Presidents Message/Washington Update 10/23

Congratulations to ALA on its 100th Anniversary from the Department of Defense.  Secretary Esper and I are aware of the services you provide…. Your partnership is critical and key to preserving our competitive advantage.”   “We are harnessing the skills of a generation of digital natives…which is exactly the kind of talent we need to attract; retain the people we recruit.”  Matthew Donovan, Under Secretary of Defense (Personnel and Readiness) at the opening day of the ALA Annual Convention. 

The Navy leadership walked the talk and came through in allocating funding to allow us to weather the storm.”   “Sustaining the military resale infrastructure during this pandemic with APF support is a small investment in an insurance policy that represents a worldwide network of ongoing quality of life services, always operating, we just turn up the dial in times of crisis—impossible to replicate this capability with commercial entities.” Rob Bianchi (RAdm-Ret.), NEXCOM CEO at ALA Annual Conference.

We’re leveraging brand equity and gaining more insight into how Marines Shop.”  Cindy Whitman Lacy, CEO/Director, Business and Support Services, HQ US Marine Corps. 

AAFES is working hard to improve cash and liquidity and provide a safe, secure and sanitized shopping environment.” AAFES CEO Tom Shull to the ALA Annual Convention

 “We are very grateful to Secretary Wilke and the entire VA leadership in recognizing our difficulty and coming forward with support.”  Ray Tober, Executive Director, Veterans Canteen Service at the Annual ALA Conference. 

 ‘The goal is, of course, to drive sales. And it is to engage the patron, not only the current patron, but also the patron who may not be visiting DeCA right now.”  Alex Sizemore, senior director of marketing, EURPAC Marketing Retail and Logistics Group and Chairman, American Logistics Association (ALA) Commissary Council

ALA convention packed with information for resale industry and agency partners.  Major announcements are emanating from the ALA convention.  Yesterday, a line-up of top executives from described their major initiatives both during the pandemic and post-pandemic era.  The event featured presentations from: Rob Bianchi, NEXCOM; Cindy Whitman Lacy, MCCS; Tom Shull, AAFES; Bill Moore, DeCA, Ray Tober, Veterans Canteen Service; Berry Patrick, Office of the Secretary of Defense.   More detailed descriptions of the action of the Convention are forthcoming.  The schedule for the October 22 day of the convention appears at the end of this message.  

 Matthew Donovan, Under Secretary of Defense for Personnel and Readiness congratulated ALA on its 100th Anniversary and pledged collaboration with industry to advance military quality of life programs.  Secretary Donovan described:

  • Defense efforts to contend with COVID including enhanced infrastructure and backbones.
  • A tripling of the workload in his vast operation that includes health care, quality of life programs and military readiness programs.
  • Base access and force protection guidance.
  • Supporting the National “whole of government” response to the pandemic.
  • Ensuring installation commanders were provided the authority they needed to meet the pandemic including base access procedures and flexibility.
  • Designating military commissaries as “mission critical”. 
  • ALA’s critical partnership with the DoD.
  • The importance of the exchange and commissary benefit in assisting Defense with the National Defense Strategy
  • Harnessing the skills of a generation of digital natives.
  • Efforts of the DOD to attract talent.
  • Looking at logistics and digital modernization in shoring up Defense supply chains
  • Working toward attaining digital dominance in DoD personnel and readiness programs. 

Marine Corps Community Services at forefront of customer insights.  Cindy Whitman Lacy, CEO/Director, Business and Support Services, HQ US Marine Corps described pandemic measures taken by MCCS.  Proud of her workforce, she said that her folks “showed up and stepped up” to meet the pandemic.  She highlighted the Marine’s strategic priorities including: Mission First; Innovation and Modernization; and Sustainability.  The Marine organization is at the forefront of developing customer insights and Whitman Lacy noted the “further maturation of our model of fully aligning mission and Marine needs and business as a force multiplier leveraging partners and innovation.  She highlighted the results of their recent customer survey on COVID shopping behavior and continuing to strive to remove friction from Maines’ lives.  She described a unified experience with on-line ordering, in-store experience and friend and family contributions. 

Other highlights of her presentation:

  •      58 percent increase in sales at micro-marts
  •       A drop of 13 percent in tobacco sales due to age minimum change
  •       Major increases in sales of electronics, sporting goods, gaming, alcohol.
  •       Major decreases in cosmetics and soft lines.
  •       40 percent of shoppers shopping earlier in season. 
  •       Focusing on brand innovation
  •       Continued examination of the marine Corp base ecosystem and potential for growth incorporating eco-system planning into assessments for master planning
  •       Deployment of micro-marts to barracks, fitness centers and maintenance facilities
  •       Innovation pipeline is rolling out and becoming operational, morphing from vision to commercialization. 

Landmark COVID rapid reaction by NEXCOM.  Way early in the pandemic, NEX moved to establish a Crisis Action Team.  The team leveraged vendor relationships and joint buying, sourced PPE and increased the quantity and quality of shipment frequency of critical items.  Bianchi said ALA can help by keeping inventory in stock; ensuring NEX is prioritized for limited inventory; strengthen value of offerings; promote our events, support our patrons, and be more innovative.  Post COVID present a lot of pent-up opportunity. 

