From the desk of the ALA President

ALA’s Resale Resurgence Annual Convention October 19, 20, 22.  We are working hard to pull together a great event and the latest agenda appears at the end of this communication.  A long list of distinguished speakers will discuss trends and policies affecting exchanges and commissaries along with highlighting efforts by military retailers and industry to inject excitement into the military shopping experience.  We’re also going to be talking about political events that will shape the course of the military’s resale system.  Many ALA member companies have stepped up as sponsors to make the event extra special and we very much appreciate and value their participation.  If you haven’t registered, please contact Mr. Bob Ellis at bellis@ala-national.org

Mark your calendar for DeCA/ALA category management meeting.  November 10, 12:30 p.m. to 2:00 p.m.  Opportunity for industry to discuss direction of Joint Business Planning with all DeCA category management teams.  Share ideas such as cross merchandising on how to take program into 2021.  Final agenda is in the works.  Stay tuned.

Democrat defense funding fight?  A subject to be discussed at next week’s ALA Convention is the defense budget and its implications for resale programs.  The Chairman of the House Armed Services Committee, Rep. Adam Smith is predicting a fight over defense funding in the new Congress.  Smith has been promoting a “rational Democratic, progressive National Security policy that may materialize in cuts to the Pentagon budget.  ALA is closely tracking this debate as it will have a bearing on the pressure on funding for community programs such as the Defense Commissary Agency.  The Democratic split over the size of future defense budgets will come to a head in the new Congress, the chairman of the House Armed Services Committee, Rep. Adam Smith, D-Wash., predicted.   “I think the reasonable assumption is yeah, the defense budget is going to be flat for a while ― and there is no reason on Earth in my view that we cannot defend the United States of America for $700 to $740 billion,” Smith said. “So, I think the better question, the question to focus on, is how do we get more out of it?”

“Section 889” emerges as a resale issue.  Section 889 of the fiscal year 2019 Defense Authorization Act places restrictions on telecommunications equipment of services purchases produced by five named Chinese companies.  Military resale stores are being asked to agree to requirements of the law and its implementing regulations.  This will have major implications on industry as DOD is proposing that it extend to include all goods and services obtained by nonappropriated fund instrumentalities and this includes exchanges.  ALA is concerned that requiring NAF programs to implement this law and extend it to all purchases will wither directly or indirectly affect military consumers.  We are concerned that until it is a National policy that extends to commercial entities, that military consumers should not be singled out and forced to bear the burden of restrictions that the rest of American consumers do not have to face.  We are dealing with the Congress and with the Administration to ensure fair treatment of military consumers.

Family advocate to be honored at ALA Annual Convention.  Joyce Raezer, a long-time advocate for military families and former Executive Director of the National Military Family Association, will be honored at ALA’s Annual Convention to be held on-line October 20 & 22.  In announcing the award to Ms. Raezer, ALA said: “Your efforts are no more illustrated than during the National pandemic crisis that our Nation is confronting.  Unlike traditional wartime mobilizations undertaken by the Department of Defense, the COIVD-19 pandemic was first and foremost a human problem requiring immediate and sustained efforts by the Department to meet the needs of military families.  DoD did so; ensuring that our families received what they needed.  Whether for housing, health care or commissaries and exchanges, the system and services for our military families were there.  This was no accident.  DoD was prepared.  Your advocacy for military families over the years helped ensure that DoD was prepared, just as it has been prepared to care for families in countless mobilizations to defend our Nation.   It is the true definition of the military family readiness for which you advocated for so staunchly and steadily in your splendid career.  

“You were the voice for military families and when you spoke, members of Congress and Administration officials took note and took action.  They did so because they knew that when you spoke, you spoke not only from years of experience in dealing with military family matters but also from the heart.  Today, a military spouse is nurturing her children while her spouse is in harm’s way defending our Nation.  While they may not be fully aware of your contributions, they are the beneficiaries of your sustained efforts and expertise.   They feel it each and every day as they stand with their families on the frontiers of freedom.”

