degree or above
Military Demographics
12 Proprietary & Confidential
Defense Commissary Agency
(DeCA)
DeCA
13 Proprietary & Confidential
Established: 1991
Employees: ≅ 15,000
Headquarters:
1300 E Avenue
Fort Lee, VA 23801-1800
Phone: (804)734-8253
Website: www.commissaries.com
Major Distribution Facilities:
ConUS - Civilian Distributor Network
Selected Operations and Services:
FY 2014 Sales: $5.625 Billion
Grocery
Produce
Meat
Dairy
Deli
Bakery
Overseas - DeCA Central Distribution Centers
Director and CEO:
Joseph Jeu
DeCA Profile
Rota Commissary, Spain
DeCA photo: Wally Raynes
The first commissary was established in 1825
14 Proprietary & Confidential
DeCA’s Mission Statement: Deliver a vital benefit of the
military pay system that sells grocery items at cost, while
enhancing quality of life and readiness.
DeCA Mission
DeCA’s Vision:
Understand our customers and deliver a
21st century commissary benefit.
One Vision, One Team, One DeCA!
DeCA’s Goals:
• Provide service members and their
families with a quality benefit at
significant savings.
• Sustain a capable, diverse, and
engaged civilian workforce.
• Be a model organization through
agility and governance.
Photo: Courtesy of the ALA
15 Proprietary & Confidential
Director & CEO (Joseph Jeu)
Deputy Director & COO (Michael Dowling)
Executive Director, Sales, Marketing & Policy (Rogers Campbell)
Executive Director, Store Operations (Keith Hagenbuch)
Director, Operations and Policy (Randy Chandler)
Director of Sales (Tracie Russ)
DeCA Organization
DeCA Profile
Jeu Dowling Campbell Hagenbuch Chandler Russ
Photos: Courtesy of the ALA
16 Proprietary & Confidential
$B
illio
ns
DeCA Profile
$5
.37
$5
.42
$5
.65
$5
.81
$5
.98
$5
.84
$5
.95
$6
.09
$5
.87
$5
.63
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DeCA Sales
Represents actual DeCA worldwide sales Source: Defense Commissary Agency
2.5% 0.9%
4.2%
2.8%
2.9%
-2.3%
1.9%
# of
Stores 273 268 264 260 254 248 252
2.3%
247
-3.6%
245
Stores in ConUS = 178 Stores in OConUS = 67
-4.1%
245
17 Proprietary & Confidential
76% of DeCA sales occur in the US
178 Stores
76%
ConUS
Sales of $4.25B
67 Stores
8%
Europe
Sales of $460M
16%
Pacific
Sales of $924M
Source: Information Resources, Inc.
DeCA Profile
18 Proprietary & Confidential
Commissary Sales vs. America’s Top Food Retailers - 2014
DeCA Profile
(Includes Patron's Savings of 30%)
(Excludes Patron's Savings of 30%)
Kroger 93.59$ 1.6%
Safeway 37.53$ -3.7%
Publix 28.91$ 5.2%
Ahold USA 26.11$ 1.1%
H.E.B. 19.68$ 8.1%
Albertsons 19.45$ 432.7%
Delhaize America 18.81$ 0.1%
Meijer 16.62$ 5.3%
Wakefern/Shoprite 14.10$ 3.7%
Whole Foods Markets 12.49$ 10.3%
Aldi 10.89$ 8.5%
Bi-Lo 9.08$ 1.5%
Trader Joe's 8.35$ 6.4%
Hy-Vee Food Stores 7.62$ 3.6%
DeCA 7.31$ -4.2%
Wegmans Food Markets 6.99$ 6.1%
Giant Eagle 6.94$ 2.6%
A&P 5.83$ -6.8%
DeCA 5.62$ -4.3%
WinCo 5.21$ 5.7%
Save Mart 4.88$ 0.7%
Source: NRF (Top 100 retailers)
19 Proprietary & Confidential
• Ideal market…where 100% of trade funds are passed on to the patron
• No co-op advertising or slotting fees
Source: Information Resources, Inc.
DeCA Profile
20 Proprietary & Confidential
Families account for more than half of DeCA’s sales
6.7M 2.4M 1.4M 1.2M .7M
Source: Information Resources, Inc.
DeCA Profile
21 Proprietary & Confidential
DeCA Shopper
TOTAL U.S.
A DeCA Shopper is more likely married with small children
Source: American Factfinder; Department of Defense
DeCA Profile
22 Proprietary & Confidential
Today, DeCA captures about 31% of shoppers’ total wallet,
which has improved over the past year.
Pt. Chg. vs. YAGO
Military 1
Grocery -2
Walmart 1
Club 0
Drug 0
All Other 0
Source: Information Resources, Inc.
DeCA Profile
23 Proprietary & Confidential
Shopping trips reflect “need states,” underlying motivations for visits, which we can see from basket compositions.
Source: Information Resources, Inc.
DeCA Profile
24 Proprietary & Confidential
DeCA shoppers use commissaries for stock-up needs; Walmart wins special purpose trips; grocery wins quick trips.
