Words from Director/CEO Tom Shull: How You Strengthened the Exchange Benefit in 2019

By Tom Shull
Director/CEO

Congratulations on a strong 2019. Amid the challenges of the ever-changing retail industry—which saw more than 9,300 retail stores close in 2019—you have provided exceptional service to Warfighters and their families.

Last year, we continued to go where our military goes, serve one another as family, honor our Veterans’ service, do our part to make each military installation the premiere place to live and leverage our technology, people and agility to support our Nation’s military mission.

We Go Where You Go

Serving at the Tip of the Spear

For Warfighters at the tip of the spear, the Exchange provides much-needed comfort and relief. In February, associates worked around the clock to open three mobile field Exchanges in Poland in nine days to support troops conducting military exercises there.

At Camp Erbil in Iraq, troops welcomed the opening of a 2,100-square-foot Exchange—more than three times larger than the previous Exchange location serving them. In Saudi Arabia, a full Exchange contingency store opened just months after Prince Sultan Air Base was re-opened, providing snacks, phone chargers and more.

Those assigned to NATO location in Bosnia also have a new Exchange, which had previously been operating out of shipping containers.

Disaster Support

As Hurricane Dorian threatened the East Coast in the fall, Exchange associates in the Southeast, Puerto Rico and HQs leaned forward.

More than 145,000 emergency supplies were shipped to the affected locations before the storm, allowing shoppers to stock up on bottled water, flashlights, gas cans, batteries and generators. Gasoline deliveries to Expresses were increased as well.

Thanks to the swift work, Exchanges in the Carolinas, Georgia, Florida and Puerto Rico were there for shoppers before and after Dorian.

When Typhoon Lingling hit the Exchange’s Korea distribution center in September, freezers used for the Department of Defense Educational Activity school meal program and Exchange restaurants were damaged, resulting in the loss of $1.3 million in food product.

Thanks to the quick work of distribution center, Logistics, Real Estate and Services and Food associates, the school meal program didn’t miss a beat. Other Exchange DCs in the region helped to cover any gap in inventory so school kids and Exchange diners could continue to enjoy nutritious and delicious meals.

Taste of Home

Troops in Kuwait were thrilled when three new Hunt Brothers Pizza locations opened in October. The Camp Buehring location set the record for highest one-day sales in Hunt Brothers Pizza history. Simple things like tasting familiar favorites can make a big difference to a Soldier or Airman serving far from home.

Some 2,000 Exchange shoppers in Germany celebrated the opening of Wahlburgers at Ramstein Air Base with the restaurant’s co-founders Mark and Paul Wahlberg.

First-run movies and downrange premieres

One of the best moments of 2019 was premiering “Star Wars: The Rise of Skywalker” with deployed troops at Bagram Airfield in Afghanistan in December.

These men and women were far from family and friends during the holidays, and getting to see the highly anticipated movie at the same time those back home were seeing it provided a welcome relief from the tensions of deployment.

More than 10,000 troops across the Middle East were able to see the film.

The Exchange has enjoyed a strong partnership with The Walt Disney Studios that made the special holiday “Star Wars” event possible, as well as the “Avengers: Endgame” screenings that took place in Afghanistan in the spring.

Family Serving Family

Delivering value to shoppers

Our sales held steady over last year as most of our key competitors saw decreases.

The Exchange delivers an annual benefit to Warfighters and their families that exceeds $1.37 billion in tax savings, dividends to Quality-of-Life programs, investment in infrastructure and technology and more.

A key value driver is the MILITARY STAR_® program, which generates a $471 million annual benefit in cardholder savings, discounts, promotional finance offers and friendly terms and conditions such as no late, over-limit or annual fees and the lowest flat-rate APR among retail cards.

The MILITARY STAR card was established 40 years ago in response to military leadership’s concerns regarding a growing number of rent-to-own, pay-advancement schemes and unacceptably high interest rate scams that military personnel were encountering.

The Exchange Credit Program (ECP), which administers MILITARY STAR, encourages and promotes the responsible use of credit and building credit wisely. The MILITARY STAR card is tailored to active duty, reserve, guard, retired service members and their families’ credit needs.

In November, MILITARY STAR introduced Pay Your Way fixed payment plans. The plans launched in November and saw $10 million in sales in its first two months.

Since the launch of the Veterans online shopping benefit in 2017, Veteran shoppers have placed nearly a half a million online orders through ShopMyExchange.com, saving nearly $9 million in sales tax on over $110 million in purchases.

They now make up 10.5% of the online shopping base. It is an honor to welcome these Veterans for life home to their Exchange benefit.

50,000 Veterans and military spouses hired by 2020

We say that our customers are our heroes, but our associates are heroes, too. In 2019, the Exchange has continued its tradition of hiring heroes as it marches toward the goal of hiring 50,000 Veterans and military spouses by the end of 2020.

Since 2013, more than 9,000 Veterans and 34,500 spouses have been hired. Exchange employment is a force multiplier for Quality of Life with advantages like spousal hiring preference, the associate transfer program and benefits retention throughout their careers.

Improving the customer experience

Troops serving in Japan and South Korea also enjoyed new stores in 2019.