“It is a proud legacy that we are pleased to recognize and be associated with.  Our Nation is stronger for this legacy and we are proud to provide you with this most deserved recognition.”

Under Secretary of Defense for Personnel and Readiness to speak at ALA convention.  The Honorable Matthew Donovan will be addressing the ALA’s Annual Convention next week.  Donovan is expected to discuss a wide range of issues that faced the military resale system.  As Under Secretary, he is heavily involved with military resale, with DeCA coming under his purview along with the Executive Resale Board and policy proponency for commissaries and non-appropriated fund programs including exchanges.   

ALA steps up as a sponsor and supporter of an upcoming unified military resale Veterans Day event.  Veterans Day falls on November 11 this year and all five of the military resale agencies are getting together to recognize America’s Veterans with a major “In Recognition Of” event.  ALA is participating as a sponsor and we are urging all member companies participate as well.  Sponsors will get their company logos displayed, have in-store recognition, and videos to be included in the lead up to Veterans Day.  Participating are AAFES, NEXCOM, MCX, DeCA, and CGX.  In a joint letter to industry, the five agencies said that inclusion in the event “will be inclusive within the collective marketing efforts across all military resale entities and within any cross-promotional activities. Companies wishing to sponsor should contact   William.Marx@nexweb.org

Small businesses not reaping their share of pandemic awards.  The Defense Logistics Agency has awarded hundreds of millions of dollars in contact for the Federal response to the pandemic.  DLA’s director of small business said that they are seeing fewer small businesses in its traditional supplier base competing for contracts in the wake of the coronavirus pandemic.   Thee director of the DLA’s Office of Small Business Programs, Dwight Deneal, said that the agency plans to roll out a new virtual outreach effort next month to reengage its small suppliers.  The Pentagon faces congressional scrutiny amid reports it awarded lucrative contracts for disposable medical gowns to a handful of unexpected and inexperienced companies despite bids from more than 100 vendors with track records of

Commissary at Naval Submarine Base Groton temporarily closes to deal with COVID.  In an October 12 release, the base said that the store would be closed until further notice after an “after hours stocker” tested positive.  The store is being inspected by a health team.

Amazon and Spartan Nash.  Spartan Nash, a major commissary distributor, has struck a deal with Amazon where the online retailer will become one of its largest shareholders. The company issued stock warrants to Amazon and said in its SEC filing that the warrant for the Amazon affiliate comes “in connection with its entry into a commercial agreement with Amazon.” Spartan has had had Amazon as a customer for at least four years when in 2016 they did a deal to supply dry and chilled dry and chilled groceries to Amazon distribution centers, including support of the Seattle-based e-tailer’s Amazon Prime Now grocery delivery program and emerging AmazonFresh perishables delivery service.  SpartanNash is the nation’s fifth-largest food distributor, operating 12 grocery distribution centers and seven military DCs. The company also operates 155 corporate-owned supermarkets in nine states and supplies more than 2,100 independent grocers nationwide.

Romania and U.S. deal.  We have been reporting on U.S. and NATO expansion further east.  In another development, The U.S. and Romania have signed a 10-year road map for defense cooperation.   “The deal “captures our common strategic goals and interests, such as defense modernization and Black Sea security,” Defense Secretary Mark Esper said. The road map could help pave the way for a larger U.S. mission in the country. Esper has said he wants to increase the U.S. troop presence in Romania, an emerging hub for NATO on its southern flank.  It comes as the U.S. is also expanding its presence in Poland and as the Administration is looking to reduce its presence in Germany.  Romania also is investing in the modernization of Mihail Kogalniceanu Air Base, “to become a pivotal hub in the Black Sea,” according to Romanian officials.   The U.S. military has invested heavily in Romania in recent years to support expanded troop rotations in places such as Mihail Kogalniceanu Air Base and Campia Turzii Air Base.

Christmas comes earlier and earlier.  Some of the Nation’s largest retailers will begin rolling out Black Friday sales this weekend — earlier than ever and the latest sign of how the pandemic is reshaping the biggest shopping season of the year.