Other highlights of Bianchi’s presentation to the Convention:

  •        Didn’t have a choice—commanders said we had to stay open.  Immediately responded to fleet pandemic-related demand signals.
  •        Agility of being a NAF activity enabled NEX to get out in front of DLA and other appropriated fund entities in responding.
  •        Supported deployment of the hospital Ships Comfort and Mercy
  •        Rushed aid to quarantined sailors       
  •      Reduced inventory 14 percent.
  •        Supplied 558 face coverings to the Fleet
  •        Leveraged NEXCOM’s communications programs to amplify pandemic safety messaging.
  •        Received $80 million in CARES I money from Navy and OSD.  MWR received another $200 million.
  •        Task force looming at 2021 and needs for comfort, safety, capacity and convenience.
  •        Added deployment of WIFI in customer facing operations.
  •        65.7 percent increase in web retail sales
  •        Delivered 98 percent of e-commerce packages on time.
  •        Challenged by closures and apparel sales drops.       NEX scores 4.5 out of 5 on store safety
  •        Drive private brands and eliminate brands that offer less value
  •        Enhance CRM
  •        June to September sales up 1.2 percent
  •        Launch of Better Together campaign with MCX
  •        Striving toward relevance post COVID
  •        Stabilizing margin.
  •        Providing “value and Exclusivity” brand strategy
  •        Continue to several collaboration and cooperation among military resale partners.

AAFES strategic overview and pandemic response.  Tom Shull, AAFES CEO descried the AAFES three-year strategy and Herculean efforts on the part of his team to cope with the pandemic from an operational and financial view.   Shull said that AAFES is working hard to improve cash and liquidity and provide a safe, secure and sanitized shopping environment.  He noted that pandemic impact will affect dividends to MWR programs and doesn’t expect full-strength return to dividends until FY 2022 at the earliest and “more likely 2023 or 2024”.  He commended the Navy leadership for coming forward with pandemic relief funding for NEXCOM and said that AAFES is awaiting and looking forward to help but has to plan to meet all scenarios.  Shull noted an AAFES point of sale program has resulted in nearly $1.5 million in donations to Army Emergency Relief.

Other highlights of CEO Shull’s presentation:

  •       Continue to press vendors for products.  AAFES FY 2020—conserve cash, stabilize the workforce, build and preserve access to debt markets.  Driving to $287 to $687 million increase in liquidity.
  •        Focusing on CAPEX and emerging customer service requirements in 2021
  •      Forecasting $116 million decline in Q1 sales-       Restore earnings performance in FY 2022 and return to full dividend levels in 2-3 years
  •        24,000 personal shopping visits for quarantined troops
  •        Vaccine support offered by AAFES to Operation Warp Speed (National vaccine response)
  •        AAFES has a strong balance sheet
  •       A shortage of five million of computers to meet customer demand
  •       Looking forward to DoD civilian exchange benefit in November
  •       E-com up 88 percent
  •       Manufacturer breadth of assortment dramatically culled as they focus supply on demand and managing to financial constraints
  •       Computers, TVs and sporting goods all showing major gains
  •       224,000 of COVID related associate leave
  •       Deploying mobile field exchanges for pandemic relief
  •       The Veteran on-line shopping benefit has had 178,000 shoppers with 741,000 orders and nearly $13 million in sales tax savings

DeCA collaboration with industry amplified by new DeCA Director Bill Moore.   “My goal is to ensure that every eligible patron enjoys the benefit,” said Bill Moore, Defense logistics expert and now Director of the Defense Commissary Agency at the ALA Annual Convention.  Moore said that he is working to ramp up curbside service with possible innovative interim solutions to jump-start the effort.  He noticed an uptick in sales in the past year but is interested in what it looks like “when you take COVID out of the equation.”  Moore also highlighted his commitment to reinvigorate the collaborative partnership with the resale industry and accelerate the deployment of the Agency’s business systems.  Moore presented a contrast of the commissary benefit versus business attributes and their ability to straddle both sides of that equation.  He implored industry to come forward with increased commodities and recognize the difficult and extended supply chain for troops and families in remote and overseas areas.  

 Other highlights of Director Moore’s presentation:

  • 214 COVID cases reported, 194 recovered, and 19 actives
  • DeCA designated as mission essential during the pandemic
  • HPCON levels impacting sales
  • DAV and retiree shoppers had limited or no access to the benefit
  • Supply channels stressed and higher than normal out of stocks
  • Concerned about eligible patrons not enjoying the benefit
  • IT modernization to slow
  • EBS roll-out underway:
  • Vendor portal planned for 2022
  • Fast lane and mobile shopper in 2021
  • RTI signage and labels in 2020

Authority for civilians to use exchanges under active review in DoD.  Berry Patrick, an official in Secretary Donovan’s operation announced that Defense Department civilian employees may be able to use exchanges under a policy change working its way through the final approval process and being considered by the Department of Defense. If approved, it is expected to add 575,000 new eligible customers.  Berry Patrick works in the DoD Office of Morale, Welfare and Recreation and Non-appropriated Fund Policy and announced the move at the ALA convention.  There are about 796,000 DoD civilians in the U.S., but about 221,000 of those employees already have exchange benefits resulting from another beneficiary category such as retiree or military spouse, he said. The new benefit would apply to both appropriated fund and non-appropriated fund employees, he said.  

