From the desk of the ALA President

Quotes of note

“DW OrganizationTransition to Chief Management Officer (CMG) Governance: The CMOoperating under the Deputy Secretarys guidancewill be responsible for the business functions of DW organizations. The CMO will focus on reforming business processes, overseeing resource planning and allocation, and evaluating each DW organizations performance against business goals. The CMO will establish methods to strengthen oversightcontinue reform momentumand instill fiscal discipline across DW organizations and accountsThe CMOs immediate focusin coordination with DirectorCost Assessment and Program Evaluation (CAPE) and the Under Secretary of Defense (USD) (Comptroller)will be to develop a consolidated FY 2022-2026 program and budget for the DW accounts. I expect DW leaders to provide their full support to the CMOs effortsand I will ask for regular progress updates”.   Secretary of Defense Mark Esper in guidance to the DoD.  DeCA oversight is now diffused between the Pentagon’s Chief Management Officer Lisa Hershman, the Commissary Operating Board, and the Pentagon’s personnel chief Under Secretary Matthew Donovan.

“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.  “The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!”  President Donald Trump on the latest pandemic stimulus bill negotiations.

“DoD’s success lies in a strategically ready force through cultivation of digitally savvy service members and civilians to successfully operate within a global security environment fueled by ground-breaking technological advancements.”  From the DoD’s just released personnel strategy.

‘Our CLICK2GO program factors greatly in DeCA’s future digital migration. As we continue to deploy our Enterprise Business Solution (EBS), even more options will become available.”  Willie Watkins, Chief, DeCA eBusiness Division

ALA’s annual conference gathering steam.  The agenda for the virtual event to be held on October 20 and 22 includes speakers from DoD, all of the resale agencies and some special surprise headliners including Susan Eisenhower, grand daughter of former President and Supreme Allied Commander General Ike Eisenhower.  Susan just released a great book “How Ike Led”.  Registration details have been sent to industry. Those who have not received the registration information can register here https://ala.enoah.com/73rd-Annual-Convention or contact Bob Ellis at ALA  bellis@ala-national.org    ALA’s membership business meeting will be held on October 19th, the day before the general sessions.

Stimulus II back and forth.  ALA has been advocating for emergency pandemic funding to be provided to offset pandemic impact to exchanges.  Funding for DoD and for military exchanges pandemic relief are included in the House and Senate versions of bills providing funding for the Nation to cope with the pandemic.  These negotiations were taking place between the White House and the Speaker of the House with the Senate largely observing.  Yesterday, the President called off negotiations saying that “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business. “ The President then said last night that he was open to several free-standing bills that would provide airline, paycheck protection funding, and small business aid.  Stay tuned.  The House bill contains includes $1.4 billion specifically targeted to aid exchanges and MWR programs.  The Senate bill doesn’t specify or direct funding to exchanges and MWR programs but includes nearly $5 billion for Defense that could be used for exchanges and MWR programs.  Meanwhile, exchanges and other nonappropriated fund programs are being provided nearly $300 million in funding from appropriations that were passed earlier in the year with more funding from this source in the works.  The Veterans Canteen Service received $140 million in another bill passed last week to keep the federal government open until December 11.

Senator Inhofe told of resale’s critical role in pandemic.  ALA Chairman Bill Doyle and ALA President Steve Rossetti met with Senator Jim Inhofe, Chairman of the Senate Armed Services Committee.  We emphasized the key role that commissaries and exchanges had played in the pandemic, especially in the early days and said that the Senator’s and the Committee’s long-standing support for the system had paid off in being able to keep products flowing during the emergency.  Senator Inhofe thanks the system for its response and said that he believes that the commissaries and exchanges also serve as a hub of family life on military bases all the time including during the pandemic.