Walmart, Target and other major brands were spurred to push up their holiday timetables by Amazon’s decision to move Prime Day, which is usually in July, to October.  More than a dozen major retailers have filed for bankruptcy during the pandemic, and several others are at risk of running out of cash. By kicking off sales in October, [retailers] are hoping to spread consumer traffic and demand over the next few months, helping them maintain social distancing in stores, consistently move inventory and adjust their strategies based on early consumer demand, according to industry experts.

Malls taking a beating.  Only 45 percent of shoppers plan to visit a mall to do some or all of their holiday shopping, down from 64 percent last year according to the International Council of Shopping Centers.  More than three-quarters of respondents said they expected to start shopping earlier than usual. The survey was based on responses from more than 1,000 U.S. shoppers between Sept. 28 and 30. Traffic at the country’s largest malls dropped 51 percent in the first eight months of 2020 compared to the same period last year.

Dollar General with over 16,000 stores wants to attract more high-income shoppers.   The company plans to open a new brand of stores called Popshelf that mostly sells things shoppers don’t need but might want, such as party supplies, home decor or beauty products. Stores will be in the suburbs of larger cities, with two planned for the Nashville, Tenn., area in the next few weeks and 30 by the end of next year. Items will be priced low, mostly under $5, but designed to appeal to women from households that earn as much as $125,000 a year.  Sales at Dollar have risen 19 percent year over year.

Amazing Amazon.  This from a just released House of Representatives Judiciary Committee Report “Investigation of Competition in Digital Markets”

“As Amazon’s e-commerce business has grown, it has also developed a significant logistics business surrounding fulfillment and delivery of third-party orders with its Fulfillment by Amazon (FBA) program. More than 73% of all Amazon Marketplace sellers reportedly rely on this program to fulfill their orders.

 Because of this, a trade association that represents third-party sellers refers to Amazon’s fulfillment operation “as the railroad of [e-commerce]. ”In addition to its fulfillment operation, Amazon is also one of the largest shippers in the world. The company provides global shipping services for its own products and independent sellers that sell on Amazon.com, as well as other e-commerce sites.

“Amazon’s ground shipping infrastructure consists of “trucks, trailers, intermodal containers, and delivery vehicles.” Its truck fleet consists of more than 10,000 trailers. It also has its own freight airline, Amazon Air, with about 50 leased aircraft, and plans to expand its fleet to 70 by 2021. Amazon has also built hundreds of package sorting and delivery centers across the United States and has established its own network of contracted delivery providers exclusively dedicated to delivering packages for Amazon.

“In recent years, the size and scope of Amazon’s delivery services and network has grown significantly. When Amazon first launched Fulfillment by Amazon, it stored products and packed orders in its warehouses, but relied on other carriers to handle shipping and delivery. Today, Amazon ships a growing number of products itself. In 2019, “Amazon delivered about half of its own packages, up from 15 percent just two years before.” Amazon has also lessened its use of large delivery companies during this time, using “800 small, independent contractors [which] are now responsible for around 48 percent of Amazon’s last mile deliveries.” These smaller providers are economically- dependent on Amazon, and “many are in fact reliant on Amazon for 100 percent of their business.”

“Parcel volume handled by Amazon’s delivery service now rivals the top carriers, including UPS, FedEx, and the U.S. Postal Service. “In 2019, Amazon delivered 2.5 billion parcels, or about one-fifth of all e-commerce deliveries, and anticipates growth. In a July 2020 investor call, Amazon CFO Brian Olsavsky stated that Amazon “expect[s] a meaningfully higher year-over-year square footage growth of approximately 50%,” which includes “strong growth in new fulfillment center space as well as sort centers and delivery stations.”

“An analysis by Morgan Stanley concluded that Amazon will overtake UPS and FedEx in market share for delivery by 2022. Amazon has already surpassed the U.S. Postal Service, which has been downsized dramatically under its current leadership. Last year, the U.S. Postal Service had a decrease in parcel volume for the first time in a decade.  

Leading CPG expert Mark Baum at ALA convention.  Mr. Baum will describe the exploding online marketplace and its implications for the industry and the military resale channel along with the latest in the CPG industry.