Percent of Product Trips P52W Ended 02-28-2015
Quick Trip
26%
Special Purpose
14%
Stock-Up 43%
Quick Trip 43%
Fill- In
17%
17%
Stock-Up 14%
Stock-Up 12%
Fill-In 17% Fill-In
17%
Spec.
Special Purpose
26%
DeCA Walmart Grocery
Source: Information Resources, Inc.
Quick Trip 60%
Special Purpose
11%
DeCA Profile
25 Proprietary & Confidential
Percent of Product Trips P52W Ended 02-28-2015
Quick Trip
27%
Special Purpose
14%
Stock-Up 43%
Quick Trip 43%
Fill- In
17%
17%
Stock- Up
14%
Stock- Up
12%
Fill-In 17%
%
Fill-In
17%
Spec.
Special Purpose
26%
DeCA Walmart Grocery
Source: Information Resources, Inc.
Quick Trip 60%
Special Purpose
11%
DeCA captures 72% of its dollar sales from stock-up trips, far more reliant on this trip than other channels.
DeCA Profile
26 Proprietary & Confidential
Average dollars per trip at DeCA exceed other retailers’ by an average of +57%.
Source: Information Resources, Inc.
DeCA Profile
27 Proprietary & Confidential
Top 10 Items DeCA Shoppers
Without Children
20 Source: Information Resources, Inc.
Top 10 Items DeCA Shoppers With Children
DeCA Profile
28 Proprietary & Confidential
When not shopping DeCA, where do shoppers spend?
$8.2 Billion Dollars Leaked
AO 11% $0.9
Billion
Grocery
Club
39% 18%
$3.2 Billion $1.5 Billion
Walmart
32%
$2.6 Billion
Walmart captures nearly a third of all leakage.
Source: Information Resources, Inc.
DeCA Profile
29 Proprietary & Confidential Source: Supermarket News
DeCA Profile
Top 20 DeCA ConUS Categories Top 20 Civilian ConUS Categories
Rank Category $ Sales Rank Category $ Sales
1 Salted Snacks 99,062,126$ 1 Soft Drinks 10,262,048,580$
2 Coffee 84,729,774$ 2 Fresh Bakery 9,941,532,412$
3 Fresh Bakery 80,039,677$ 3 Salted Snacks 9,806,821,029$
4 Dog Food 70,077,123$ 4 RTE Cereal 4,836,881,537$
5 Soft Drinks 66,220,392$ 5 Candy 4,829,880,518$
6 RTE Cereal 65,732,760$ 6 Coffee 4,472,234,345$
7 Candy 62,959,666$ 7 Water 4,093,913,882$
8 Toilet Paper 62,280,823$ 8 SS Juices and Drinks 3,840,677,623$
9 SS Juices and Drinks 54,113,295$ 9 Crackers 3,520,296,862$
10 Laundry Detergent 47,230,174$ 10 SS Vegetables 3,234,809,024$
11 SS Vegetables 43,974,686$ 11 Cookies 3,113,539,800$
12 Crackers 43,136,937$ 12 Toilet Paper 3,108,288,027$
13 Vitamins and Supplements 39,771,513$ 13 New Age Beverages 3,036,102,094$
14 Water 39,005,189$ 14 Dog Food 2,915,376,742$
15 Cookies 38,839,916$ 15 Good for you Foods 2,675,039,930$
16 Oral Hygiene 37,875,506$ 16 Fresh Desserts 2,503,584,944$
17 Paper Towels 34,730,702$ 17 Laundry Detergent 2,156,371,394$
18 Wholesome Snacks 34,013,802$ 18 Wholesome Snacks 2,142,450,098$
19 New Age Beverages 32,484,496$ 19 Snack Cakes 2,113,553,891$
20 Shortening and Oils 30,881,148$ 20 Shortening and Oils 2,093,626,541$
2014 Sales by Category
Nonperishables/Semiperishables
30 Proprietary & Confidential Source: Supermarket News
DeCA Profile
Top 20 DeCA ConUS Categories Top 20 Civilian ConUS Categories
Rank Category $ Sales Rank Category $ Sales
1 Cheese 116,074,349$ 1 Milk 10,666,622,886$
2 Milk 87,947,399$ 2 Cheese 10,664,622,661$
3 Fresh Vegetables & Herbs 71,952,980$ 3 Fresh Vegetables & Herbs 7,862,051,878$
4 Frozen Entrees 67,639,844$ 4 Fresh Fruit 6,054,771,805$
5 Fresh Fruit 53,710,291$ 5 Yogurt 5,141,197,288$
6 Lunchmeat 49,014,124$ 6 Frozen Entrees 4,751,097,510$
7 Yogurt 44,413,935$ 7 Ice Cream 4,392,956,288$
8 Breakfast Meat 44,250,005$ 8 Refrigerated Juice Drinks 4,095,243,327$
9 Refrigerated Sausage 41,943,184$ 9 Lunchmeat 4,016,098,895$
10 Eggs 41,301,130$ 10 Eggs 3,951,084,413$
11 Refrigerated Juice Drinks 38,961,641$ 11 Breakfast Meat 2,972,812,434$
12 Frozen Seafood 36,308,639$ 12 Refrigerated Sausage 2,970,841,802$
13 Precut Fresh Salad Mix 27,586,131$ 13 Precut Fresh Salad Mix 2,961,137,652$
14 Frozen Vegetables 26,878,657$ 14 Frozen Pizza 2,610,363,846$