Employees would use their Common Access Card to shop.  Patrick said officials believe the benefit will be used more by the civilian employees than by disabled veterans, who were granted commissary, exchange and some MWR benefits as of Jan. 1, 2020. The usage by that population has been less than expected, he said, largely because of the pandemic which has forced restrictions on access to many installations. In addition, many of the 4.2 million newly eligible disabled veterans don’t live near an installation, according to an article in the Military Times.  DoD civilians are on the base every day, he noted. Based on projections of buying patterns, he said, they estimate exchange sales could increase by about $287 million a year, with a potential increase of $48 million in profits going back to support the services’ MWR programs. DoD has been deliberating the policy change for about three years.

One indicator of the popularity of the benefit among DoD employees was the situation in March, when DoD gave base commanders temporary authority to give commissary and exchange privileges to DoD civilians and contractor employees considered mission critical. Many people misinterpreted that to mean that every DoD mission-critical civilian employee automatically got those privileges, and DoD officials were getting phone calls from those potential customers, he said. But it was up to each installation, and some commanders gave the privileges while others didn’t, for various reasons such as concern about the strains on the supply chain’s ability to provide enough products for the stores.

Patrick said as the new benefit rolled out in January to disabled veterans, caregivers and others authorized by law, everything was in place within the resale community, MWR and for installation access. A post-implementation assessment showed there was no negative impact on the facilities, he said.

But COVID came along, resulting in impacts from a variety of reasons, to include some installations limiting access to their installations. Those issues have ebbed and flowed, he said. Currently only about 200,000 in this population of 4.2 million are using their benefits, and exchanges and commissaries have the capacity to take on larger numbers, Patrick said.

Through Sept. 30, commissaries logged about 503,000 transactions from the newly eligible population, and the exchanges estimated about 1.2 million combined transactions over that time period, he said.

He asked for industry’s help in continuing to promote the benefit to the newly eligible population. “We have a long way to go to get from 200,000 to the 4.2 million” extra disabled veterans and others who can use the benefits now, he said.

Other OSD announcements by Mr. Patrick:  

  •        Authorized MWR access on base to emergency workers
  •           Making American Forces Travel available to Veterans
  •          Working to implement the change to the tobacco law
  •         Ramping up efforts and working with ALA to promote the expanded commissary and exchange benefit for disabled veterans
  •         Removing impediments to fast-tracking NAF IT expenditures by having a separate official to work NAF IT issues
  •         Continuing to limit beverage alcohol sales in commissaries to beer and wine and not distilled spirits due to shelf space considerations
  •         Moving to an all-NAF model for lodging

VCS aid, innovative pandemic workarounds. Ray Tober, Executive Director of the Veterans Canteen Service described the tremendous difficulty faced by the pandemic and announced that they are beginning to see the beginnings pandemic relief appropriations coming to support the VCS and head off what would have been the only furloughs in Government due to the pandemic.   Mr. Tober described the work-around that VCS has been accomplishing to keep operations running and changes to the product assortment in the VCS stores to make operations more pandemic-relevant.    

Active ALA 2021 agenda.  ALA’s President Steve Rossetti presented an active agenda for the coming year and a multitude of challenges and opportunities for the resale system.  ALA has 100 years of public service and 2021 is going to be no exception.  During the ALA Annual Conference, Rossetti said that ALA is mobilizing for 2021 with some 12 conferences in the works including DeCA, AAFES, Marine Corps, and NEXCOM.  He also announced pop-up sessions dealing with specific policy issues.   In a far-reaching discussion of the pandemic, Rossetti said that distributors were incurring heavy pandemic costs and that ALA was working to gain funding relief.  Rossetti also cited the extraordinary efforts of the exchanges and DeCA in confronting the pandemic, including active participation with the DoD industrial policy group on a wide range of issues including protective gear, contracting relief, and PPP, vaccine distribution, and contracting and payment issues.  He described the state of play for major legislation passing through the Congress including the Continuing Resolution, pandemic stimulus bills, the NDAA, and appropriations bills.  

Other areas of emphasis were ensuring that all of the exchanges received their fair and equitable share of pandemic relief funding and explained the legislative process for making this funding available.  He cited major costs to resale programs because of strategic restationing of forces that are amounting to over $100 million in construction costs and called for reimbursement of resale entities because these projects were commissary surcharge and non-appropriated funded.  Rossetti reviewed the state of play on legislation moving through the Congress and regulations being considered by the Administration that will affect resale programs including Uyghur forced labor report and sanction, food labeling, diversity training, Section 889 implementation, and the Cybersecurity Maturity Model Certification compliance requirements.  

Rossetti warned of continued pressure to reduce commissary appropriations and the need for continued vigilance.  He also cited the consolidation efforts and the need for continued validation of the cost savings and expense associated with this effort. 

He pointed to language in the defense bills encouraging DoD to keep commissaries open and the inclusion of funding mechanisms to bridge the commissary funding gap between any Government closure to ensure the stores stay open.  

