Words From the Director/CEO: A Midyear Update on Strategic Priorities for 2023
Tom Shull Exchange Director/CEO
Team,
With the second half of FY 2023 in full swing, the Exchange remains strong, supporting the mission through critical strategic value levers to protect and preserve the hard-earned benefit we are honored to provide service members and their families.
At the end of the second quarter, Exchange earnings were $236 million, or 40% above financial plan and 52% over the same period last year. However, compared to 2021 and excluding APF received in 2023, normalized earnings were down $12 million, reflecting the impact of the Executive Orders that increased wage costs. This underscores the importance of cost control to mitigate the inflationary pressures.
At the MSM/GM Conference in April, we talked about recent Exchange achievements and how we will build on them. Here is a midyear update on results secured.
Self-checkout: Worldwide, the Exchange now has nearly 1,350 self-checkout kiosks, a sign of how rapidly this rollout has accelerated since launching in April 2022 at Fort Moore. Today, nearly 500 PXs, BXs and Expresses have self-checkout lanes, with more than 32 million transactions processed. More than 1,500 additional self-checkout lanes are planned to be operational by the end of FY 23.
Self-checkout benefits shoppers by reducing the time they stand in line; it benefits stores by helping them manage customer traffic at peak times; and it benefits associates by freeing them up to help elsewhere in the store. Shoppers can pay at self-checkout with a MILITARY STAR®, debit or bank-issued credit card. Future enhancements such as the use of coupons and cash acceptance will be implemented.
MILITARY STAR expansion: The Exchange Credit Program is continuing with the development and integration of its partnership with Discover Financial Services (owner of the Discover card). This collaboration, which was finalized in March, will allow the MILITARY STAR card to provide tap-to-pay, secure EMV (simpler, quicker and more secure checkout) and mobile wallet options while significantly expanding integration and acceptance. Cardholders will begin receiving new MILITARY STAR cards in the second half of FY 2024.
ShopMyExchange.com expansion: The Exchange team has aggressively increased the dropship program, allowing more tax-free e-commerce orders to ship direct to customers from third-party vendors. More than 100 vendors have been added to ShopMyExchange.com in 2023, with more than 250 total planned for the year. The goal is to increase our relevancy to the military community with a more comprehensive online assortment.
The results of this work are already evident, primarily with the May launch of the Exchange’s partnership with The Home Depot, giving shoppers tax-free access to a much wider assortment with a leading retailer of major appliances. Orders are fulfilled by The Home Depot, eliminating the Exchange’s logistics costs. Another key partnership, Curated by Sunglass Hut, launched in August.
We have improved the functionality and navigation with an upgraded ShopMyExchange.com search engine. Launched in July, the upgrade provides faster and more relevant results.
Family Serving Family!
Thank you for your amazing passion for keeping the Exchange benefit strong for service members, Veterans, retirees and their families. Because of the work of terrific teammates like you, the Exchange has been privileged to serve our Nation’s heroes for more than 128 years. It is truly an honor to serve those who serve with you.
Onward and upward,
Tom