15 Frozen Pizza 26,850,037$ 15 Novelty 2,462,446,277$
16 Refrigerated Meals 25,109,558$ 16 Cream 2,411,098,096$
17 Ice Cream 22,459,578$ 17 Refrigerated Meals 2,174,129,475$
18 Cream 22,281,398$ 18 Frozen Vegetables 1,987,530,052$
19 Butter 21,402,919$ 19 Frozen Seafood 1,974,320,788$
20 Poultry Frozen 20,107,620$ 20 Fresh Meat 1,949,643,837$
Perishables
2014 Sales by Category
31 Proprietary & Confidential
DeCA Fiscal 2014 Sales Statistics
Sales Comparison by Category ($ in thousands)
Category FY '14 FY '13 % Change
Grocery 4,641,097$ 4,895,981$ -5.20%
Meat 473,403$ 461,482$ 2.58%
Produce 510,499$ 518,674$ -1.57%
Total 5,624,999$ 5,876,137$ -4.27%
Sales Comparison by Area ($ in thousands)
Area Grocery Meat Produce Total
DeCA East 1,196,601$ 124,379$ 139,311$ 1,460,292$
DeCA Central 982,822$ 113,192$ 100,715$ 1,196,730$
DeCA West 1,319,918$ 131,693$ 131,741$ 1,583,354$
DeCA Pacific 748,690$ 74,505$ 101,343$ 924,540$
DeCA Europe 393,064$ 29,631$ 37,387$ 460,083$
Total 4,641,095$ 473,400$ 510,497$ 5,624,999$
Source: American Logistics Association
DeCA Profile
32 Proprietary & Confidential
Top 20 Commissaries in Coupon Redemption 2014
Source: American Logistics Association
DeCA Profile
Sales Rank Store Name Coupon $
Coupon Quantity
6 OCEANA NAS $1,719,473.20 1,753,887
1 FORT BELVOIR $1,705,779.85 1,796,710
3 SAN DIEGO NB $1,556,419.76 1,645,747
23 MACDILL AFB $1,403,031.40 1,451,554
4 FORT CAMPBELL $1,378,852.53 1,332,926
5 FORT MEADE $1,303,675.12 1,319,662
9 JACKSONVILLE NAS $1,265,936.45 1,325,208
14 LANGLEY AFB $1,261,007.36 1,325,077
29 SCOTT AFB $1,214,446.98 1,296,887
20 LITTLE CREEK $1,165,392.15 1,224,841
8 FORT BRAGG SOUTH $1,121,147.42 1,202,884
16 CAMP PENDLETON $1,112,715.16 1,173,393
15 QUANTICO MCB $1,031,773.31 1,097,894
17 MIRAMAR MCAS $1,028,013.04 1,087,627
13 FORT LEWIS $1,019,980.26 1,051,927
38 RANDOLPH AFB $1,010,326.27 1,018,241
18 MCCHORD AFB $991,747.46 1,030,783
42 PATRICK AFB $984,423.72 1,059,461
44 LUKE AFB $979,010.49 977,874
25 NELLIS AFB $924,973.43 958,250
33 Proprietary & Confidential
Coupon Usage - Historical Comparisons
DeCA Profile
Source: American Logistics Association
COUPONS FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Coupon Dollars $114,122,168 $112,703,419 $104,188,496 $91,005,779 $83,742,771
Coupon Quantity 129,353,453 123,027,684 113,297,927 99,600,729 89,160,971
$ per Coupon $0.88 $0.92 $0.92 $0.91 $0.94
% Change in Coupon $ vs. Prior FY 8% -1% -8% -13% -8%
% Change in Coupon # vs. Prior FY 4% -5% -8% -12% -10%
% Change in $ per Coupon vs. Prior FY 4% 4% -- -1% 3%
34 Proprietary & Confidential
The Top 10 States - Commissary Sales FY ’14
DeCA Profile
Washington
$228,766,910
California
$539,451,294
Hawaii
$249,125,585 Texas
$318,062,945
Colorado
$151,575,620
N. Carolina
$240,608,656
Georgia
$234,267,203
Virginia
$554,840,049
Maryland
$208,103,858
Florida
$350,458,607
Source: American Logistics Association
35 Proprietary & Confidential
The Top 30 Stores Represent 33%
of Total Worldwide Dollar Sales FY ‘14
Source: American Logistics Association
* Indicates more than 1,000,000 customer transactions
Ft Belvoir* $96,031,716 Camp Pendleton $58,764,591
Pearl Harbor* $89,454,294 Miramar MCAS $58,289,645
San Diego NB* $88,639,721 McChord AFB $57,990,146
Ft Campbell* $71,497,384 Andrews AFB $57,572,651
Ft Meade $69,560,907 Little Creek NAB $57,247,963
Oceana NAS $69,323,332 Ft Bliss $56,510,354
Schofield Barracks* $69,198,994 Ft Myer $54,703,383
Ft Bragg South* $67,980,893 MacDill AFB $53,550,939
Jacksonville NAS $65,516,902 Ft Carson $52,349,332
Ramstein AB* $65,106,692 Nellis AFB $52,243,552
Ft Benning $62,539,907 Travis AFB $51,701,359
Ft Bragg North $61,260,558 Hickam AFB $51,051,518
Ft Lewis $60,902,916 Kadena AB $50,991,553
Langley AFB $59,426,763 Scott AFB $50,597,933