NDAA in November or December.  Speaking of Senator Inhofe: A number of key provisions of law and policy are for military resale programs is being held in limbo because of a delay in the passage and enactment of the National Defense Authorization Act for Fiscal Year 2021.  These provisions include language on validating data associated with DoD’s recommendation to consolidate commissaries and exchanges, language asking the GAO to examine commissary sales declines and business practices, and several reporting requirements being placed on DoD and the resale industry for product labeling and other policy matters.  The National Defense Authorization Act is the annual policy bill developed by the House and Senate Armed Services Committees.  Both the House and Senate have passed their versions of the bill and are preparing to formally go to conference to work out their differences.  Staffers are meeting informally to work out differences, but the bill is delayed this year because of a number of contentious issues and because of the election.  ALA learned yesterday that the House conferees won’t be appointed until mid-November.  Until the Speaker of the House appoints these conferees, formal negotiations cannot get underway.  The bill is late but is expected to ultimately pass as it has done for some 50 years.

Here we go again.  Military bases in the southeastern United States are again hunkering down for a Hurricane Delta expected to hit the Gulf Coast.  The storm is gathering strength and is expected to affect operations at several baes including; Fort Polk, La.; Keesler AFB, Miss.; Barksdale AFB, La.; and possibly Eglin and Tyndall Air Forces Bases in Florida.  Military bases in Louisiana are just recovering from a hurricane strike last month.   AAFES, NEXCOM, MCX, CGS, VCS and DeCA all have been mobilizing in recent years to ensure minimal disruption to operations during these storm events and other natural disasters, exacerbated recently by the pandemic.  This mission support criticality continues to be highlighted by the ALA to policy-makers in Washington.

Another Federal NAFI hits the skids.  A largely unknown nonappropriated fund program The Smithsonian Institution has laid off 237 employees from its shops, theaters and concessions this week, part of ongoing cost-cutting measures meant to limit the financial losses related to covid-19.The Smithsonian lost $49 million — from store and restaurant revenue as well as canceled ticketed events, classes and tours — between March and September, spokeswoman Linda St. Thomas said. An additional 66 Smithsonian Enterprises employees earning $100,000 or more were hit with 5 percent cuts. The division had 550 employees before the pandemic.

The majority of the institution’s 6,300 employees are federal workers and not affected by these moves. A survey by the American Alliance of Museums found that 44 percent of the museums initiated furloughs or layoffs as a result of the pandemic; a report from this summer estimated that about 1,500 employees nationwide had been laid off since March. Federal funds from Congress make up two-thirds of the Smithsonian’s $1.5 billion annual budget, allowing the museums to offer free admission. The $500 million balance comes from endowment funds and donations, the revenue it earns from ticketed programs, shop receipts, parking and other activities. The layoffs don’t include those who work in the Smithsonian’s eight cafeterias and cafes, which are operated by Restaurant Associates and remain closed.

Data driven service member of the future.  The OSD personnel Chief Matthew Donovan has been invited to speak at the ALA Annual Convention.  Donovan has policy oversight of the military’s resale programs.  He also is the Department of Defense human resource officer.  He just issued the DoD’s Personnel and Readiness Strategy for 2030.  In it, DoD talks about an image of a service member working in tandem with a robust IT infrastructure, one who is constantly informed by data and who is surrounded by a diverse cast of highly educated peers.  The picture is a long way from the WWII stereotypes of grunts digging ditches and plodding across rough terrain, though the military still expects its employees to do that as well.  The strategy outlines the need for a “technologically dominant force that is strategically ready, globally relevant and flexibly sustainable,” the authors wrote. “The cornerstone to this vision is achieving data dominance through digital modernization, seamlessly connecting all our data in real-time and harnessing the skills of a generation of digital natives.”  While service members will be self-sufficient, they will also be constantly working with technology like artificial intelligence, GPS and various software, which require an interplay between man, machine and data.  To build this new kind of employee, DoD says it needs to provide the right kind of infrastructure. That includes having a robust IT model, room for innovation from all ranks and ways to digest data in a coherent way. “This digitally savvy workforce must intuitively understand how to effectively validate, analyze, interpret, and extrapolate data to provide information, knowledge, and wisdom for department leaders.  DoD also says it needs to change the way it approaches personnel. The strategy rejects the “industrial-era” personnel system DoD currently uses. It calls into question the “up or out” policy that forces service members to promote or leave the military.

