From the desk of the ALA President

Quotes of note

“This is clearly a whole government effort and we’ve been assisting for over a year for this whole government effort to get after this threat of COVID.  I’d just like to quickly tell you that we’ve provided over 4,200 DOD personnel in support of FEMA mission assignments in 14 states, 44 separate locations, 63 hospitals, doing everything from our original response to embedding in local hospitals and as you know today, standing at this COVID vaccination center.”   Air Force Gen. Glen D. VanHerck, Commander, U.S. Northern Command.

“Consumer spending is firing on all cylinders.”  James Knightley, ING Financial Markets commenting on the 5.3 percent increase in consumer spending reported by the Commerce Department.

“Up until recently, I was unaware that there are 2.6 million military spouses and family members, more than the 2 million active duty and reserve military members. These 2 million military members have official leadership, but the 2.6 million dependents do not have an official voice within existing infrastructure. Military spouses struggle with many well-known issues you’re well familiar with, as your family has a history of engagement with our community. Reports demonstrate that in recent years military spouses have a 25 percent unemployment rate and earn approximately 27 percent less than their non-military peers. Beyond the severe economic impact that comes from simply being the spouse of a military member, my peers and I grapple with education for our kids, consistent moving, creating community, mental health issues, marriage and relationships, financial difficulties, health care, and extended family back home. These issues can be overwhelming and, in my experience, do not occur independently of each other.”   Aleha Landry, Air Force Spouse, arguing for a Military Spouse advocate position in the Department of Defense

Pressure building on commissary program as volume declines affect every sector.  In the grocery business, as with most businesses, volume is king and solves a lot of problems.  When volume drops, it’s another story.  You can have the best systems and procedures in the world but at the end of the day, it’s about volume.  Volume spreads costs—simple arithmetic.  Volume demonstrates patron acceptance.  Volume provides inertia to make way for remedies.  Sales is the ultimate barometer and report card for retailers.  Sales is the fountain from which all opportunity for transformation and modernization flows. Rule number one—expense reduction, system changes and procedures cannot and should not be made at the expense of sales volume.  Effect on sales should be the litmus test of each management decision.  This has been demonstrated in the commercial sector where the major retailers have focused on volume and market share first and picked up the pieces on expense reduction later.  They recognize, as do all retailers, that managing something is a lot easier than managing nothing.    The commissary program along with the industry that supports it is experiencing tremendous pressure as years of continuous volume declines, some pandemic related, take their toll on resources and the system’s ability to keep prices low and service levels high.  The declines are affecting the amount trade spend, the cost per unit to ship products, and the industry’s ability to provide in-store and other support for the program.  DeCA leadership has recognized that it needs to fix the sales problem and has placed it at the top of their list of priorities.  But the pressure continues to build on industry affecting pricing and service levels across the board.  Costs are heavy to support a 240-store system that is spread out globally with many far-flung  often small locations in remote U.S. and overseas areas.  It’s a tough logistics and support environment—one that is not made any easier by the pandemic and volume declines.  Impact is especially acute on mid-sized and small suppliers with lower economies of scale and razor thin margins.  This calls for more engagement and consultation and collaboration between the Agency and suppliers.  ALA and individual companies are in increased consultation with DeCA personnel and through a variety of forums are working to isolate problems and solve them.  Issues include those within the control of the system and take place vary at different points along the supply chain from systems, to ordering, to promotions, to sales-driven management of product assortments.  Then there is another set of issues out of the direct control of the commissary program including pandemic and security-induced base access restrictions and pandemic induced scarcity of products caused by increased pandemic demand.  The conflation of these two overall sets of issues is yielding tremendous challenges for commissary managers and the supporting industry and puts tremendous upward pressure on the price charged at the shelf with implications on the Congressionally mandated patron savings levels.  Further, the grocery business is inherently difficult up and down the supply chain where already thin margins have been stressed by volume declines pandemic and non-pandemic-related.  Perhaps at no time in the history of the commissary program has the closely knit ecology of industry and the Government retailer been so manifest.  ALA is committed to galvanizing all of its members’ expertise and dedication to work with the commissary leadership in meeting the challenge and we are gratified and embrace efforts on the part of the commissary agency’s leadership to isolate, identify and solve any issue that is impeding sales.  The commissary program has a lot going for it.  It’s support of military families during the pandemic has been magnificent and demonstrated its purpose.  It enjoys wide political support both inside and outside the five-sided building.  It has a management team that recognizes that the system is critical for military families.  And, it has a vast network of suppliers including distributors, brokers, manufacturers large and small, and promotional and infrastructure support partners that are prepared to work with the commissary management to get the job done.