Quantico MCB $58,783,439 Camp Lejeune MCB $50,269,759
DeCA Profile
36 Proprietary & Confidential
DeCA’s Focus – 2015
Sales Growth and Opportunities
37 Proprietary & Confidential
Maintain household counts and trips
Opportunity to improve in store experience
Fresh (produce, wellness) which will result in increased
purchases
DeCA demonstrated success in increasing basket size
over the past year
Increase of
0.7 Trips ($65/trip)
Increase of
$3/Trip (14.5 trips/year)
Source: American Logistics Association
DeCA 2015 Sales Objectives
38 Proprietary & Confidential
eCommerce
CLICK2GO
Future with EBS
Content Marketing
Digital Communications
Sales flyer
38 Source: American Logistics Association
Sales Growth and Opportunities
Engaging the Empowered Shopper
39 Proprietary & Confidential 39
CLICK2GO Piloted in three locations
Fort Lee, Offutt AFB, Travis AFB
Average Basket Size
• CLICK2GO: $104.70
• Brick and Mortar: $62.60
Source: American Logistics Association
Click2Go Pilot
40 Proprietary & Confidential
The commissary is one of the most important tools you have for the health and well-being of the military in this country.
– Senator Barbara Mikulski
• HBI/Better for You
• Natural & Organic
• Healthier Eating
Strategy – 2015 Health & Wellness Initiatives
Source: American Logistics Association
Healthy Base Initiative
41 Proprietary & Confidential
Healthy Base Initiative
Source: American Logistics Association
42 Proprietary & Confidential
Establishing the Value Brand
Source: American Logistics Association
• Quality brand names – store brand prices
• Response to continue demand for private
label/store brand products
• Approximately 450 items; spanning more than 55 categories
• Save: 20-25% versus retail private label/store brands
• Save: 40% against similar national brand items
• Value Brands featured in each promotional flyer
43 Proprietary & Confidential
Rewards Card
Source: American Logistics Association
Over 382,000 current users
Coupon Redemptions
grew 65% for FY14
New Age Technology
Users spend more money!
Average Basket $157
Among Loyalty Card Users
44 Proprietary & Confidential
Sales Flyer – Content Marketing
Sales flyers posted for
each promotion on
webpage & Facebook
44 Source: American Logistics Association
45 Proprietary & Confidential
DeCA Summary
46 Proprietary & Confidential
Military Exchanges and
Ships Stores Market
Exchanges
47 Proprietary & Confidential
•Self-funded, using few tax dollars.
•Pay their own operating costs from sales revenue. •Return earnings to customers through payments to
Morale, Welfare, and Recreation funds. The MWR
Fund supports quality of life programs which include the following on base: golf courses, aquatic and recreation centers, and child care centers.
AAFES, NEX, and Marine Exchanges operate as federal instrumentalities – unique organizations
within the Department of Defense
Coast Guard Exchanges
An MWR activity; Coast Guard is part of the Department
of Homeland Security
Veterans Canteens Operates under the authority of the Department
of Veterans Affairs
Exchanges Profile
Photos: Courtesy of the ALA
48 Proprietary & Confidential
Exchange Sales
$ Billions
$12.29 12.97 $13.03$11.99 $11.49
2010 2011 2012 2013 2014
* Includes Vets Canteen sales figures
Source: American Logistics Association
Exchanges Profile
1.74% 5.53% .54%
-7.9% -4.2%
49 Proprietary & Confidential
2014 Total Exchange Sales $11.49 Billion*
Navy $2.66 billion
AAFES $7.33 billion
Vets Canteen $443.78 million
Coast Guard $158.04 million
Marine Corps $898.84 million
Source: American Logistics Association
Exchanges Profile
* Does not include concession sales
50 Proprietary & Confidential
Exchange Sales vs. America’s Top 22 Retailers 2014
U.S. Sales
(Billions)
Source: NRF (Top 100 retailers)
Exchanges Profile
EXCHANGES RANK
22nd AMONG TOP RETAILERS!