More than 200 commissary store brands are going to be sold at a 20% discount until Oct.25. Brands include the Freedom’s Choice food brand and HomeBase non-food brand, as well as the non-exclusive store brands TopCare (health and beauty), Full Circle Market (natural and organic food options), Tippy Toes (baby products), Flock’s Finest (wild bird food for hopper, tube or platform feeders); Pure Harmony (high quality pet food that provides grain-free options using meat, poultry or fish as the first ingredient; and Wide Awake (ready to drink coffee beverages). DeCA partners with retailer SpartanNash on its private brands.  “Our customers will see some of our leading private label products in several categories put together in a unique sales promotion,” said Tracie Russ, the agency’s sales director. “This sale brings together the best of all worlds – quality products at deeper savings, video recipes and more.”

Temporary COVID commissary closure.  Joint Base Lewis-McChord’s Lewis Main Commissary reopened yesterday after being shut down last weekend by a coronavirus infection. Saturday, base officials announced that a commissary employee had tested positive for the virus— the employee reportedly took the test Friday, and received results Saturday, forcing officials to close the commissary immediately and prepare for a deep cleaning Sunday.

Commissary curbside push.  We are hearing that the leadership of DeCA is examining ramping up e-Commerce purchasing to include curbside service.  ALA’s Commissary Council is working with DeCA to promote the service at new sites with industry promotions.  ALA’s Larry Lapka interviewed the head of DeCA’s curbside program Willie Watkins.

With customers looking for both convenience and safety when doing their exchange and commissary shopping, the need for new and innovative pickup options became greater than ever before when the COVOD-19 pandemic enveloped the world late last year and during the entirety of 2020.

Curbside pickup had been around in various forms for a number of years, but once the coronavirus struck, it almost seemed to be the safest way to get the needed items that families desired.

“Curbside pickup provides an additional way for authorized commissary patrons to access their well-deserved benefit, and in turn, it provides our store staff an additional option to drive sales,” Watkins said. “Our CLICK2GO program factors greatly in DeCA’s future digital migration. As we continue to deploy our Enterprise Business Solution (EBS), even more options will become available.”

Not all stores are currently able to offer this option to their customers. “A variety of factors, such as sales and transactions, existing infrastructure and demographics are being used to determine if a commissary will be suitable for CLICK2GO,” Watkins said.

The agency currently offers CLICK2GO at Fort Eustis, NAS Oceana, Fort Belvoir, MCB Quantico and Fort Lee, all in Virginia; McGuire AFB, N.J.; and Charleston AFB, S.C.

There are plans to offer the service at three more commissaries later this year: Minot AFB, N.D., and Offutt AFB, Neb., in October and NAS Jacksonville, Fla., in December.

Watkins added that Fort Polk, La., “is pending assessment from Hurricane Laura,” and “other stores are scheduled to come next year as we roll out our new business and front-end systems.”

Each CLICK2GO service is customized to serve a particular location. “If the demand calls for it, DeCA will adjust its service accordingly,” Watkins noted. “For example, the Fort Belvoir Commissary increased the service capacity of CLICK2GO at the end of March as customers turned to online shopping during the COVID-19 outbreak. The store experienced an increase in curbside orders, so DeCA boosted its capacity about 35 percent, adding 100 more pickup times during a week.”

At those installations that offer curbside pickup, Watkins said authorized commissary shoppers access the service through DeCA’s CLICK2GO page on commissaries.com.

“Customers use a computer or mobile device to make their orders online, where they select from commissary products offered based on the store’s stock assortment,” he explained. “After products are selected, the shopper selects a pickup time and completes the checkout process. At their appointed time, they park in designated parking spaces, where commissary workers bring their groceries and complete the transactions.”

A $4.95 service fee is applied for each order except for the first 30 days of a new deployment, when the service fee is waived.

“The commissary has the Rewards Card program, so patrons can load up their coupons, and the CLICK2GO staff uses them for customers while filling orders, and the staff also picks coupons on the shelf for curbside shoppers,” Watkins explained, adding that most items sold in the commissary are available through CLICK2GO.