Base access effect on resale raised at HASC pandemic hearing.  During a HASC hearing on the pandemic, Rep. Andy Kim (D-NJ) who has Joint Base Dix-McGuire in his Congressional district asked the panel of DoD witnesses about the problems that veterans and other eligible commissary shoppers were having getting on base because of the pandemic.  The DoD witnesses said that it was up to the installation commander and that the commanders certainly take into consideration access be commissary beneficiaries.  Congressman Kim urged more transparency and communication with the beneficiaries and DoD said they would emphasize that.

1/3 of the military are refusing to take the vaccine.   A congressional hearing on the pandemic revealed that one-third of the military is refusing the vaccine.  Many thought that vaccines for military are mandatory, i.e., vaccines taken for chemical weapons protection during the first Gulf War.  However, Pentagon surgeons said that vaccines are in an “emergency use authorization” status and, as such, they cany be made mandatory on military personnel until they are fully “FDA approved.”   300,000 civilian workers and contractors have received the vaccine.

Commerce Department reports major retail sales increases.  Overall, up 5.3 percent Department store sales increased 26 percent from December.  Electronics up 14.7 percent and furniture and home furnishings rise 12 percent.  Commerce report is here: https://www.census.gov/retail/marts/www/marts_current.pdf

Sodexo nets commissary support contract.  Sodexo was awarded a $9,521,236 contract for in-store delicatessen and bakery resale operations to include sushi, where applicable, for 22 commissaries located in the Defense Commissary Agency’s East Area locations.

Pressure is building to increase the minimum wage to $15 an hour.  This debate has far-reaching implications for military resale programs with tens of thousands of affected workers in the resale agency programs and in the industry.  While the increase to the minimum wage requires Congressional action, the President has the authority to impose it on Government and the contractors that support it.  This past month, the Biden Administration issued an Executive Order that said, in part, “The federal government should only award contracts to employers who give their workers the pay and benefits they have earned; President Biden is today directing his administration to start the work that would allow him to issue an Executive Order within the first 100 days that requires federal contractors to pay a $15 minimum wage and provide emergency paid leave to workers.  Emergency paid leave”.  On January 1, 2021, the Executive Order 13658 minimum wage rate is increased to $10.95 per hour.

More regulation on refrigerants.  In nearly every supermarket in America, a network of pipes transports compressed refrigerants that keep perishable goods cold. Most of these chemicals are hydrofluorocarbons— greenhouse gases thousands of times more powerful than carbon dioxide — which often escape through cracks or systems that were not properly installed. Once they leak, they are destined to pollute the atmosphere.  The Environmental Protection Agency issued a public call last week for companies to report production and import data on HFCs.  The EPA must phase down the production and import of greenhouse gases 85 percent over the next 15 years.Another mission-critical offering at NEX.   Exchange operations are closely tied to the mission of their respective branch of the Armed Services and provide critical services in support of the National defense.  A great example of this support is the NEXCOM’s Navy Clothing and Textile Research Facility which has been providing research, development, test, evaluation and engineering support for Navy uniforms and personal protective clothing for over 135 years.  “The mission of NCTRF is critical to Navy’s readiness and lethality of the force,” said Capt. John D. Cassani, deputy commander, Uniform Programs at NEXCOM. “The NCTRF team is a key component to bring forward new technologies that provide our service members with the necessary uniforms and protective clothing so that they can effectively and safely accomplish their missions.”  NCTRF’s focus areas in testing include evaluation of fabrics and clothing systems for key attributes such as fire and heat resistance; water immersion and buoyancy; durability; heat and cold stress.   In March 2020, the Naval Supply Systems Command solicited requirements to address challenges in the availability of personal protective equipment (PPE) during the pandemic.  NCTRF proposed pivoting its existing Small Business Innovative Research (SBIR) program on 3D knitting research from Flight Deck Jerseys to the development of personal protective face coverings to help prevent the spread of COVID-19. NAVSUP concurred and funded the research.