At Camp Humphreys, the Exchange cut the ribbon on the 12,000-square-foot Zoeckler Express Mini Mall as part of the Yongsan Relocation Project, which is seeing the population assigned to Camp Humphreys continue to grow.

At Kadena AB, the military community has a brand-new 13-000-square-foot Express with fuel, healthy grab-and-go food and a Subway and Hunt Brothers Pizza.

Soldiers of the 10th Mountain Division at Fort Drum also have a new 12,000-square foot Express Mini-Mall.

USAG Vicenza, Barksdale Air Force Base, Fort Bragg, Camp Foster, Fort Gordon, Fort Hamilton, JBPHH-Hickam, Fort Jackson, Redstone Arsenal, Fort Stewart, Fort Hood, KMC-Ramstein Air Base, Fort Leonard Wood and Altus Air Force Base all celebrated grand openings of new or renovated Expresses or Main Stores.

In 2019, the Exchange invested a total of $175 million to build new facilities and upgrade older stores. This investment is part of our overall facility strategy to improve the customer experience.

2019 also saw the opening of more than 50 name-brand restaurant favorites, with a focus on BE FIT options such as Muscle Maker Grill, Freshens, Qdoba and Bun-D.

Greater convenience for shoppers

The Exchange continued to provide convenience to online shoppers. More than $400 million in orders were placed online in 2019, an increase of nearly 9% over last year. Purchases made by Veteran online shoppers increased nearly 30% over 2018.

The ship-from-store program fulfilled over $100 million in online orders, 59% more than the previous year. And shoppers are using the new Buy Online, Pickup in Store service to skip the shipping costs and pick up their online orders at their local Exchange.

In its first year, the service saw more than 125,000 orders filled.

The ecommerce team is leaning forward to bring flexibility and versatility to the Exchange shopping experience and meet shoppers’ lifestyles.

Welcoming Home More of Our Heroes

Expanded patronage

The Exchange recently welcomed an additional 4.1 million Veterans home to in-store shopping privileges.

Since Jan. 1, Purple Heart recipients, Veterans with service-connected disabilities and certain primary family caregivers are eligible to shop at the Exchange. Our outreach and customer engagement teams are aggressively communicating this new shopping benefit to these newly authorized shoppers.

 A holistic approach to health and wellness

As our Nation’s disabled Veterans come back to their Exchange, we’re listening to feedback from our shoppers and Commanders to provide dining choices that support a BE FIT lifestyle.

The Exchange is also working to offer more wellness services.

The Exchange’s first mobile dental offices opened at Forts Eustis and Bragg, with 10 more offices scheduled to open in 2020. The mobile locations will serve the communities while permanent offices are constructed.

Additionally, we obtained approval from the Air Force Surgeon General to provide dental services on all Air Force installations. Currently, local Air Force commands have authorized the Exchange to provide dental services on nine installations.

Surgeon General approval is being pursued for additional healthcare services such as: chiropractic care, urgent care, physical therapy, mental health and pharmacy services.

We are also working to add lab services into the Exchange’s health and wellness portfolio to provide holistic healthcare solutions to all authorized Exchange shoppers.

Doing our part to make each military installation the No. 1 place to live

Building strategic partnerships

Collaboration has been key to strengthening the benefit in 2019. A joint-buying alliance was established between military resale entities, a move that will help lower costs.

The Exchange also participated in the first Military Electronics Expo with the other military exchanges. Joint offers and events highlighted the Exchange’s strong partnership with the Defense Commissary Agency.

Collaborating across the military resale landscape puts the military shopper first and helps the Exchange strengthen and secure hard-earned benefits.

A Force Multiplier for Quality of Life

Safer, faster, better

The Exchange has been focusing on increasing supply chain efficiencies and keeping associates safe. The legacy fashions distribution system at the Dan Daniel Distribution Center has been retired and replaced with new technology to make merchandise flow smoother and more efficiently.

Our teams found ways to reduce transportation costs by streamlining the delivery of major appliances and awarding a new import contract.

A new reporting tool is helping distribution centers identify the most common types of injuries among associates, which allows managers to increase and improve relevant training to reduce injury frequency rates and keep our teammates safe.

In conjunction with U.S. Transportation Command, the Exchange assisted in developing and testing a transportation management system (TMS) prototype on behalf of the DoD.

If USTRANSCOM moves forward with the new TMS, it can drastically improve in-transit visibility and reduce the amount of time needed to place cargo shipping orders in the system, making the process more efficient.

Leveraging technology for greater efficiency

The Exchange continues to pursue new technologies. The IT directorate launched a self-checkout pilot at the headquarters Express, which has proven popular.

HQ associates also got a glimpse of what’s possible with new technology during IT’s Robotic Automation Processing fair, which showcased how “bots” can rapidly perform many repetitive and time-consuming tasks, thereby reducing costs and freeing associates to focus on more complex tasks.

Serving the best customers in the world

 There is much to look forward to as we enter our 125^th year of serving those who serve.

The Exchange benefit is stronger than it has ever been and it is you who deserve the thanks. Your tireless efforts to serve the military family are what makes the Exchange like no other retailer.

The Exchange continues to be nested in the Services’ efforts to recruit young Americans while retaining families. You are critical to support of military Quality of Life and the broader readiness mission.

There is no greater honor than serving those who serve!

Tom