Rossetti cited the ALA membership for their active involvement including the outgoing Chairman Bill Doyle (EURPAC) and he incoming Chairman Michael Sleighter (Advantage Sales) along with the dedication and hard work of the ALA Commissary and Exchange Councils.   

Congressman Rob Wittman to be recognized by ALA with the Distinguished Service Award on Day 2 of the ALA’s Annual Convention. In prepared remarks, Steve Rosetti, President of the ALA will say: “Congressman Wittman has served Virginia’s 1st District since 2007.  He is the Ranking Member of the Sea power and Projection Forces Subcommittee, House Armed Services Committee.  As the ranking Republican on the subcommittee, Congressman Wittman works tirelessly to support a defense and the vital role that our forces play in protecting our commerce sea lanes and projecting U.S. military power in the defense of Freedom.   The Tidewater region includes a vast military Seapower presence and shipbuilding  industry.  Congressman Wittman recognizes this contribution and provides a steady and strong voice in representing United States Maritime interests in the United States Congress. 

 Congressman Wittman has been a consistent supporter for a strong defense and for military quality of life programs including the commissary and exchange programs.  Virginia is the center of gravity and a powerful commerce engine for military resale programs with four of the six resale headquarters located in the state and hundreds of companies serving military resale with their thousands of employees and hundreds of millions of dollars in commerce.  He has led the way in preserving these benefits and in creating and preserving jobs in his district, in Virginia and in the Nation.   Virginia is the chief transit point for moving products and services to commissaries and exchanges on the East Coast and to far flung areas of Europe and the Middle East.  Most recently, he has promoted hundreds of millions of dollars in relief for military resale programs that have been stressed during the pandemic.  I quote from a letter he sent to the Secretary of Defense in May of this year:  

“…as nonappropriated fund instrumentalities of the United States government, these operations are not able to take advantage of the aid programs made available to American businesses by the Congress, Treasury or Federal Reserve.  We can’t afford to have these programs fall through the cracks due to their unique nature and status.  

The exchanges are facing extraordinary costs for personal protective gear and added costs for operating safely in the pandemic.  Further, the exchanges face major re-opening costs when the pandemic subsides, and these costs will further exacerbate an already disastrous financial condition.  

The list is long, and the effects are cascading across the supply chain that supports the exchanges as vendors face curtailment of orders, backed-up inventories, and severe business interruption.   Already there are reports that the exchanges are seeking extended forbearance terms from suppliers to aid the exchanges in their cash flow.  These businesses that support the exchanges should be given the same financial consideration as businesses in the Department of Defense that supply weapons systems and other essential defense needs.”

 “funding should be made available to compensate these suppliers in order to help them weather the pandemic and continue to get vital food products to military bases.  We urge the Department of Defense to make available the funding from resources made available from Congress to the Department to provide a mechanism for needed financial infusion to these programs in order to optimize this critical supply channel.”

 Congressman Wittman led the way on including language in the Defense Bill to provide a path for keeping commissaries open during budget impasse-driven government shutdowns.   He has always been there for this system and for our military people. “

Defense guidance is expected on President’s Executive Order on diversity training.  DoD officials say that they are working on guidance to implement a recent Presidential Executive Order on diversity training.  The officials say the guidance will describe how Government contractors must comply.  Stay tuned.   

What’s going on here?  In April, the Food Industry Association and the International Foodservice Distributors Association (IFDA) formed an ad-hoc partnership in response to rising shopper needs amid the coronavirus pandemic. The program connects foodservice distributors that have excess capacity in the areas of products, transportation services and warehousing services with food retailers and wholesalers in need of additional resources to meet grocery stores’ surging demand.  Last week, Longtime Target supply chain executive Bill Hancock has joined US Foods Holdings Corp. as EVP and chief supply chain officer to help the foodservice distributor execute its “Great Food. Made Easy,” strategy.  Hancock joins the $26 billion company at a time when its core foodservice customers have been hit hard by the pandemic and ceded market share to food retailers. Hancock will oversee all warehousing, transportation, supply chain strategy and operations, safety, labor relations and continuous improvement at US Foods and report to chairman and CEO Pietro Satriano.

In April, US Foods paid $970 million to acquire 70 small format cash and carry stores that Smart & Final operated under the banner of Smart Foodservice Warehouse. The stores, located in California, Washington, Oregon, Idaho, Nevada, Utah and Montana, serve small and mid-sized restaurants and other food business customers and offer about 8,000 items.  More recently, US Foods launched US Foods Ghost Kitchens to help its customers establish and operate facilities dedicated to off-premise dining. A recent National Restaurant Association survey found that 75% of restaurant operators consider off-premise dining their best growth opportunity.  “The Ghost Kitchens program was developed in response to growing interest among our customers, but we’ve also been tracking the trend, and ghost kitchens are projected to reach a $1 trillion global market by 2030, making them an attractive concept for operators even after dine-in restrictions are lifted,” Jim Osborne, US Foods SVP of customer strategy and innovation said when the program was launched in August.  The moves could help US Foods rebound from the devastating effects COVID-19 has had on the foodservice industry. Those effects were evident when the company reported second quarter results which saw sales decline 29.2% to $4.6 billion.

