Director/CEO Tom Shull Opens Managers’ Conference With Message of Unity, Strength

Leading cheers of “Better Together,” the theme of the Exchange’s first Retail, Food and Services Managers’ Conference, Director/CEO Tom Shull kicked off the conference with a message emphasizing unity and strength.

“Your selfless and steadfast service makes a difference,” Shull said. “We serve with distinction every day with honor, with integrity and with love.”

Shull spoke about how Team Exchange rose to the challenges of the past few years, beginning with the COVID pandemic that started in 2020.

“The pandemic forever changed shoppers’ expectations,” Shull said. “We had to advance technology. We had to get better at financials, better at logistics, we had to get better in so many areas during the pandemic to continue to provide that great customer experience that all of you provide.”

Early financial reports show that the Exchange surpassed sales and earnings goals for fiscal 2023 (final results will be available after a third-party audit is completed this spring). This will allow the Exchange to provide higher-than-planned dividends to the Services for critical Quality-of-Life programs for Soldiers, Airmen, Guardians, and their families.

Shull highlighted strategic priorities for 2024, which will build on successes. The Exchange will continue collaborating with companies it has worked with the best and use those collaborations as a model for the future. The priorities include:

MILITARY STAR expansion: The Exchange Credit Program is establishing the MILITARY STAR card as the primary form of payment across military installations, including third-party vendors. The expansion will make it easier to do business with the Exchange while reducing costs associated with card acceptance.

The MILITARY STAR card will provide tap-to-pay, secure EMV (simpler, quicker and more secure checkout) and mobile wallet options. Card holders will be able to use MILITARY STAR at significantly more merchants across the installation.

Retail optimization: One of 2023’s major successes was the launch of the Exchange’s partnership with The Home Depot. Major appliance showrooms have launched at 68 PXs and BXs in CONUS, Puerto Rico and Hawaii. Orders are fulfilled via drop-ship through The Home Depot, eliminating the need for the Exchange to invest in physical inventory, reducing the cost of warehousing, storing and shipping.

Building on this model, as national brand names are added to stores and ShopMyExchange.com, the Exchange is focused on bringing the best value to the customer while remaining cost-efficient. The priority is to work with businesses that will provide enough inventory to bring foot traffic to stores but will add even more products online and use drop-ship, which allows e-commerce to ship tax-free items directly from third-party vendors.

Optimizing top-performing restaurant brands: In February, a new Panda Express at the Grafenwoehr Exchange had the biggest restaurant grand opening in Exchange history, grossing more than $22,600 in first-day sales and approximately $170,000 in first-week sales.

This is just one example of the Services and Food Directorate fine-tuning the Exchange’s restaurant portfolio with brands that perform best, working with restaurant partners to expand training; increase operating hours when necessary; and bring the most successful brands to additional locations.

Panera, which has two high-performing Exchange locations, is scheduled to open 18 more during the next three years. Qdoba, which has 30 Exchange locations, will open its first Pacific Region locations in 2024. Panda Express, which has proved especially popular in Europe—where the only locations are at Grafenwoehr and Ramstein AB—is scheduled to increase its Exchange locations from 30 to 40 during the next two years.

Innovative services: In 2023, SFD greatly expanded the number of unattended retail units (URUs)—fully automated self-serve stores that offer better-for-you food options—to provide 24/7 convenience and flexibility to military communities. More than 200 were added, for a total of more than 400 across nearly 80 installations. This aggressive expansion has continued in 2024 with the opening of more URUs.

In early March, the Selfridge Air National Guard Base Exchange team opened a 2,700-square-foot unit at Battle Creek ANGB. As a full-size store, the unit is larger than a typical URU and has aisles of essential items and grab-and-go food, as well as seating area, message chair, Starbucks coffee machine and more. More than 85 new URUs are planned for 2024 as this expansion continues.

Several Army installations have been enjoying improved cellular and internet connectivity—a significant Quality-of-Life improvement—thanks to new cell towers from the Exchange. One of the most significant cell-tower additions is at U.S. Army Garrison Hawaii’s Helemano Military Reservation, a remote location offering military housing for about 2,000 service members and families stationed at Schofield Barracks and Wheeler Army Airfield. At year-end, the Exchange had more than 30 cell towers and more than 200 small cells (mini cell sites that augment cellular service; SFD expects to add 30 towers and nearly 70 small cells in 2024.

Accelerating implementation of a new point-of-sale systems: With self-checkout nearing 100% at PXs, BXs and Expresses, Information Technology is turning its in-store focus to improving point-of-sale (POS) systems. IT will work with the same vendor the Exchange worked with on the successful self-checkout launch to bring a new POS platform to stores. Because this is a known vendor, the Exchange has been able to work more quickly on developing the project. An equipment demonstration will be available at the conference.

HQ expense reduction: In 2023, more than 275 headquarters-based associates took advantage of a Voluntary Separation Incentive Pay/Involuntary Early Retirement program to help right-size personnel. This resulted in nearly $15 million in savings and allows the Exchange to better navigate economic challenges. Expense reduction will continue through attrition. The Exchange is committed to avoiding furloughs or layoffs, remaining resourceful and focusing on solutions.

“The organization and the benefits we provide to all those who serve in uniform and their families are sacrosanct,” Shull said, asking the audience to repeat the word “sacrosanct.” “That means sacred. Everything you do as a team is sacred. That’s the most important message of all.”