Tom Shull: Exchange Leaning Forward to Meet 2018 Strategic Objectives

By Tom Shull
Exchange Director/CEO

The Exchange team at all levels of the organization has done a remarkable job in leaning forward to accomplish our seven 2018 strategic priorities. These priorities are critical to protecting and preserving the hard-earned benefits we are honored to provide  Warfighters and their families.

Here’s a glance on our progress so far:

Intensify MILITARY STAR

• Commissary sales using the MILITARY STAR card are tracking to exceed the 2018 annual goal of $144 million. One in four active cardholders is using the MILITARY STAR card at commissaries and spending an average of $71 a visit.
• From February through August 2018, MILITARY STAR purchases saved the Exchange $17.5 million in bank fees, while cardholders received $18.4 million in rewards.
• New MILITARY STAR accounts are up substantially at 76,000, nearly 9,000 over the same period in 2017. Greater exposure for MILITARY STAR through geofencing technology and digital advertising on popular websites, such as CNN, Recipes.com and realtor.com, are contributing to an increase in applications.
• The Credit Program is beta testing a MILITARY STAR mobile app for iOS and Android. The app will let account holders check balances, track spending and rewards, pay bills, find promotional offers and enjoy exclusive features. Piloting will begin this  fall, and the app is slated to be in the Google Play Store and the Apple Store by the fourth quarter.

Intensify the Veterans online shopping benefit and customer relationship management

 Customer Relationship Management

• The Customer Relationship Management Directorate can now draw deep insights of customers’ buying habits based on ways they interact with the Exchange, whether online or in brick-and-mortar retail and food operations. Such insights include product purchase insights, returns, and favorite product categories. This information allows for a level of customer engagement tailored to ensure Exchange offerings reflect each customer’s preferences.
• Customer’s preferences, or propensity-to-buy, are tagged at detailed levels, such as “pet ownership,” “plays soccer,” “uses Apple Mac Pro desktop,” and other tags. This helps guide personalized and targeted communications, such as emails and advertising.
• Based on a customer’s propensity to buy, digital ad content will be routed to his or her smartphone or tablet when near an Exchange selling a desired category or product. This “geofencing” has been deployed at 80 percent of all CONUS Expresses and generated both incremental foot traffic and revenue.

Veterans online shopping benefit

• Through aggressive outreach and marketing campaigns, the Exchange now has more than 300,000 authorized Veteran shoppers this year. Hitting that goal took a total team effort. Please share posts and videos from the Exchange’s social media accounts concerning the Veterans online shopping benefit during the critical fourth quarter to ensure all of our Nation’s honorably discharged Veterans know of their lifelong online shopping benefit.
• This year, Veterans online shopping benefit orders are exceeding $2 million per month with each purchase averaging $210 per order. Since launcing last Veterans Day, the Veterans online shopping benefit has saved those who have our Nation honorably more than $3 million in sales tax!
• Fueled by the strength of the Veterans online shopping benefit, ShopMyExchange.com sales are up 28% year-to-date.

Optimize concessions, food and main store business

• Throughout 2018, a property asset management (PAM) tool began rolling out to all concessions, restaurants and main stores. The PAM helps managers calculate sales and earnings per square foot for each concession, restaurant and main store. These findings assist our services business managers in identifying the best place for new offerings.
• In our main stores, associates worked hard to give customers special shopping experiences—and it’s showing in the numbers. Through August, sales stood at $1.3 billion, 1.4 percent higher than the same time last year.
• Ship-from-store sales through August were $16 million, 23 percent higher than last year.
• From February through July, food sales increased $43 million over Plan as the Exchange opened 22 name brand restaurants. Slim Chickens, Fazoli’s and Wahlburgers openings are in the works. Restaurants that offer healthier options, such as Muscle Maker Grill, Freshens, Sarku, Qdoba, Subway, Boston Market and Panda Express, recently opened to complement our organizational focus on a “Be Fit” lifestyle.
• The Exchange brought 19 free movie screenings, including “Mission Impossible—Fallout” and “Smallfoot,” to military communities around the world.
• The Exchange opened five durable medical equipment stores since February at Forts Belvoir, Bliss and Hood; Joint Base Lewis-McChord; and Nellis AFB.
• Motorists fueled up with 230 million gallons of gas at Expresses between February and July, a $1 million increase over the same period last year. Gross profit for fuel is up to $72 million, $4 million above Plan and $9 million above the same time last year.

Intensify holistic BE FIT program

• Softlines BE FIT sales between February and July increased 5 percent vs. prior year, to reach $91 million.
• Hardlines saw a 7 percent increase in sales of smart watches, fitness trackers and other exercise equipment, hitting $71 million.
• BE FIT Consumables sales in main stores and Expresses rose 10 percent to $36 million.
• ShopMyExchange.com’s Community Hub links visitors directly to BE FIT content with healthy recipes and fitness tips. The page also includes BE FIT influencers who share their personal stories about leading fit lifestyles. More than 35,000 people viewed the Community Hub in August and September.
• Strategic Marketing Manager Roy Montez became the Exchange’s BE FIT ambassador, educating and informing by sharing fitness information, nutrition tips and other tools to help Warfighters and their families live healthy lifestyles.

Invest in e-Commerce and technologies

Online shoppers began enjoying more than 230 website enhancements, such as:

• Predictive searching.
• Improved return process that allows customers to print labels and drop off at the post office or closest brick-and-mortar Exchange.
• Text updates on orders.
• Tags that helped customers identify best sellers, search by model number and filter for clearance items.

Reduce operating costs

• From February through August, operating costs were more than $18 million below plan—in this case, “below plan” being a good thing—as we have effectively managed personnel costs, travel and TDY expenses.

Optimize the supply chain

The Exchange took steps during the year to put inventory in the right place and determine the best locations from where to ship eCommerce orders to reduce costs and improve transit times.

• $1 million in costs savings through the use of Exchange trucks to deliver large appliances to online customers in 10 days.
• $96,000 reduction in oversize shipment surcharges.

These actions are proof that when we all pull together as a team, we can accomplish great things. All of you are the lead tanks in our efforts to support the world’s best customers, wherever they serve.

Now, we are in the critical part of the year, which includes the holiday shopping season. Your continued focus on these priorities to ensure success is appreciated.

One team!