The executive noted that safety is the most major priority in the program, for both patrons and store personnel. “All employees engaged in CLICK2GO use proper face coverings and protective gloves,” he explained. “They also ensure all surfaces that come in contact with customer orders are wiped down throughout the process.”

Watkins reported that online ordering and curbside pickup “increased significantly” at the height of the pandemic; he said that curbside sales increased by 11 percent “at one of our CLICK2GO locations,” and approximately 2 percent of sales are derived from curbside pickup.

Watkins said that that percentage has held steady over the course of the past few months, and convenience “has always been the No. 1 driver” for the success of CLICK2GO.  “Of course, customers appreciate that they can do their grocery shopping and pick them up without having to go inside,” he said. “Since the pandemic, more and more people are taking advantage of the convenience and social distancing that CLICK2GO provides.”  At the present time, delivery services are not offered to patrons. “Delivery is impractical to implement logistically,” Watkins noted.

“For example, during the month of March, Fort Detrick, Md., conducted over 15,000 patron transactions, and of these, 60.64 percent were from military retirees,” Watkins said. “Approximately 420 retirees shopped at the commissary every day.

“As Fort Detrick is a small store, with a limited number of employees, it would create a real burden on these employees to try and maintain the processing of the remaining 39.36 percent of customers and run a veritable curbside pickup process. There simply are not enough employees to establish, monitor, and run this type of effort.”

DeCA’s curbside program enters a rapidly evolving commercial marketplace. 

  • The US retail grocery marketplace has become a severely competitive marketplace and is now dominated by large and strong regional players.
  • Amazon and other E-commerce CPG players have become very aggressive and gaining share
  • Consumer shopping behavior is rapidly evolving.
  • Technology has become more advanced and is a core part of today’s marketplace
  • On-Line ordering has progressively gained acceptance
  • Curbside & Delivery has captured roughly 1% per year with 6.4% in 2019
  • COVID, as with most crisis events, has accelerated a trend already in motion.
  • Current forecasts all indicate that 20-25% of all grocery sales will be Curbside/Delivery in next 2 years
  • his is the “Retail Battlefront” of this generation.  This type of event has not happened in many decade
  • Retailers are pouring massive resources to gain/maintain share
  • A Retailer must conform to the Consumer because they will seek those Retailer that do
  • Everyone is racing to capture the Consumer’s “Share of Wallet”
  • Retailers with just a brick & mortar strategy will not succeed
  • This is the “Retail Battle of the Decade” and the winners will dictate the “Shape of Retail” in the future
  • This month, Walmart launched its subscription Walmart Plus, for $98/year-unlimited delivery & discounts on gas
  • In May, InstaCart hired 550,000 employees
  • Target reports 141% sales increase and expands Curbside to 3,000 stores
  • Aldi expanded curbside to 600 of its stores
  • Amazon (B2C) is coming the other way by expanding its brick & mortar play with Whole Foods
  • Walmart is hiring an incremental 100,000 and almost all stores now have curbside
  • Target reported a 141% increase in Ecommerce sales and have expanded to 3,000+ stores
  • Walmart is going directly after Amazon Prime with Walmart Plus…Major Battle will ensue
  • This is a rapid 13% -18% shift in market share to Retailers with On-Line Strategies
  • Those without a Curbside Strategy will lose an incremental 13+% year-over-year•
  • Target said its digital sales growth accelerated from 33% in February to about 100% in March to 282% in April, for a total first quarter e-commerce increases of 141%

Driving sales. Bruce Cameron, an Army & Air Force Exchange Service (AAFES) driver who rides out of the Waco Distribution Center in Texas, was named a 2020 All-Star Driver by the National Private Truck Council (NPTC). He is the Exchange’s sixth driver in the past 11 years to earn All-Star status.  The NPTC, a trade association that advocates on behalf of private trucking fleets and their drivers, co-sponsors the award along with International Truck/Navistar. The All-Star designation recognizes 100 drivers who have exhibited an exceptional commitment to safety, compliance and customer service from June 2019 through May 2020.  “It’s an all-encompassing nomination process that looks at a driver’s record — safety on the job, injuries, traffic history and compliance with internal policies,” said Col. Douglas Vallejo, the Exchange’s deputy director of Logistics. “Bruce’s record shows a totality of excellence and a commitment to living up to Exchange values to serve those who serve.”