Retailer % Change
vs. YAGO
1 Wal-Mart 334.30$ 1.7%
2 Costco 74.74$ 5.2%
3 Target 71.27$ -0.9%
4 The Home Depot 69.95$ 6.6%
5 Walgreen 68.06$ 1.3%
6 CVS 65.61$ 3.1%
7 Lowe’s 52.21$ 3.6%
8 Amazon.com 43.96$ 27.2%
9 Best Buy 35.76$ -1.2%
10 Macy’s 27.86$ 0.9%
11 Apple/iTunes 26.64$ 11.0%
12 Sears 26.61$ -13.4%
13 Rite Aid 25.52$ 0.5%
14 TJX 20.92$ 7.7%
15 Kohl's 19.03$ -1.3%
16 Dollar General 17.50$ 9.2%
17 True Value 16.33$ -1.6%
18 BJ's Wholesale 12.95$ 4.9%
19 Gap 12.87$ 4.3%
20 Nordstrom 12.36$ 3.7%
21 J.C. Penney 11.78$ -8.7%
22 U.S. Military Exchanges 11.49$ -7.9%
U.S. Sales
(Billions) Retailer % Change
vs. YAGO
51 Proprietary & Confidential
Exchange Stores
NOTE: Resale systems combined operate thousands of retail operations including Main Stores, Express Stores, Troop Stores,
Package Stores, Sport Shops, Lawn and Garden, Fast Food, Military Clothing Stores, Gas Stations, and more.
EXPRESS/TROOP/
MINI MARTS
CLASS 6
STAND ALONE
CONUS OCONUS
TOTAL
WORLDWIDE WORLDWIDE WORLDWIDE
AAFES 100 26 126 300 24
NEXCOM 68 33 101 159 209
MCX 15 2 17 85 6
CGES 59 5 64 63 10
VCS 169 4 173 N/A N/A
TOTAL 411 70 481 607 249
EXCHANGE MAIN STORES
Exchanges Profile
Source: American Logistics Association
52 Proprietary & Confidential
Exchange Resale Systems
• Pricing equal to or lower than other retailers
• Voluntary Price Reduction (VPR)
• Favorable payment terms
• Marketing funds for:
In-store demos
Premiums, giveaways
Truckload and parking lot sales
Contests and sweepstakes
Clerk training
Scholarships
Exchanges Business Drivers
Photo: Courtesy of the ALA
53 Proprietary & Confidential
• Advertising funds for:
Weekly tabloids
In-store flyers
Special programs
• Prepaid freight
• Warehouse allowances
• Business processes
Vendor Managed Inventory (VMI)
Same UPC code for Bonus Packs
Pre-ticketing for certain kinds of merchandise
• E-commerce and social media outreach continue to grow
Exchange Resale Systems
Exchanges Business Drivers
Photo: Courtesy of the ALA
54 Proprietary & Confidential
2014 Total MWR Dividends by Branch
Army - $116.5 million
Air Force - $69.4 million
Navy/Marines – $21.4 million
$211 for every soldier and airman
Source: AAFES Quick Facts
Exchanges Business Drivers
55 Proprietary & Confidential
Army & Air Force
Exchange Service (AAFES)
AAFES
Photo: Courtesy of the ALA
56 Proprietary & Confidential
Established: 1895
Employees: 40,622
Headquarters:
3911 S. Walton Walker Blvd.
Dallas, TX 75236-1598
Phone: (214)312-1101
Website: www.aafes.com
Major Distribution Facilities:
Forest Park, GA Newport News, VA
French Camp, CA Waco, TX
Giessen, Germany Feltwell, England
Tokyo, Japan Inchon, Korea
Okinawa, Japan Honolulu, Hawaii
Director/CEO:
Thomas Shull
Selected Operations and Services:
FY 2014 Sales: $7.33 Billion
Retail Stores On-line Shopping
Concessions Catalog Services
Food Facilities Gas and Auto Repair
Movie Theaters Vending Centers
Military Clothing Stores
AAFES Profile
COO: Michael P. Howard
57 Proprietary & Confidential
AAFES Sales Trend
Source: American Logistics Association
$8.24 $8.65 $8.61$7.78 $7.33
2010 2011 2012 2013 2014
AAFES Profile
$ Billions
+0.98% +4.97% -0.46%
-9.63%
Does not include concessions
-5.78%
58 Proprietary & Confidential
AAFES Mission: To be our Customers’ First Choice
AAFES Mission
Quick Facts
• AAFES is 119 years old
• AAFES is self-supporting with 98% of its operating budget
from within
• Only 2% of the exchange budget comes from taxpayer $
• AAFES returned 185.9 million in MWR funds
• In the past ten years, AAFES has returned $2.4 billion
to the quality of life programs
• $211 per capita to every soldier and airman
• Of its 36,000 employees:
24% are military family members
10% are veterans
2% are active duty
Source: AAFES Quick Facts
Photo: Courtesy of the ALA
59 Proprietary & Confidential
AAFES Quick Facts (continued)
AAFES Mission
• AAFES returns two-thirds of its earnings to the MWR program
• AAFES operates 2,448 retail facilities worldwide in all 50 states,
5 U.S. Territories, and 26 countries
• AAFES is the only retailer to follow troops into a war zone
• More than 4,345 AAFES employees have deployed since 9/11
• 486 wounded warriors have been hired since 2010
• 7 plants supply fresh bakery goods and water overseas
Source: AAFES Annual Report
60 Proprietary & Confidential
Top 10 Main Stores
Store Name & Rank
FY 2013
Sales
1 Kaiserslautern $139.267M
2 Kadena AB $93.271M
3 JB Lewis/McChord $61.976M
4 Camp Foster $58.345M