19 commissary total store resets cancelled.  According to an agency spokesman, “the total store resets — not category resets — are cancelled for 2021 due to COIVD. With the quantity of persons having to attend, lead times for ordering shelving, and store preparation requirements, we felt the best course of action is to maintain the safety of all personnel and cancel for the year.”  Tracie Russ, DeCA’s director of Marketing, said, “Please accept our apologies for any inconvenience this may cause. Any new information will be announced with as much advance notice as possible for your planning purposes for 2022 total store resets.”  The cancelled total resets encompass stores in a dozen DeCA zones and include commissaries operating in both CONUS and OCONUS.

MCLB Albany

NAS Pensacola

Fort Sam Houston

JB San Antonio

Randolph Commissary,

JB San Antonio

Cannon AFB

White Sands Missile Range

MCAS Miramar

MCAS Yuma

Fort Buchanan

Aberdeen PG

Andrews Commissary, JB Andrews

Arnold AFB

Redstone Arsenal

NS Norfolk

NAS Oceana

RAF Lakenheath, England

Vogelweh AB, Germany

Misawa AB, Japan

FA Yokosuka, Japan

National Guard supporting state COVID vaccine efforts.  Now active-duty military getting into the game. The Pentagon has approved the deployment of 20 more vaccination teams that will be prepared to go out to communities around the country, putting the department on pace to deploy as many as 19,000 troops if the 100 planned teams are realized. The troop number is almost double what federal authorities initially thought would be needed.The National Guard has been assisting states and localities for some time in administering the vaccine.  Now, DoD is sending in active-duty personnel.  The active duty will be supporting the FEMA-directed portion of the vaccination programs.  As part of new COVID-19 support efforts and sourced from new Active-Duty personnel recently announced by DoD to support the new effort.   California. 220 service members who arrived February 11, will support one team in one city.   New York.    280 service members, arriving February 19, will support two teams in two cities.   Texas.  500 service members, arriving February 19, will support three teams in three cities.   New Jersey.  100 service members will support four teams in more than six cities.   U.S. Virgin Islands.  50 service members will support two teams on two islands, arriving on a date to be determined.

Deep freeze hitting resale programs.  Operations at dozens of military bases have been curtailed or closed due to extreme frigid weather across the United States.  Operations at over 40 commissaries were affected along with closures or curtailment of operations at exchange facilities.  More than a dozen military bases stretching from Fort Drum in New York to Fort Hood in Texas were closed Tuesday as large swaths of the country were gripped by freezing temperatures and dangerous weather conditions.  In southern portions of the United States, many residents were dealing with freezing temperatures and power and water outages.

NEX quarantine program aids shipboard sailors.  The NEX Quarantine Program allows Sailors to order and pay for merchandise online for free delivery to the ship. In Guam, The NEX filled 2,722 orders, about 30 pallets of merchandise, for USS Theodore Roosevelt Sailors. Most of the orders were received and delivered the same day.

Key congressional panel leadership announcements.  

SASC Subcommittee on Personnel  

Chair: Sen. Kirsten Gillibrand, (D-N.Y.)

Ranking Member: Sen. Thom Tillis, R-N.C.

SASC Subcommittee on Readiness and Management Support

Chair: Sen. Tim Kaine, D-Va.

Ranking Member: Sen. Dan. Sullivan, R-Alaska

House Defense Appropriations

Betty McCollum (MN) – Chair

Senate Defense Appropriations Subcommittee

John Tester (D-Mont.) Chairman

Sworn in.  Jesse Salazar, Deputy Assistant Secretary of Defense for Industrial Policy

AAFES opening more dental and medical equipment service centers.  AAFES offers wellness services on several military locations worldwide, including: 139 optical and optometry clinics, 17 durable medical equipment shops, 9 dental offices.  AAFES is planning to open six chiropractic clinics, seven additional durable medical equipment shops and eight dental offices at locations worldwide this year.