Meat packing plants stabilizing.  Another wave of coronavirus-driven closures of meatpacking plants is unlikely because worker testing and safety practices have improved since the spring.   Major meat companies have installed automated temperature checkpoints, distributed safety gear to plant workers and installed partitions between some workstations to catch Covid-19 symptoms and prevent its spread in plants. “I’m pretty confident we are not going to have the size of the disruption we saw in April and May,” said JBS CEO Andre Nogueira at The Wall Street Journal’s Global Food Forum, held remotely on Monday.

AAFES-run military Star card rates the highest on a survey of the best cards.  A survey released this month found that the interest rate of 10.24 bests all other store cards.  The Star Card offers a variety of programs to aid distressed military and their families as well.

Uniform contractor indicted.  An operations manager of a North Dakota-based company that sells clothing and others items to the U.S. military, U.S. government, police, and others, has been indicted by a federal grand jury in Providence, RI, for his alleged role in a conspiracy that sold more than twenty million dollars-worth of counterfeit goods to military and government purchasers.  It is alleged that Terry Roe, 48, of Burlington, ND, conspired with at least one other individual, Ramin Kohanbash, 50, of Brooklyn, NY, to obtain counterfeit clothing, apparel, and gear. Kohanbash in turn worked with Bernard Klein, 39, also of Brooklyn, to arrange for these goods to be manufactured in China and Pakistan and imported into the United States. The indictment alleges that Roe, and others working at his direction through his position as an operations manager for the North Dakota company, then arranged for these counterfeit goods to be sold and delivered to the U.S. military, and other government and law enforcement agencies, including to the Rhode Island National Guard in East Greenwich, RI, as part of an investigatory controlled purchase. As alleged, Roe and others working at his direction falsely represented to the U.S. military and its suppliers that the counterfeit goods were manufactured in the United States as required.

What’s hot and what’s not?  Cortera, a data company that tracks US businesses reports that within the reshaped landscape, some companies have adapted faster than others.

  • As foot traffic evaporated, Chipotle Mexican Grill Inc. saw online orders more than triple in the second quarter, rising to 61% of total sales from about a quarter. The chain added staff and said it would include drive-through “Chipotlanes” at most new restaurants.
  • Lululemon Athletica Inc., after closing stores in the spring, was able to capture purchases by Americans working from home and eager for more comfortable “athleisure” clothing. The seller of high-end yoga pants embraced the shift to at-home fitness by buying Mirror, a startup that sells Internet-connected equipment and class subscriptions.  Other companies found the virus stoked demand for their wares.
  • Spending by data hosting and processing companies rose 7% in April, from a year earlier, and slightly in May, as consumption of cloud services soared. Supermarket business thrived as families ate at home more and stockpiled staples.
  • Electronics retailers saw business rise as people worked from home and went out for entertainment less.  Home-improvement chains like Home Depot Inc. and Lowe’s Cos. saw business soar as home-bound Americans went to work on their lawns and spare rooms and the housing market boomed.
  • Walmart Inc. and rival Target Corp. recorded year-over-year sales jumps as Americans stocked up on essentials and turned to their e-commerce offerings. Amazon.comInc. said last month that it would hire 100,000 more employees across North America.
  • Oxford Economics reports some types of businesses are unlikely to recover before 2024, the firm says, citing textiles and apparel, electrical equipment and appliance manufacturing as well as the petroleum, mining and coal industries. It could take until early 2022 for U.S. manufacturing to return to late-2019 levels, and until the end of next year for retailing and transportation, the firm says.
  • Broadly, sales and profits are showing signs of recovery. Retail sales have grown for four months straight through August, but the pace of that growth has slowed significantly.

Best regards,

Steve Rossetti

President

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