Instacart market value doubles in one year to $18 billion.  Instacart has raised $200 million in new funding, further solidifying the company’s position as a leader in grocery e-commerce.  It has expanded to more than 500 retailers, deliver from nearly 40,000 store locations across North America and move grocery delivery into the mainstream as millions of people across North America now rely on Instacart.

The company partners with more than 500 retailers and delivers from nearly 40,000 store locations across the U.S. and Canada. Instacart is available to more than 85% of U.S. households and more than 70% of Canadian households with delivery and pickup services across more than 5,500 cities in North America. The company expects to deploy the new capital in a number of ways, including: product development focused on introducing new features and tools to enhance the customer experience, continued investment in Instacart Enterprise to support retailers’ end-to-end e-commerce needs, and further investment in Instacart Ads to help connect Consumer Packaged Goods (CPG) brands of all sizes to customers shopping online from their favorite local retailers.

Instacart just rolled out its Senior Support Service, a high-touch support offering for customers over age 60, has brought more than 60,000 seniors online with online grocery delivery in the past month.

Kroger ClusterTruck deal.  Kroger is the largest U.S. grocer and it has teamed with ClusterTruck to operate delivery only restaurants.  ClusterTruck is a technology start-up that operates delivery-only restaurants, the kitchens will provide a variety of freshly prepared meals on-demand with no service or delivery fees.  Different from the off-premise concept, the new concept will repurpose approximately 1,000 square feet at each participating store to create a culinary space for ClusterTruck staff to prepare meals for quick delivery and in-store pickup. Customers can order from a menu of more than 80 meals, spanning a variety of ingredients – and best characterized as food quality you can get at a sit-down restaurant with the personality of street food. The expansion of Kroger’s relationship with ClusterTruck reflects the retailer’s ongoing investments in providing a variety of prepared fresh food options and creating a seamless experience for customers. Kroger experienced a 127% digital sales lift in second quarter 2020, as customers continued to use digital ordering options, including pickup, delivery, and ship to home.

The Department of Defense has published a new Data Strategy with implications for military resale companies.  ALA is working with the Department of Defense on implementing the CMMC or Cyber Security Model Certification and looking at how military resale companies will have to comply.  It also has implications on the roll-out of DeCA’s data systems.  This comes as DoD issued a new data strategy.  The Strategy emphasizes managing data as a strategic resource, highlighting the criticality of data to build and maintain battlefield advantage, and the need to treat information systems on par with the priority given to weapon systems.    DOD Chief Information Officer Dana Deasy stated, “Data is the ammunition in the Digital Modernization Strategy and is increasingly central to warfighter advantage on and off the battlefield. The National Defense Strategy directed us to be more lethal, efficient, and interoperable with partners. This strategy is our first step to making that ammo persistently available to the men and women of the DOD regardless of echelon or geographic location.”

Defense does a deal with Rheaply to process surplus goods,  Each year DoD processes about $50 billion in surplus property and DoD has just done a deal with Rheaply, a Chicago startup that specializes in recycling and sourcing unused items, has landed a contract with the U.S. Defense Logistics Agency to help government entities, like the Department of Defense and the U.S. Air Force, streamline the redeployment of military property. Through the partnership with the DLA, Rheaply will study the government agency’s disposition processes and provide improvement suggestions using its software.  The DLA gather unused military equipment, refurbish it and redeploy it to a department or person who needs it. Each year, the DLA processes approximately $50B of surplus property, which can range from hardware and fitness equipment, to weapons and vehicles.

Shipt is hiring an additional 100,000 shoppers this holiday season. 

The new hiring push will bring the company’s personal shopper base to over 300,000 (rival Instacart has amassed an army of 750,000 shoppers this year.)  It is now available to 80% of households in more than 5,000 U.S. cities

 

ALA Annual Conference Agenda:  

Resale Resurgence 

An agenda for resale growth

The vast network of military businesses is weathering the pandemic—responding to patron needs.  At the Defense Commissary Agency and the exchange commands of the armed services, managers and their industry partners are exploring new avenues to ensure that the system emerges from the pandemic stronger, and more relevant and responsive.  This year’s ALA agenda focuses on these efforts.  