Food Lion launches SNAP EBT payment for Instacart orders.  Food Lion has partnered with Instacart to enable Supplemental Nutrition Assistance Program (SNAP) participants to directly pay for online grocery orders through electronic benefit transfer (EBT).  The capability is now available at more than 350 Food Lion supermarkets across North Carolina.  covering about a third of the Ahold Delhaize USA chain’s store base. Currently, SNAP EBT payments are available only through the Instacart marketplace. At the site, Food Lion SNAP EBT customers select their local store and then shop eligible products. After adding items to their virtual cart, customers designate the amount of their benefits that they would like to allocate to the order, choose pickup or delivery, and then complete their transaction.  Food Lion provides online grocery delivery and pickup under the Food Lion To-Go brand via its website and mobile app, both powered by Instacart Enterprise. SNAP EBT payment capability will be enabled on the Food Lion site and app in the coming months, according to Instacart.  To help subsidize costs for SNAP beneficiaries, Instacart will waive delivery and/or pickup fees for the first three EBT SNAP orders through March 16. Customers must have a valid EBT card associated with their Instacart account.   The launch comes after the U.S. Department of Agriculture’s Food and Nutrition Service (FNS) approved North Carolina as the first state for Instacart and Food Lion’s EBT SNAP partnership, the online grocery giant said. Plans call for the capability to roll out to Food Lion stores in Delaware, Georgia, Kentucky, Maryland, South Carolina, Tennessee, Virginia and West Virginia in the coming weeks.

AAFES has 534 franchises.  Includes Subway, Burger King, Charley’s Philly Steaks, Popeyes Louisiana Chicken, Taco Bell, Arby’s, Einstein Bros. Bagels, Qdoba Mexican Eats, Manchu Wok, Dunkin, Wing Zone, Basking-Robins, Blimpie, Pizza Hut, Taco John’s, Slim Chickens.

Vaccines at Walmart.  Walmart Inc., the U.S.’s largest retailer and private employer, is set to become one of the biggest distributors of the Covid-19 vaccine as the federal government enlists retail pharmacies.   Last week, 21 retail chains and pharmacy networks started administering those doses, including CVS, Walgreens, Kroger and grocers in all 50 states. The government initially plans to give around a million doses a week directly to pharmacies. Around 200,000 of those are going to Walmart, a spokeswoman said.  Of 5,000 U.S. stores under the company’s Walmart and Sam’s Club banners, about 4,000 are located in what the federal government defines as medically underserved areas.   The government gives Walmart and other retail pharmacies the vaccine free and there is no charge to shoppers. Walmart can earn a small fee from insurance companies when patients are covered.

Bluedot consumer survey.  

Restaurant customers are showing clear signs of pandemic fatigue. Concern for safety protocols such as masks and gloves softened among consumers. They also expressed less anxiety connected to entering stores or restaurants. 69% were still experiencing some level of anxiety, a decline from 80% from last April.

Consumers are becoming more impatient. Consumers favored shorter wait times over safety protocols. Their willingness to wait for restaurant orders dropped dramatically to an average of six minutes across drive-thru, curbside, and in-store pickup options from 10 minutes just six months ago. Slow speed of service looks like a deal breaker for consumers as 77% stated they will leave or consider leaving a restaurant if they see a long line.

Curbside and in-store pickups are on the rise. 67% of consumers are picking up at curbside as often or more frequently now compared to 45% from last April. In-store pickups have also increased with 67% picking up in store as often or more frequently now compared to 55% last April. Of note, 53% of those who had not tried pickup last April have started to utilize the service.

Restaurant drive-thru visits dipped slightly last month but remain strikingly high. Consumer drive-thru visits dipped slightly from the last report with a decrease to 68% of those visiting as often or more frequently in January from 74% in August. However, the drive-thru still remains vastly more popular now than at the beginning of the pandemic with a 26% increase in consumers frequenting the drive-thru as regularly or more often since last April.

Mobile real estate is competitive for restaurant apps. While the majority of consumers (85%) currently have at least one restaurant app on their phone, very few (17%) have more than five. However, 28% indicated they would be willing to have more than five restaurant apps on their phone. Brands that earn a spot will remain for at least six months according to 46% of consumers who stated they typically keep a restaurant app for at least six months.

Consumers are downloading more restaurant apps and app usage has spiked. There continues to be a sharp uptick in mobile app usage since the start of the pandemic with consumers downloading and using restaurant mobile apps more now than ever before. The vast majority of consumers (82%) indicated that they have downloaded at least one new mobile app to purchase food or essentials. The data also revealed an increase of 134% among consumers who have downloaded 3 – 5 new apps and a 265% increase among those who have downloaded 5 or more new apps. The majority of consumers (68%) have 1 – 5 restaurant apps on their phones.