As military resale programs look to more curbside and BOPIS options, the commercial grocery industry has added a new twist to customer pickup.  Albertsons Cos. is adding PickUp lockers to its e-commerce arsenal in select Chicago Jewel-Osco and Bay Area Safeway stores.  The Boise, Idaho-based company is testing lockers as the newest easy fulfillment option for e-commerce shoppers. Albertsons already offers in-house Delivery and Drive Up & Go options through its websites and apps and has partnerships with third-party operators to provide fast delivery options.  Albertsons, reported a 276% increase in digital sales in its first fiscal quarter and continues to add Drive Up & Go stores throughout the country, said that it’s looking at all of the ways that it can make customers’ lives – and their grocery shopping – easier.  “Contactless PickUp through our state-of-the-art, temperature-controlled lockers makes it even easier to shop with us,” said Chris Rupp, EVP and chief customer and digital officer. “Whether customers choose to shop in our familiar neighborhood stores or through our websites and apps, we are ready to provide them with extraordinary service where and how they want to get their groceries. Our strategy to leverage technology and innovation to continue to grow our digital business is focused on creating products customers love that truly make their lives easier.”  Delivered by Bell and Howell, the lockers are modular, temperature-controlled, and suitable for both indoor and outdoor environments. Individual columns in the modular setup can be adjusted dynamically to ensure specific temperatures required to meet the wide needs of a variety of customers’ online orders are maintained.

Said Larry Blue, CEO of Wheeling, Illinois-based Bell and Howell. “With our temperature-controlled grocery lockers, Albertsons Cos. customers can quickly and conveniently pick up their entire order, from heated to frozen food items, whenever and wherever they want.” 

The lockers will first be available in select Jewel-Osco locations in Chicago and are expected to be installed at select Safeway locations in the Bay Area later in the year. Customers who live in neighborhoods with stores that feature the lockers will notice a new “PickUp” option when they shop on the store’s website or app. 

Customers who select the PickUp option will be asked to select a time window to pick up their groceries. Once customers complete their purchase, they receive a unique code that they will use to quickly pick up their order from the self-serve lockers.  Albertsons operates 2,252 retail stores with 1,726 pharmacies, 402 associated fuel centers, 23 dedicated distribution centers and 20 manufacturing facilities. The company’s stores predominantly operate under the banners Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw’s, Star Market, United Supermarkets, Market Street and Haggen.

 Kellogg Brown & Root Services Inc., Houston, Texas, has been awarded a ceiling $974,000,000 indefinite-delivery/indefinite-quantity contract for U.S. Air Forces in Europe – Air Forces Africa (USAFE-AFAFRICA) base operating support. This contract provides day-to-day base operations and maintenance services throughout locations within USAFE-AFAFRICA. Work will be performed at Morón Air Base (AB), Spain; Incirlik AB, Turkey; Izmir Air Station, Turkey; Office of Defense Cooperation-Turkey; and Ankara Support Facility, Turkey, and is expected to be completed by Aug. 27, 2028. This award is the result of a competitive acquisition and three offers were received. Fiscal 2020 operations and maintenance funds in the amount of $10,000,000 will be obligated via the first two task orders, which will be awarded immediately after the basic contract. Air Force Installation Contracting Command, Ramstein AB, Germany, is the contracting activity (FA5641-20-D-0009).

The Army & Air Force Exchange Service surprised 52 military families this week with news that their layaway balances had been paid in full by the nonprofit Pay Away the Layaway.  Families from Joint Base San Antonio-Lackland Air Force Base; Maxwell Air Force Base; and Forts Hood, Campbell, Bragg and Lewis were asked to join one of three Zoom calls held Oct. 13, 14 and 15. Told to expect a “special surprise,” they didn’t know their layaway balances—totaling $10,000 in back-to-school purchases—were going to be paid off until the call’s big reveal.  “With all the stress and uncertainty military families have experienced this year, we wanted to give these lucky military families something special,” said Air Force Chief Master Sgt. Kevin Osby, Exchange senior enlisted advisor. “It was truly heartwarming to see the faces of these hardworking and patriotic families when they received the news.”  The Department of Defense’s largest retailer, the Exchange has partnered with Pay Away the Layaway for four consecutive years to pay off military shoppers’ layaway plans.

ALA’s Commissary Council Chairman Sizemore: Collaboration ramping up between industry and DeCA.  ALA’s Larry Lapka reports that the COVID-19 pandemic has greatly impacted every sector in our society, and much like civilian grocers, Defense Commissary Agency (DeCA) stores have not been immune to this scourge, but the mission remains the same: to bring a top assortment of grocery items to all eligible shoppers in the military sector at the best prices.

Alex Sizemore, senior director of marketing, EURPAC Marketing Retail and Logistics Group and chairman, American Logistics Association (ALA) Commissary Council, noted that the council is steadfast in its focus on continuing to build the business and strengthen the benefit.  Working with DeCA and other agency partners, this goal will be met through teamwork and collaboration.

The ALA Commissary Council has a number of business-building initiatives with its DeCA partners. Briefly describe a few of these initiatives.

Alex Sizemore: One of the most exciting initiatives is the joint business planning sessions recently conducted with industry. The sessions allowed DeCA category managers to present their strategies and tactics within key categories for the next fiscal year. The sessions provided industry an opportunity to gain insight, engage in question/answer and understand the category manager’s “go-to-market” strategy.