 ALA’s Annual Convention 

Monday, October 19, 2020

ALA business meeting (members only)

1:00 p.m. to 1:15 p.m.: Call to order—Mr. Bill Doyle (EURPAC), Chairman of Board.  Mr. Doyle will describe the state of the Association along with business and policy priorities. 

1:15 p.m. to 1:30 p.m.:  Treasurers report—Mr. Joe Campagna (Kellogg’s, Inc.), ALA Treasurer

1:30 p.m.- 2:00 p.m.—Board of Directors, Commissary Council and Exchange Council recognition—Mr. Bill Doyle (EURPAC, Inc.)

2:00 p.m.-2:05 p.m.—Passing of the Gavel from Bill Doyle to Michael Sleighter (Advantage).

2:05 p.m.-2:20 p.m.—Incoming Chairman’s remarks

Tuesday, October 20, 2020

10:20 a.m.- 10:25 a.m.—National Anthem—John Woodall

Musician, songwriter and performer John Woodall will sing the National Anthem.  John is not only a wonderful artist; he loves America’s military.  He is founder of Camp4Heroes, a caring respite for injured Veterans and first responders located in North Carolina.  He regularly performs for the U.S. military, most recently on the USS Eisenhower. 

10:25 a.m.– 10:30 a.m.—Opening remarks.  Conference Chairman Mr. Marty Johnson (E&J Gallo, Inc.) will set the tone for the convention and describe the sequence of events.

10:30 a.m.- 11:00 a.m.—Mr. Rob Bianchi (RADM, USN, Ret.) Chief Executive Officer, Navy Exchange Command

 The Navy Exchange Command or NEXCOM circles the globe providing vital retail services and mission support for the U.S. Navy.  Admiral Bianchi will describe major initiatives, accomplishments and goals.

 11:00 a.m.-11:45 a.m.—Mr. Tom Shull, Chief Executive Officer, Army and Air Force Exchange Service

 Mr. Shull describes the major initiatives of the Exchange including mission support, pandemic reaction, and major initiatives to pitch AAFES into the future. 

 11:45 a.m.-12:30 p.m.–Defense Department programs and policies—Mr. Berry Patrick, Office of MWR and NAF Policy, Under Secretary of Defense for Personnel and Readiness

 Mr. Patrick will describe emerging military resale issues and programs and policies being examined by the Department of Defense.

 12:30 p.m.- 1:30 p.m.: Government affairs update–Mr. Stephen Rossetti, President, American Logistics Association

–       Democrat and Republican views on resale and Department of Defense issues

–       Resale issues before Congress

–       Commissary transformation

–       Exchange system issues

–       ALA member relevance initiatives

–       Industry support for resale programs

–       Base access

–       Geo-political factors affecting Defense spending

–       Status and outlook for Defense spending.  

–       Force structure outlook.  

–       Military personnel reforms and implications for military base operations and resale programs.  

–       4th Estate reforms and effect of DeCA

–       Congressional action on the fiscal years 2020 and 2021 VA, DoD, and DHS budget affecting resale programs

–       Resale consolidation 

–       Base closures and global re-stationing of forces 

–       Compliance restrictions in the FY 2021 NDAA

–       The politics of defense and National security, supporting military families, status of budgetary deliberations

–       Changes in business practices and relationships between sectors of the industry

–       Defense plans and studies on consolidation and resale restructuring

–       The politics of defense and National security, supporting military families, status of budgetary deliberations

1:30 p.m. – 2:15 p.m.: Marine Corps exchange issue.  Ms. Cindy Wittman-Lacy, CEO/Director Business and Support Services HQ USMC will discuss accomplishments and objectives for Marine Corps exchanges and MWR programs. 

2:15 p.m.-2:45 p.m.: Mr. Ray Tober, Executive Director, Veterans Canteen Service will discuss VCS efforts during the pandemic and the prospects for VCS going forward in the post-pandemic world. 

