Words From the Director/CEO: A Post-First Quarter Update on Exchange Priorities
Tom Shull
Exchange Director/CEO
Team,
At the Retail, Food and Services Managers Conference in March, we talked about strategic priorities for 2024, which will build on the successes of recent years. The Exchange continues to move forward and grow stronger.
The first quarter of fiscal 2024 has already seen strong results. Earnings were $77 million, up 12% over plan. The positive earnings reflect prudent cost savings in the past year as well an aggressive focus on growth initiatives that can tangibly improve Quality of Life for the heroes we are honored to serve.
Below is a summary of our progress through the first quarter:
Military Star expansion
The Exchange Credit Program, which has been planning a migration into the network of  Discover Financial services (owner of the Discover Card), has completed the first stage testing on a redesigned MILITARY STAR card that is expected to debut this fall. The second stage began this month. A prototype of the card has been successfully used to make purchases at the HQ Express and at our stores on Naval Air Station Joint Reserve Base Fort Worth, Tinker Air Force Base and Fort Cavazos.
The collaboration will enable the MILITARY STAR card to become the primary form of payment across military installations, including third-party vendors, as card holders will be able to use their MILITARY STAR at significantly more merchants across the installation. The new card will also provide tap-to-pay, secure EMV (simpler, quicker and more secure checkout) and mobile wallet options.
The best tastes of home and innovative services
The Services and Food Directorate is bringing the best taste of home and innovative services to our Warfighters near and far.
Our food team is fine-tuning the Exchange’s restaurant portfolio by working with restaurant partners to expand training, increase operating hours when necessary, and bring the most successful brands to additional locations.
Highlights include:
Panda Express: Grafenwoehr and Fort Carson introduced this brand in February and have already secured more than $1.5M in sales. Panda Express plans to open 10 additional Exchange locations in the next two years; the additions have already started with the successful opening of a new location at Sheppard AFB in early June, generating more than $13K in sales on the first day.
Panera Bread: In February, Fort Liberty opened the Exchange’s second Panera (the first with a drive-thru). The third location is scheduled to open at Fort Drum in June, and 17 more Exchange locations are set to open during the next three years.
Qdoba: With 32 Exchange locations in operation, this brand is on track to open its first Pacific Region locations in the third quarter.
Also in the first quarter: The Exchange’s first Potbelly Sandwich Works opened at Fort Liberty, which also debuted the first Starbucks Military Family Store on a military installation.
The Services team continues to deploy innovative services to improve Quality-of-Life and provide essential connectivity support.
During the first quarter, by the end of April, our Services and Food team opened 68 unattended retail units (URUs), bringing the Exchange’s total to 502 across 84 military installations.
These fully automated self-serve stores offer better-for-you food options. They are especially effective in serving remote and isolated locations, providing greater convenience for service members and their families. For example, an Exchange URU that opened in February at Fort Belvoir’s U.S. Army Command, Control, Communications, Computers, Cyber Intelligence, Surveillance, and Reconnaissance (C5ISR) Center serves a secure area with a small population. At Barksdale AFB, a new Exchange URU supports Security Forces who work multiple shifts and previously had no food options late at night.
Several Army installations are enjoying improved cellular and internet connectivity, thanks to new cell tower infrastructure managed by the Exchange. In February, the Exchange broke ground on one of ten new cell towers planned for Fort Bliss, bringing 5G connectivity for Verizon’s network.
This initiative is a significant quality-of-life improvement for military communities, improving personal and mission-connected communication. SFD expects to add 30 towers and nearly 70 small cells (mini-cell sites that augment cellular service) during 2024.
Also, during the first quarter, two new cell towers were added at Fort Wainwright and one at Fort Knox. The latter improves reception at post lodging and the Holiday Inn Express Newgarden on Fort Knox, an International Hotel Group Army Hotel.
Retail optimization
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. Merchandising and eComm are working closely with region and store teammates to ensure the Exchange is working with businesses that can properly support our inventory requirements while delivering even more products online through drop-ship agreements that allow ShopMyExchange.com to ship tax-free items directly from third-party vendors.
Family serving family
The Exchange remains committed to serving those who serve and have served, and the passion of team Exchange remains central to our noble mission. Upgrades to food, services and the MILITARY STAR card are important, but it’s your dedication to the best customers in the world that keeps the Exchange thriving.
Onward and upward!
Tom Shull
Director/CEO