As a result of the open dialogue, suppliers have an opportunity to reassess their brand plans based on key insights and feedback provided by the category mangers.

Other noteworthy action items to come out of the session are DeCA’s desire to take advantage of “deals of the week,” cross-merchandising opportunities, theme events, need to get innovation to the shelf, appropriate patron savings levels and optimizing their assortment. DeCA and industry will be tackling these together in order to aggressively drive sales.

Can you speak a little bit further about some of these things? Why are they needed, what the goals are?

Sizemore: The goal is, of course, to drive sales. And it is to engage the patron, not only the current patron, but also the patron who may not be visiting DeCA right now.

We understand there are active duty, retirees and disabled veterans not using the benefit. They may not fully recognize or realize the commissary offers them savings on groceries, and we are attempting to educate our community of shoppers on this vital point.

We are employing vehicles to assist us, such as media outlets like magazines or base web sites, VA hospitals or billboards, to raise awareness about the savings. Again, it’s all about creating mindshare with the patron.

We know there is a fair percentage of our customer base not fully realized; our efforts remain focused on how we attract those patrons into their respective commissary.

You’ve got to make visiting the commissary an experience! Patrons drive by many competitive retailers en-route to their commissary. We are challenged with generating excitement and making the commissary a true destination … social media and eCommerce will help with messaging and expanding our reach moving forward.

Because of COVID-19, there has been a big surge in the use of social media and eCommerce, because people aren’t getting out as much, so how do you engage in that, making the patrons aware of what is happening at the commissaries, making these stores a “must-stop shop” for them on their grocery list?

How do you do that in this type of environment? Some installations have been forced to limit access to various patrons, in particular older ones, who cannot even get on base due to different protocols. How do you spread the word about the value of the commissaries in this type of situation?

Sizemore: A number of bases have started to ease restrictions, especially in the CONUS area. Part of it is getting the information out, and posting it on the base web sites, letting customers know to go to the base web site to see what the access restrictions are on the base.

My father is a retired Marine, and he is not a big social media person. But if he is going to come down to Fort Lee, he needs to get to the web site to see what the restrictions are.

If there is a way to tapping into those base web sites, and putting information out about the commissary, that would be a way of getting them to know about it.

My dad is a big reader of the Navy Times and the Marine Corps Times, so how do we engage him, someone who is his age, who still reads those magazines, and as an industry, how do we tap into that type of media to communicate to him?

You have people on the younger end, people who are new to the military, and then on the other end, you have retirees and older people … do you tap into the same things? You do have older people who will go on the Internet, but there are others in this age group who probably have not been on the Internet in their entire life. But then you have younger people who have grown up with the Internet as part of their lives, and they are very in tune with the Internet and surfing the web. Are there different strategies to use for both ends of the spectrum, and on top of that, you have everyone in the middle …?

Sizemore: I think it is the same message, I just think it is different media that you have to engage in. I don’t think that the strategy is different, the strategy is always going to be about the commissaries being the place to save money, the commissaries are part of the base community.

It is more about how you get that message to the different generations. You have your 18 to 35-year old’s who are social media savvy, who have never known a time without social media and the Internet. They are the ones you can engage that way. Then you have the 40 to 76-year old’s, that is where my father falls in, who knew a time without social media and without the Internet who might still rely on some things, the newspaper …

My dad is not on social media at all, but he does get emails from the Navy Times or the Marine Corps Times, he reads those types of trade magazines on the computer, but he does not go to the social media sites.

It’s about taking the message, the same message, across all different platforms, and getting it out to them so that patrons can understand that “the commissaries present a value, here is why you should come to the commissary, and here are the savings being offered.”

Is there a message beyond the fact that the commissary should be their go-to place to get value and savings and to get what they want? Any shopper who goes to a supermarket or a commissary is looking for items that they want, and if they don’t find them there, they will go elsewhere. How do you get that across that the commissary is the place where they won’t be disappointed, that they will be able to find what they want?

Sizemore: That is one of the things that we talked about in the joint business planning. DeCA wants to be the first to market with innovation, so again, that is up to industry and the council and DeCA to put that information out there: “Here’s the latest new item, here’s what’s available.”

Again, it’s communicating using those different platforms to say, “This week, here’s what’s happening, here is what’s available, here’s your Halloween candy if you are looking for Halloween candy” … “Here is what we have available at the commissary,” or “Here is your holiday turkey, here is what is available.”

It’s about getting the word out to the consumer through those different platforms and having them know what is available in the commissary.

 We are coming up to a big time of year, with the holidays such as Thanksgiving and the end-of-the-year holidays, including Christmas. How are these initiatives going to be focused on those special periods?

Sizemore: Right now, DeCA is doing a contest for Halloween, where kids are being asked to submit their picture in their costume, and they are giving away a turkey at every store.

It’s about getting the information out to the patrons, it’s about having those in-store demos, talking about the products in the stores, having the big displays in the stores … you go to Fort Lee, and there is Halloween candy at the queuing line, so it’s about getting all that product out to stores in displays, showing that we have it, we are here for you and are ready to meet your needs for what you need for the holidays.