5 Ft. Belvoir $56.838M
6 Ft. Hood $56.722M
7 Ft. Bliss $54.602M
8 Ft. Campbell $49.321M
9 Sam Houston Exchange $48.838M
10 Lackland Exchange $48.274M
AAFES Profile
Source: American Logistics Association
61 Proprietary & Confidential
Top 10 Class Six Stores
Store Name & Rank
FY 2013
Sales
1 Ft. Buchanan Class 6 $22.029M
2 Santiago PR Retail $13.591M
3 Ft. Belvoir Express $9.452M
4 Ft. Jackson Class 6 $8.195M
5 Ft. Buchanan Main Store $7.789M
6 Ft. Meade Express/Gas $7.575M
7 MacDill AFB Class 6 $7.505M
8 Redstone Arsenal Express $6.981M
9 Hill AFB Mini-Mall $6.772M
10 Ft. Bragg NP Class 6/Express/Gas $6.708M
AAFES Profile
Source: American Logistics Association
62 Proprietary & Confidential
Top 10 Express Stores
Store Name & Rank
FY 2013
Sales
1 Ramstein – Express $38.148M
2 Schofield Barracks – Car Care Center $36.779M
3 AF Kandahar $36.607M
4 Ft. Meade – Express $34.088M
5 Travis AFB – Express $31.200M
6 Ft. Belvoir – North Post Express $29.893M
7 Ft. Hood – III Corps Express $28.378M
8 Ft. Bragg – Pines Express $27.365M
9 Ft. Bragg – Main Express $26.573M
10 JB Lewis/McChord – Class 6 $26.515M
AAFES Profile
Source: American Logistics Association
63 Proprietary & Confidential
Army & Air Force
Exchange Service (AAFES)
Priorities in 2015
AAFES’s Priorities
Photo: Courtesy of the ALA
64 Proprietary & Confidential
Critical Growth Areas - Military Star and E-commerce
Targeting Three Main Growth Opportunities National Guard and Reserve Retirees Young Active Duty National Guard and Reserve 12% of our MilStar Business Online Business Growing (22%) Under indexed on the 18-24 Guard and Reserve Shopper (6%)
Our Next Steps Targeted 18-24 mailings and emails - tracking new acquisition Outreach to Guard and Reserve training locations Co-market on Guard and Reserve online sites – measure effectiveness Build relationships with Guard and Reserve organizations
Customer Acquisition
Source: American Logistics Association
Photo: Courtesy of the ALA
65 Proprietary & Confidential
Customer Acquisition
Retirees 32% of customers are Retirees
40% of e-commerce business is Retirees Concern - 37% of Retiree customers are 55+ Our Next Steps:
Focus Target Marketing on Transition Age Groups Leverage their community in “Refer a Vet” program for online shopping privileges
Active Duty 33% of customers are Active Duty
25% of online customers are Active Duty Doing very well with 25-34 age group Growth opportunity - 23% of 18-24 have a Military
Star Card, but only 6% are shopping online
Our Next Steps: Focus on Young Active Duty - Graduation Cards with Milstar Focus
Create Loyalty Incentives in Food Courts and Express
Source: American Logistics Association
Photos: Courtesy of the ALA
66 Proprietary & Confidential
Grow the Express
Buy more, save more Incorporate vendor instant rebates and/or BOGOs Highlight/promote seasonal items to increase basket Bundling Point of sale promotions Solution selling Larger, “value” package sizes where it makes sense
Drive convenience store sales per transaction to realize a 5% average sales per transaction increase (expected) or 10% average
sales per transaction increase (exceptional) in Express Stores.
How this will be achieved:
Source: American Logistics Association
67 Proprietary & Confidential
Extend Online Benefits to Veterans
Soldiers and airmen today have deployed 3-4 times into combat Their sacrifices are often higher
They should have some benefit when they leave the service
Online shopping privileges for
Source: American Logistics Association
AAFES’s goal is to extend the shopping privilege, but this is still awaiting approval.
Photo: Courtesy of the ALA
68 Proprietary & Confidential
Navy Exchange Service
Command (NEX)
NEX
Photo: Courtesy of the ALA
69 Proprietary & Confidential
Established: 1946
Employees: 14,000
Headquarters:
3280 Virginia Beach Blvd.
Virginia Beach, VA 23452
Phone: (757) 463-6200
Website: www.navy-nex.com
Major Distribution Facilities:
Norfolk, VA Chesapeake, VA
Chino, CA Pensacola, FLA
Naples, Italy Honolulu, Hawaii
Chief Executive Officer
Robert Bianchi
Selected Operations and Services:
FY 2014 Sales: $2.66 Billion
COO:
Michael Good, SES
NEX Profile
Retail Stores; Concessions; Food
Facilities; Gas and Auto Repair;
Vending Centers; Uniform Stores;
Ship Stores
70 Proprietary & Confidential
NEX Mission
NEX Mission
To provide iconic brands and
quality goods and services to our
customers at a savings and
support Navy quality of life
programs.