2:45 p.m.- 3:30 p.m.-The Honorable Matthew Donovan, Under Secretary of Defense for Personnel and Readiness.  Secretary Donovan will discuss Department of Defense personnel programs including quality of life efforts and programs and policies affecting the military resale system.

3:30 p.m.- 4:15 p.m.: Mr. Bill Moore, Director, Defense Commissary Agency.  Mr. Moore just took over at DeCA and is expected to discuss his agenda for improving commissary operations.  

Thursday, October 22, 2020

 10:00 a.m. – 10:05 a.m.: Singer and songwriter John Woodall will perform his wonderful song Stand Tall—a call to America to stand with its military and first responder heroes.

10:05 a.m.10:15 a.m.: Presentation of the AlA’s Distinguished Service Award to Congressman Rob Wittman.  Congressman Wittman has served Virginia’s 1st District since 2007.  He is the Ranking Member of the Seapower and Projection Forces Subcommittee, House Armed Services Committee.  Congress Wittman has been a consistent supporter for a strong defense and for military quality of life programs including the commissary and exchange programs.  Most recently, he has promoted relief for military resale programs that have been stressed during the pandemic.   Congressman Wittman will receive ALA’s prestigious Distinguished Service Award and provide some remarks.

10:15 a.m. to 10:20 a.m.—Mr. Michael Sleighter (Advantage Sales Inc.) and ALA’s Chairman of the Board will discuss the agenda for the Association in 2021. 

10:20 a.m.- 11:00 a.m.: Captain Jeffery Eldridge, Commander, Coast Guard Exchange, will discuss pandemic experience, and programs and agenda for the Exchange going forward.

11:00 a.m.-11:20 a.m.: Presentation of the ALA Lifetime Achievement Award to Ms. Joyce Raezer, former Executive Director, National Military Family Association by Michael Sleighter (ALA Chairman of the Board) and Stephen Rossetti (ALA President).  Ms. Raezer’s distinguished career advocating for military families will be recognized at this ceremony.  Remarks by Joyce Raezer. 

11:20 a.m.-12:00 p.m.: Susan Eisenhower.  Author and granddaughter of President Dwight “Ike” Eisenhower will talk about leadership principles and her new book “How Ike Led”.  

12:00 p.m. – 1:30 p.m.: Military resale agency collaboration and future merchandising and marketing efforts.  A panel of discussion of efforts resale agencies are taking to come together to improve operations and patron service.  The panel will include: John Reiley, Chief Operating Officer, Coast Guard Exchange; Amy Kafner, Chief Merchandising Officer, Veterans Canteen Service; Rich Honiball, Executive Vice-President, Global Chief Merchandising and Marketing Officer; Jennifer Wible, Deputy Director, Business Operations Chief Operating Officer, Marine Corps Community Services; Ana Middleton, President, Chief Merchandising Officer, Army and Air Force Exchange Service; Chris Burns, Executive Director, Sales, Marketing and Logistics, Defense Commissary Agency. 

1:30 p.m. – 2:00 p.m.: Mr. Mark Baum, consumer products industry expert will discuss the outlook for the industry and its effect on military resale programs.

 2:00 – 3:00 p.m.:  Gaining a larger share of wallet.  A panel discussion of marketing efforts by resale agencies and their media trading partners to reach patrons with the value proposition for military resale programs.  Sandi Lute, Vice-President, Marketing and Customer Engagement, Army and Air Force Exchange Service; Scott Poteet, Director of Marketing, Coast Guard Exchange; Sandi Bates; Chief Marketing Officer, Marine Corps Community Services; Marc Michaels, Military Media;, Sam Meek, Sandboxx; Rich Carroll, D&R Communications; Mark Igo, MyMilitarySavings.com; Vince Santoro, MilitaryLife Publishing Co (invited);  Joe Mugnai, Family and Salute Magazine (invited).  Moderated by Christine Roussey, IRI.   

 3:00 p.m.-3:10 p.m.—Closing remarks by Mr. Marty Johnson, Chairman of the ALA’s Annual Conference and special performance by John Woodall singing “Home”.

 

Best regards,

Stephen Rossetti
President
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