Looking at the remainder of calendar year 2020 into calendar year 2021, do you have any business-building programs or initiatives that you are looking to implement going forward that you could speak about?

I think one of the biggest initiatives that we’re getting ready to embark on, it is big with the council and with DeCA too, is “how do we engage the patron?”

We started another committee within the commissary council, and the whole purpose of that committee is to devise ways to engage the patron … how do we involve industry, the third-party media companies and DeCA, how do we get everybody involved to reach out and get that message across?

I think that, industry-wise, that is one of the biggest initiatives that we have … getting that message out to them so that we can get the patrons back into the building.

I think that the biggest opportunity is creating initiatives to engage the patron to see what the commissaries have to offer.

Have you had to kind of shift gears in mid-stream because of the coronavirus? It has had a tremendous impact on everything that we do, and it has had a tremendous impact on everything related to the commissaries and their partners and what the council does. Have you had to make any major shifts in focus or theme related to the pandemic?

Sizemore: I think the biggest focus across industry would be getting product to the commissaries. As the demand for product has outpaced supply, that has been the one big focus, where you really haven’t had an issue before. There had always been product availability, so it hasn’t been a big issue, but overall, it’s about meeting the demand that is out there.

The demand is still high. We are still having issues; suppliers are still having issues meeting the demand. And I don’t think it is going to end any time soon.

The entire focus of the council is spearheaded by teamwork between different factions of the industry, the agency, its various partners, the American Logistics Association, and others. Can you tell us how teamwork propels all of this going forward?

Sizemore: That is the critical part of it, that DeCA, the council and industry are working together to meet patrons’ needs. It is about teamwork. We can’t do it without DeCA and DeCA can’t do it without industry.

How can we supplement them, and how can they help us? It is teamwork, and that is propelled by collaboration. It is through having some open conversations and honest conversations on either the issues or the opportunities that we can bring to the plate.

How can all factions make the benefit stronger?

Sizemore: DeCA has been very collaborative over the past two-and-a-half years with the council. Industry and DeCA need to continue that collaboration and find ways to get past the hurdles.

Remember, we are here to serve the best patrons in the world, and that is what everyone has to keep in mind. The council needs to focus on finding solutions.

I tell people that one of the biggest things is that it is easy to complain and gripe; it’s harder to find the solutions and to work together.

Let’s not complain and gripe, let’s find the solutions together and work together.

It was always that patrons wanted the product, they wanted it when they wanted it, they wanted it to be there when they were looking for it, and if they didn’t find it, that is the biggest complaint. Why should they go to the commissary if they cannot find what they want? Have you heard from patrons at all? What do they say to you? What is on their mind?

Sizemore: Based on what my father has told me, he is concerned about the commissary remaining viable. That is one of the main things for him, that it stays viable, it’s a place where he can come and shop, and it is offering him the savings that he is used to.

I get a lot of cues and feedback from him. He is very vocal on a few things, when things aren’t working right or broken.

I would agree with the product being there when they want it. If you are a retiree or a disabled veteran, you are driving to come to the commissary, you are going to drive by other grocery stores, you are going to drive by Walmart, so you do not want them to get there and not have the product and they have wasted their time.

 So, it is critical, and it something that patrons will mention and complain about. If the product is not there, they will say they could have gone to the grocery store down the street.

Availability during the pandemic was spotty at times. The commissaries are like civilian supermarkets. They are doing as good as they can do to serve their patrons.

Sizemore: And that comes with collaboration from industry, that the commissary is a vital necessity for patrons, this is something that they count on.

That is why they call it the benefit.

 DeCA Commissary Leaders Recognized As ‘Top Women in Grocery’ by Progressive Grocer.  Two Defense Commissary Agency (DeCA) store leaders were recognized as “Top Women in Grocery” for 2020 by Progressive Grocer.Meralie Ervin, store director at MCB Quantico, Va., and Melquiadeth Supinger, assistant store director at Spangdahlem AB, Germany, were cited for excellence by the online and print magazine, which reports on grocery and supermarket industry news. DeCA’s winners were recognized in the June print issue of the magazine, as well as on progressivegrocer.com.  “I want to extend my congratulations to Meralie and Melquiadeth,” said DeCA Director/Chief Executive Officer (CEO) William Moore. “It’s quite a prestigious honor for them and for DeCA. It shows their hard work and achievements are noticed, appreciated and valued by their peers in the grocery business.”

NCTRF Begins Study of 3D Knitted Face Coverings.  The Navy Clothing and Textile Research Facility (NCTRF) announced the commencement of a study and evaluation of 3D-knitted face coverings.   NCTRF is a business line of the Navy Exchange Service Command (NEXCOM), whose parent command is the Naval Supply Systems Command (NAVSUP). As such, in March 2020, NAVSUP directed NCTRF to pivot their 3D-knitting research from flight deck jerseys to personal protective face coverings to prevent the spread of COVID-19.  “At the onset of COVID-19, when the Honorable James Geurts [assistant secretary of the Navy, (Research, Acquisition and Development)] asked to pull together ideas to respond to COVID-19 and support the defense industrial base, the Navy’s Small Business Innovative Research (SBIR)/Small Business Technology Transfer (STTR) team rose to the challenge,” said Brian Shipley, Commercialization program manager, Department of the Navy’s SBIR/STTR Program Office.   “This effort was quickly determined to be a way to pivot an existing SBIR Phase II project to support COVID-related efforts to assemble a solution using technology already in development in our SBIR Program,” Shipley explained.