Photos: Courtesy of the ALA
71 Proprietary & Confidential
Navy Exchange Sales Trends
NEX Profile
$ Billions
$2.81$2.66 $2.66$2.77$2.64
2010 2011 2012 2013 2014
Source: American Logistics Association
6.45% +4.92%
+1.44%
-5.33% 0%
72 Proprietary & Confidential
NEX Quick Facts!
• NEX offers its customers a 22% savings compared to outside the gate
• $2.4 billion provided to Navy recreation programs over 65 years
• NEX operates 94 NEX complexes (approximately 300 stores)
• ShipStores and Navy Lodges also come under NEX
• The Navy Lodges (39 worldwide) generated more than $67 million in sales
• NEX supports the wounded warrior program, with games for the hospitals,
and 13,000 free nights at the Navy Lodge
NEX Profile
Source: American Logistics Association
Photo: Courtesy of the ALA
73 Proprietary & Confidential
Diverse Global Customer Base
Empty Nesters 21%
Double Dippers 21%
Arrivers - 11% Full Nesters 34%
Senior Shoppers 11%
Source: ALA Roundtable Presentation 2014
NEX Diverse Global
Customer Base
NEX Profile
Photos: Courtesy of the ALA
74 Proprietary & Confidential
Top 10 Mini Marts
NEX Profile
Store Name & Rank
FY 2013
Sales
1 JEB Little Creek-Fort Story, VA (Autoport) $11.89M
2 JB Pearl Harbor-Hickam, HI (Fleet Store) $11.51M
3 NAS Pensacola, FL (Mall Mini-Mart) $10.63M
4 NB San Diego, CA (Quick Mart) $9.53M
5 JB Pearl Harbor-Hickam, HI (Mini-Mart Holomoku) $8.72M
6 NH Guam (Mini-Mart/Gas) $7.38M
7 NBK Bangor, WA (Mini-Mart/Package Store) $7.08M
8 NA Capodichino, Italy (NEXMart) $6.93M
9 NAS Whidbey Island, WA (Fleet Store) $6.83M
10 NS Mayport, FL (Fleet/Furniture Store) $6.70M
Source: American Logistics Association
75 Proprietary & Confidential
Top 10 Class 6 Stores
NEX Profile
Store Name & Rank
FY 2013
Sales
1 JB Pearl Harbor-Hickam, HI (Mini-Mart) $10.61M
2 NS Norfolk, VA (Package Store) $10.31M
3 NAS Jacksonville, FL (Package Store) $9.75M
4 NAS Oceana, VA (Package Store) $9.16M
5 JEB Little Creek-Fort Story, VA (Gas/Mini-Mart) $8.56M
6 NAS Pensacola, FL (Mall Mini-Mart) $7.87M
7 NSA Bahrain $6.24M
8 NB San Diego, CA (Package Store) $6.23M
9 NSA Mid-South, Millington, TN $5.93M
10 WRNNMC Bethesda, MD (Package Store) $5.46M
Source: American Logistics Association
76 Proprietary & Confidential
NEX’s Focus: 2014 and Beyond Growth Businesses
Health and Wellness
Pet Apparel Handbags Activewear eCommerce
Fresh Food Footwear
In-Store Experience Cosmetics Portfolio Management Store Segmentation
Center Core “A Better You” Consumer Electronics
NEX Profile
Marketing
Omni-Channel
Grow Email
Navy Blue Holiday
Customer Loyalty Program
Mobile
Supply Chain
In-Stock on Shelf
Space Management
Vendor Compliance
Supply Chain Decision Tree
Growing Sales = Driving Traffic, Keeping Shoppers in Store > 25 minutes
77 Proprietary & Confidential
It’s All About the Customer
It’s all About the Customer
Source: ALA Roundtable Presentation 2014
Photo: Courtesy of the ALA
78 Proprietary & Confidential
Marine Corps
79 Proprietary & Confidential
Established: 1897
Employees: 3,543
Headquarters:
3044 Catlin Avenue
Quantico, VA 23134-5103
Phone: (703) 784-3800
Website: www.usmc-mccs.org
Director
Cindy Whitman Lacy
FY 2014 Sales: $898.8 Million
COO: Jennifer Ide
Major Distribution Facilities:
Selected Operations & Services: Retail Stores;
Concessions; Vending Centers; Gas & Auto
Repair; Food & Hospitality centers;
MWR programs
Marine Corps Profile
Photo: Courtesy of the ALA
80 Proprietary & Confidential
Marine Corps Vision
• A Great Shopping Experience – Curb to Register
• The First Place our Customers Think to Shop and Have
Confidence in our Assortments
• Clear in our Value Story to the Customer
• Emotionally Connected to the Marine Customer
Marine Corps Mission
81 Proprietary & Confidential
Marine Corps Sales Trend
$ Millions
$925.3
0
$997.7
8
$1,0
38
$967.5
0
$898.8
4
2010 2011 2012 2013 2014
Marine Corps Profile
Source: American Logistics Association
+.41%
+7.78% +4.01%
-6.84% -7.13%
82 Proprietary & Confidential Source: ALA Roundtable Presentation 2014
Line of Business FY14 Sales
(000)
Chg vs.
