Director/CEO Update: Winning Strategies Continue to Create Impressive Results

Team,

As we near the close of FY 2024, your incredible work to advance our strategic priorities continues to increase the Exchange’s momentum.

Team Exchange’s dedication to the best customers in the world creates impressive results. Earnings through the third quarter are $388 million, 23% above plan. These numbers are  attributable to rigorous cost control from the field to logistics during the past year and critical initiatives that have significantly strengthened the benefit we are privileged to provide those who serve and have served.

MILITARY STAR expansion

After nearly two years of extensive planning, development and  testing by the Exchange Credit Program (ECP) team, the new MILITARY STAR card debuted in September. The important Quality-of-Life enhancement, developed in collaboration with Discover® Global Network, features a modern design, chip technology for security, tap-to-pay capability and mobile wallet options. The card provides military-exclusive benefits such as an industry-leading low APR; a rewards program; food and fuel discounts; and special promotions.

By leveraging the Discover network while retaining control of all credit issuance activities, the value of the MILITARY STAR card is as compelling as ever and can now be easily accepted by additional services and providers, including concessionaires, name-brand restaurants, third-party vendors and an increasing number of Morale, Welfare and Recreation and Services activities.

The launch of the new MILITARY STAR card has been met with excitement by cardmembers. The ECP team was able to beat the forecast target completion date for card fulfillment, having the 1.5 million cards out to customers prior to the important Veterans Day holiday weekend. Customers are eagerly adopting the new features and card use is exceeding expectations. These features have also generated buzz and excitement with new customers applying for the card, resulting in double-digit year-over-year growth in new accounts opened.

This achievement is a stellar example of collaboration—with external partners such as sister Exchanges, MWR and more, and with many internal directorates, including IT, Services and Food, Merchandising and eCommerce, Marketing, General Counsel, Contracting and Corporate Communication.  And this collaboration has enabled our military community to benefit by having a credit card that has more features and capabilities and is accepted at more locations across our installations.

The best tastes of home

Exemplifying the Exchange’s “We go where you go” motto, the Services and Food Directorate is bringing the best tastes of home and innovative services to Warfighters.

The food team continues to enhance the Exchange’s portfolio by collaborating with restaurant partners to expand training, increase operating hours when necessary and bringing the most successful brands to more locations.

Third-quarter highlights include:

Panda Express: One of the most popular brands in the Exchange portfolio added locations in September at MacDill AFB and Joint Base San Antonio-Lackland.

Qdoba: The fast-casual Mexican restaurant opened its first locations in the Pacific Region—on or off an installation—at Kadena Air Base and Camp Foster in Okinawa, as well as two at U.S. Army Garrison Humphreys in South Korea. The Kadena location is the first Exchange Qdoba with a drive-thru, with sales averaging $7,400 daily. Since debuting in 2016 at Fort Carson, the brand has expanded to more than 30 Exchange locations.

Chipotle Mexican Grill: The third Exchange fast-casual restaurant opened in late October at Fort Liberty’s Glider Express.

Potbelly: The sandwich chain opened its second Exchange location in September at Fort Liberty’s Honeycutt Express (The first Exchange Potbelly, also at Fort Liberty, opened in April at the Express Mini Mall). The new location delivers added convenience to service members working at Simmons Army Airfield.

Charleys Cheesesteaks: Fifty-eight CONUS restaurants completed the launch of branded POS successfully in October, providing Exchange customers the opportunity to “Skip-the-Line” with mobile order and pay, receive special promotions, and earn reward points.

At Expresses, the Merchandising Directorate continues to make quick-serve restaurants (QSRs) a priority. Hunt Brothers Pizza now has nearly 120 locations, including one opened in August at the Sagamihira Housing Area Express on Camp Zama, the first on the installation. Joint Base Elmendorf-Richardson also opened its first Hunt Brothers in August, at the Fort Richardson Express.

Fast casual salad-and-sandwich restaurant Chopz, another popular QSR, expanded its reach with five locations that opened in August: Hurlburt Express; the Global Reach Mini Mall at Fort Bliss; Robins AFB Express; Fort Drum Mini Mall; and at the Laughlin AFB Express with Class Six.

Innovative services

The Services team continues to improve Quality of Life, emphasizing advanced telecommunications and unattended retail units (URUs).

At the beginning of the year, the Services team set a goal of opening 81 URUs by the end of FY 24. The team has exceeded expectations, with more than 160 opened through October for a total of 595 throughout the Exchange. The first URU contract in Europe was awarded at the Ramstein Exchange. In addition, the first direct-operated URU machine went online in Japan. Exploration for overseas expansion and growth continues. The Services team is continually opening URUs; at least 30 more are expected to debut before the end of FY 24.

These self-serve stores offer an assortment found in most convenience stores, including snacks, drinks and better-for-you food options. They are especially well-received at smaller installations or inside barracks, hospitals and large HQs, providing increased 24/7 access for service members and their families.

Several military installations enjoy enhanced connectivity to critical infrastructure thanks to telecommunications services managed by the Exchange. During the third quarter, several telecom additions were completed: seven cell towers became operational (three at Joint Base Lewis-McChord, two at Fort Wainwright, and one at Forts Bliss and Meade). Fiber to the home service is available in all residential housing on Fort Carson, offering 1 gigabit per second internet access. Military families at Fort Cavazos will now enjoy faster speeds, better connectivity, and ultra-wideband 5G, thanks to the addition of more small cell towers in the community. The Exchange supported the Air Force effort to provide a free tier of internet service to 10 student dormitories at the Air Education Training Center (AETC).

Retail optimization

In September, the Exchange and Bass Pro Shops officially announced a collaboration to offer Bass Pro hunting, camping and fishing gear as well as apparel at ShopMyExchange.com. This is yet another major step in delivering the best brands to authorized shoppers tax-free. Recent additions include Athleta, Wrangler, Casper, Sleep Number, Stanley and more in stores and online at ShopMyExchange.com as well as expanded national brands, such as Old Navy and The Home Depot, at PXs and BXs.

As the brand-name portfolio grows, Merchandising, eComm and region teammates are refining the assortment selection. Direct-to-consumer agreements and collaborations such as Bass Pro and others are strengthening the Exchange benefit and extended the tax-free saving authorized shoppers enjoy.

Reinvesting in the shopping experience

The Real Estate directorate completed more than $22 million in projects during the third quarter.

Highlights include \a nearly $8 million Express with gas at Osan Air Base and a nearly $2.5 million image upgrade to the Joint Base San Antonio-Lackland AFB Troop Store.

Real Estate has had a productive year, completing more than $112 million in projects through the third quarter..

Family serving family

Your dedication to our mission continues to set the high bar. The passion and grit you bring every day makes a difference and strengthens our military community’s readiness and resilience, as we delivering more than $1.6B in value to our Nation’s military community annually.

It is truly an honor to serve those who serve with you.

Wishing you a happy and successful Q4!

 

With respect,

Tom Shull

Director/CEO