 “The utilization of 3D-knitting technology has proven to provide a more streamlined and efficient approach to producing an item,” said Laura Winters, director of NCTRF. “Our continued work with small businesses and new technologies like 3D knitting will continue to move technology forward and greatly benefit our Navy’s warfighters.”   NEXCOM said that seamless 3D-knit technology enables rapid prototyping, short lead times and sustainable production of textile products.

 Using the standards of the N95 mask as a baseline, NCTRF developed the laboratory evaluation protocol for these non-medical face coverings. The yarns used to construct the 3D-knitted face coverings are evaluated for comfort and filtration efficiency and the designs are assessed for durability.

 A wear test was conducted over the summer, and included a broad range of participants within NAVSUP, NEXCOM and Naval Sea Systems Command (NAVSEA).

 Using data collected during the wear test of the initial prototypes, a second face covering prototype was developed with design and performance improvements.

 The wear test of the second prototype is scheduled to occur this fall, and the full evaluation of the second prototype is expected to conclude by the end of 2020. Anticipated commercialization is expected in 2021.

 “Assembling a team. and collaborating on solving a problem by identifying a technological solution, has served as a great example of our ‘Team of Teams’ approach to innovation at NAVSUP,” said Karl Larson, command science advisor and Innovation program manager, NAVSUP. 

 NEXCOM said that NCTRF will continue to pursue new technologies and present new solutions to meet the requirements of Sailors within variable Navy environments.

 Defense looking to ramp up its small business contracts for the Federal response to COVID.  Over recent months, the Defense Logistics Agency has awarded hundreds of millions of dollars in contracts for the federal response to the COVID pandemic, but that’s not necessarily benefitting the Defense Department’s usual vendors.   In fact, the Pentagon contracting arm is seeing fewer small businesses in its traditional supplier base competing for contracts in the wake of the coronavirus pandemic, the director of the DLA’s Office of Small Business Programs, Dwight Deneal, said Tuesday.  “Our percentages [of small business involvement] are as high as they’ve ever been over the past five years, but we are recognizing that the participation level from our supplier base’s standpoint has steadily declined,” Deneal said at a small business panel at the Association of the U.S. Army’s annual meeting, which was being conducted virtually.  “So [the DLA is] looking at the gaps in there and how do we strategically attack those areas where some of our suppliers are just not participating in or winning some DLA contracts,” Deneal said, adding that the agency plans to roll out a new virtual outreach effort next month to reengage its small suppliers.

Schedule for Day 2 of the ALA Annual Convention, 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.-10:20 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. 

10:20 a.m. to 10:25 a.m.—Mr. Michael Sleighter (Advantage Sales Inc.) and ALA’s Chairman of the Board will discuss the agenda for the Association in 2021.  

 10:25 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.

11:15 a.m.11:20 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.

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: Scott Poteet Director of Marketing, 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. Marc Childs and Mr. Mark Baum, consumer products industry experts will discuss the outlook for the CPG 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; Shane McCarthy, Sandboxx; Mark Igo, MyMilitarySavings.com; 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”.

Pentagon News/Military News

INDUSTRY NEWS 

Pandemic doesn’t scare off Spirit Halloween  


Full Story:
The New York Times (tiered subscription model) (10/12)   Seasonal retailer Spirit Halloween opened more than 1,400 locations around the US this year, with a mission to provide pandemic-weary consumers with an escape outlet, CEO Steven Silverstein said. The retailer, which generates about 90% of its sales between Labor Day and Halloween, is encouraging consumers to enjoy socially distanced activities including contactless trick-or-treating.
 

C-store Industry Fuel Sales Continue to Lag With COVID-19 Disrupting Commuting Patterns

NACS research finds that 61 percent of c-store retailers expect fuel sales to be down the remainder of the year.

 

RESALE NEWS:

Approval expected soon for DoD civilians to shop in military exchanges

Berry Patrick, who works in the DoD Office of Morale, Welfare and Recreation and Nonappropriated Fund Policy, during a virtual conference o…

Commissaries offer special pricing on specific products during October

Vietnam War-era air base terminal gets $25 million makeover in Tokyo

customs facility, distinguished visitor and business lounges, an Army and Air Force Exchange Service eatery, car rental counter, vending

Exchange Director/CEO Recognized For Supporting Military Readiness, Recruiting, Retention and Resiliency

DALLAS – Army & Air Force Exchange Service Director/CEO Tom Shull received the Department of Defense Distinguished Service Award …

Navy Exchange Service Command announces NEX holiday return policy

NORFOLK, Va. – Navy Exchange (NEX) customers can make post-holiday returns at any location worldwide through Jan. 23, 2021. This …

Mark your Calendar

Date                                               Event                                              More Information

. 20 and Oct. 22 ALA National (Virtual) Convention

 

Pending Coordination                 NEX-MCX Virtual Update                           TBD

Pending Coordination                  AAFES-Industry Virtual Work Shop’s         Consumables TBD

American Logistics Association

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