YAGO Food & Gourmet $58,309 -3.20%
Non-Alcoholic Beverages $45,006 -6.71%
Tobacco $44,523 -5.66%
Health & Beauty $26,596 -2.65%
Cosmetics $22,598 -4.68%
Spirits $22,416 -5.12%
Beer & Ales $22,304 -1.91%
Sports Nutrition $12,262 8.45%
Cleaning $8,233 -19.89%
Wine $8,167 -9.41%
Stationery $8,167 -7.46%
Hardware $4,504 -8.40%
Pets $2,710 -1.59%
Personal Care $2,443 -9.97%
Automotive $2,206 -6.44%
Mass Cosmetics $1,408 -2.18%
Total Consumables $291,853 -4.83%
Consumables by Line of Business
83 Proprietary & Confidential
• Supply Chain/Inventory Efficiency
• Marine Marts/Small Store Formats
• Operational Efficiency
• Customer Centricity
• Strategic Communication
• Employee Development & Career Pathing
MCX Priorities
Source: ALA Roundtable Presentation 2014
Marine Corps Priorities
84 Proprietary & Confidential
Veterans Canteen Service
85 Proprietary & Confidential
Established: 1946
Employees: 3,100
Headquarters:
Jefferson Barracks Road, Bldg# 25
Saint Louis, MO 63225
Phone: (314) 845-1200
Website: www.vacanteen.va.gov
Selected Operations and Services:
FY 2014 Sales: $443.78 Million
Executive Director:
Joseph Tober
Retail Stores; Food Operations
(Cafeterias); Personalized Services;
Vending
Core Customers:
Patients (including relatives & friends);
Staff & medical workers; Volunteers
COO:
James Leahy
Average Retail Store Size:
1,500 sq. ft.
Veterans Canteen Profile
86 Proprietary & Confidential
Mission Statement:
To provide America’s Veterans, enrolled in VA’s
Health Care System, their families, caregivers, VA
employees, volunteers, and visitors, reasonably
priced merchandise and services essential to their
comfort and well being.
Veterans Canteen Mission
87 Proprietary & Confidential
Veterans Canteen Profile
$372$412 $421 $429 $443
2010 2011 2012 2013 2014
Veterans Canteen Sales Trend
Source: Military Retailer 2011 Fact Book
$ Millions
-5.82%
10.75% 2.18% 1.90% 3.26%
88 Proprietary & Confidential
Veterans Canteen Profile
Eligible Customer Base
Source: American Logistics Association
• Veteran Enrollees > 7,800,000
• Family Members (est.) 7,800,000
• VA Caregivers 221,000
• VA Volunteers 25,000
• Family Members 580,000
More than 16 million
89 Proprietary & Confidential
90 Proprietary & Confidential
Established: 1945
Employees: 1,600
Headquarters:
Chesapeake, VA
Phone: (757) 420-2480
Website: www.uscg.mil
Selected Operations and Services:
FY 2014 Sales: $158.04 Million
Commander:
Captain Robert Whitehouse
Retail Stores; Food Operations (franchised); Gas
Stations; MWR Programs; Vending Centers
Director of MWR:
Gary Scheer
Coast Guard Profile
COO:
Jim Reiley
Source: American Logistics Association
91 Proprietary & Confidential
Mission: To provide quality goods and services at a savings to our authorized patrons, and to provide funding to the Coast Guard’s Morale, Well Being and Recreation program.
Coast Guard Mission
Coast Guard Mission
Source: American Logistics Association
The Coast Guard Exchange (CGX) is one of many support organizations within the Department of Homeland Security (DHS). CGX is a military activity that operates as a business enterprise. Income generated is used as working capital to maintain CGX and to provide the Coast Guard with supplemental funding to the Morale, Well-Being, and Recreation (MWR) fund. Because CGX provides services to its customers in remote locations, some units operate with little or no profit as a benefit to military service members and their families. Photo: Courtesy of the ALA
92 Proprietary & Confidential
$158.4 $162.6 $162.7 $158.3 $158.0
2010 2011 2012 2013 2014
Coast Guard Sales Trend
Coast Guard Profile
Source: American Logistics Association
$ Millions
+8.32% +2.65% +0.06% -2.70% -0.19%
93 Proprietary & Confidential Source: American Logistics Association
Coast Guard Profile
64 Locations in 23 States and Puerto Rico
94 Proprietary & Confidential Source: American Logistics Association
Coast Guard Profile
Store Segmentation
Format # Stores % Total Stores
% Total Sales
Superstore 2 3% 30%
Main Store 6 9% 13%
Convenience + 12 19% 18%
Convenience 1 11 17% 4%
Convenience 2 22 34% 12%
Fleet 5 8% 11%
Student 4 6% 6%
Market Place 2 3% 6%
TOTAL 64 100% 100%
95 Proprietary & Confidential
Military Resale Market
• Powerful mission – serving the most deserving patrons in the world, with a benefit they highly value
• Profitable market – no slotting fees, lower go-to-market costs • Strategic channel – demographically formative years, large
number of authorized patrons, global reach
Summary
Source: American Logistics Association
96 Proprietary & Confidential
Thank You!
Photos: Courtesy of the ALA