Third-party delivery apps lag behind restaurant apps. 79% of consumers indicated they are ordering directly from restaurant apps more than once a month while 36% said they never order from third-party apps.

Pandemic-era restaurant habits will outlast Covid-19. 8 in 10 consumers (78%) plan to continue their current dining habits even after the pandemic subsides.

Planters to Hormel.  Kraft Heinz said it had agreed to sell its nuts business, including the iconic Planters brand, to Hormel Foods for $3.35 billion in cash.  At Hormel, Planters will be added to a growing collection of food brands, including the peanut butter brand Skippy, which Hormel acquired in 2013, and Justin’s nut butter, which it acquired in 2016.  The pandemic has been a sales boon for Kraft Heinz, which had some of its factories working three shifts during periods in the past year to meet high demand for products like its Kraft Macaroni & Cheese.  For the full year, Kraft Heinz said net sales rose 4.8 percent to $26.18 billion.

MCX merchandising shifts.  With the retirement of Steve Manning, long time Marine Corps Exchange (MCX) buyer for Gifts, Home Décor, Trim, Floor Care and Small Electrics on Jan 29, 2021, some team restructuring has occurred in order to support merchandising growth initiatives and business shifts.   As the MCX shifted away from a labor-intensive direct furniture and major appliance model to third parties via indirect, MCX  has the need to balance the buying responsibilities.  Tracey Stevens has buying responsibility for the “outdoor” business with an emphasis on Spring, adding Trim, Home Decor and Gifts that have a heavy Fall influence, was an easy pick up by that team to seasonally balance the buying responsibilities across the year.  Coupled with this was a layering on to the Housewares and Domestics team with the addition of Floor Care and Small Electrics. This was an incremental add to the new “Home Team” managed by Sherry Nazzaro as the buyer. These categories have elevated supported by financial/assortment planning efforts, Planogram clusters and replenishment, where efforts are balanced with planning resources. With this shift, MCS sees the need for an added support role and the addition of an Assistant buyer to support the add of “corded home” products for that team. The newly positioned business will also gain a singular vision, as they are traditionally shown the same markets and cohabitated/adjacent in most stores.  In order to align resources to business opportunities, Manning’s vacant buyer position will shift to Bob McLaughlin’s Consumables team to pick up Non-Alcoholic Beverages to include ready to drink Sports Nutrition. Joe Cella who was previously responsible for non-alcoholic beverages will continue to purchase for the Spirits category. Non-Alcoholic has been a down trending business for the last few seasons because of the drop off in soft drinks. Ready to drink (RTD) in sports Nutrition has been growing and we believe by increasing the penetration of RTD MCX can continue to grow that business and offset the losses in soft drinks and energy. By combining RTD with non-alcoholic MCX says it can maximize opportunities with new innovation.

Defense guidance on essential workers.  Here is a link to the December 16th, 2020, “Advisory Memorandum on Ensuring Essential Critical Infrastructure Workers’ Ability to Work During the COVID-19 Response”. CISA’s advocacy for critical infrastructure workers is on page two of the cover memo.

o   https://www.cisa.gov/sites/default/files/publications/ECIW_4.0_Guidance_on_Essential_Critical_Infrastructure_Workers_Final3_508_0.pdf

 

Here is a January 7th, 2021, memo “DoD COVID-19 Vaccine Allocation and Distribution Policy” as well as the referenced March 20th, 2020, memo “Defense Industrial Base Essential Critical Infrastructure Workforce” which you will find below.

o   https://media.defense.gov/2021/Jan/14/2002564837/-1/-1/0/DEPARTMENT-OF-DEFENSE-COVID-19-VACCINE-ALLOCATION-AND-DISTRIBUTION-POLICY.PDF

 

o   https://media.defense.gov/2020/Mar/22/2002268024/-1/-1/1/DEFENSE-INDUSTRIAL-BASE-ESSENTIAL-CRITICAL-INFRASTRUCTURE-WORKFORCE-MEMO.PDF

 

Best regards,

Stephen Rossetti

President

Posted in .

Leave a Reply

Your email address will not be published. Required fields are marked *