From Director/CEO Tom Shull: 2021 Strategic Priorities—Driving For Success to Preserve the Benefit

Tom Shull
Director/CEO

After an unprecedented 2020, Team Exchange is focused on preserving the hard-earned benefit for all who wear the uniform—past, present and future. The leadership team has set the organization’s road map for 2021. These multiyear strategies will drive the business as the Exchange continues its nearly

126-year-old legacy of service and support. The following six strategic priorities will increase the organization’s relevancy as the Exchange continues to be a crucial non-pay benefit for those we are so honored to serve—Soldiers, Airmen, Guardians and their families.

Main Stores, Gas Stations and Wellness Offerings

Main store strategies: The Exchange is eager to welcome our Nation’s heroes and families back to main stores—a slow, steady process. PowerZone, BE FIT and cosmetics continue to offer great brands and value. Athleisure/outdoor apparel, outdoor living and sporting goods are trending categories and have been the most affected by the COVID-19 pandemic as shoppers adjusted to quarantining and working from home. The Exchange is anticipating new shopping behaviors as customers venture out after receiving COVID vaccines and as restrictions ease. This year, the back-to-school season will be important to customers, and we will focus heavily on our assortments to ensure we can support in-school learning this fall. Families are looking forward to traveling and gathering for the holidays. The Exchange anticipates a resurgence of home goods for the holidays. The regions and Merchandising are working together to reimagine the main store shopping experience. These are exciting times—more to follow on exciting plans for the main stores later this year and into 2022.

Branded fuel: The Exchange is introducing TOP TIER branded fuel from Marathon, BP Amoco and Valero at 180 gas stations in CONUS beginning in July. Exchange shoppers will see no changes to fuel pricing policy, and this effort will also improve the fuel supply chain to further strengthen mission support, especially during emergencies and natural disasters.

Wellness service expansion: Chiropractic offices—a first for the Exchange—are in discussion in 2021, making Exchange shopping centers a destination for on-installation care. In addition, eight dental offices and seven durable medical equipment shops are planned as well.

Food and Quick-Service Restaurants

Expanded restaurant portfolio: More than 200 new restaurants, including Slim Chickens and Bun-D, are planned during the next five years. New restaurants will focus on better-for-you options as well as drive-thru service.

Delivery service: On-installation meal delivery from Exchange restaurants through DoorDash is being tested at Fort Hood and Fort Carson, and a Fort Bragg pilot will roll out soon. Delivery service will modernize the Exchange’s restaurant business and keep it competitive. Retail delivery is also under development for Express merchandise and food to offer greatest convenience to shoppers.

Wider footprint for quick-service restaurants at the Express: The team is evaluating square footage of quick-service restaurants (Hunt Brothers Pizza, J. Walken Chicken and Chopz), looking to expand the footprint. In 2021, 10 locations are set to expand, with about 50 more growing their footprints in the next five years.

eCommerce  

Drop ship growth: A new back-office system will help expedite the addition of supplier-warehoused full product assortment catalogs to ShopMyExchange.com. This enables the Exchange to increase breadth of assortment without the burden of inventory investment. The real value proposition is the expansion of tax-free shopping across key brand assortments. The team continues to explore key supplier partnerships with big-box retailers to drive a unified commerce solution.

Fulfillment logic: The new order-management system for ShopMyExchange.com launched in February. This software solution suite from Manhattan utilizes an adaptive learning algorithm which optimizes e-commerce profitability and speed of service to the customer by determining the most effective fulfillment and delivery channel. Customers should expect quicker deliveries of online orders with fewer split shipments.

MILITARY STAR_®

Market expansion: The Exchange Credit Program continues to pursue expansion of the MILITARY STAR card beyond the gate. Acceptance at Priceline.com is expected in April, and other avenues, including accepting the card at off-installation partners, are being considered.  MILITARY STAR customers benefit from fair and flexible terms to help them safely and affordably build credit. Unlike bank-issued credit cards, MILITARY STAR does not charge merchant fees to the military resale community. The Exchange continues to drive toward making the card the primary form of payment across military resale. Card acceptance at IMCOM-G9 and Air Force Services facilities remains in coordination.

New payment options: The ECP team is working toward changing cardholders’ minimum payments, making the card’s terms more affordable and understandable.

Improved loyalty program: The Exchange Credit Program is evaluating enhancements to the Rewards program to include digital delivery, mobile integration and updated options for earning rewards. Updates will reduce program costs while deepening engagement with our Military Star cardholders.

Partnerships

Buying alliance expansion: The military resale buying alliance, in its third year, is engaged across several categories, including private label. The alliance was an integral part of the Exchange’s success during the onset of the pandemic, as demand for paper goods and cleaning supplies skyrocketed. The Exchange and its Marine Corps, Navy and Coast Guard counterparts as well as the Defense Commissary Agency leveraged one another’s sources to quickly meet unprecedented demand.

Digital Garrison enhancements: The app, a partnership between the Army and Exchange, launched in 2020 with information specific to each user’s Army community—including access to ShopMyExchange.com. Planned enhancements for 2021 include expanding command outreach by sharing local news, events and command information.

Shopping privilege expansion to Department of Defense civilians: Because of a Department of Defense policy change, about 473,000 DoD civilians who hold a Common Access Card will soon be able to shop in person in the United States and online at ShopMyExchange.com and apply for a MILITARY STAR_® card. Privilege expansion will benefit the military community through improvements to budget-constrained military Quality-of-Life programs; leveraged buying power, pricing and assortments for military exchanges; and a stronger benefit and value overall for all who wear the uniform—past, present and future.

Overhead Process Improvements

Workforce refinements: The leadership team will continue to improve efficiencies and right sizing at headquarters to drive business after the pandemic. The Exchange is committed to stabilizing its workforce—there have not been layoffs or furloughs during the pandemic.

Energy efficiency: Replacing LEDs throughout Exchange stores will provide electricity savings and lower carbon emissions. The new lighting will provide uniform light levels and colors, which will improve the shopping experience. Because of the superior lifespan of LED lamps, the Exchange will save thousands of manhours by reducing lamp replacement. LEDs also generate less heat, reducing store cooling loads in the summer. Multiple efficiencies are gained from LED technology. This is a continuing phase of our lighting improvement program, which previously included gas canopies, cornice lighting and cooler door lighting.

Logistics process enhancements: The Logistics team will continue to optimize its warehouse and transportation management systems along with artificial intelligence and robotics to reduce expenses and increase productivity.

Procurement improvements: Category management principles will continue to deliver savings from its goods not for resale (GNFR) spend with continuous improvement in total value compared to cost for goods and services.

Working hard, working together

As 2021 progresses, Exchange associates can turn to the Exchange Post for updates on our accomplishments regarding the strategic priorities. Every member of the Team Exchange plays a role in our success. Our core values of courage to use good judgment; respect everyone; and family serving family lead the way. Thank you for all you do to keep the Exchange benefit strong for Warfighters and military communities. Looking forward to seeing what we accomplish together in 2021!

One Team, One Fight!