Presidents Message/Washington Update 9/24

Quotes of note

Our third line of effort drives us to reform the Department for greater performance and effectively manage our Fourth estate, which includes organizations such as the Defense Logistics Agency, Defense Health Agency, and the Missile Defense Agency.  In doing so, we are redirecting our time, money, and manpower to our highest priorities while maximizing the use of every taxpayer’s dollar. We have made great progress on this front with our Defense-Wide Review, where we identified $5.7 billion in defense reforms and efficiencies across the Fourth estate last year, and we are on track to identify billions more this year.  We have also directed our Military Services to conduct clean-sheet reviews to identify savings and efficiencies, as well as to develop their plans for reform to the NDS.  Our Combatant Commands are going through a similar review to consolidate and reduce legacy requirements in order to optimize our operational footprint.  Secretary of Defense Mark Esper speaking to Rand Corporation September 15, 2020.  DeCA is part of this review and funding for the agency is being scrutinized.  The review also includes the Community Reform Task Force that is examining consolidation of resale programs including commissaries and exchanges.

Right now, and this may sound odd, our focus is less on sales and more on getting the experience RIGHT.  Our overall retail sales are up over the last three months and while we are seeing our customers visit us less, they are buying more when they shop. In our most recent brand health study, with over 12,000 participants, all of our metrics went up – Satisfaction, Connection to the Military, Value Offered.  Our Foresee Satisfaction scores on a 12-month rolling basis are up both in our physical stores and online. So, we know what we are doing is resonating. That gives us the ability to focus on getting the Drive/Up, and eventually BOPIP, experience right because we know the sales will follow.  Rich Honiball, NEXCOM Executive Vice President, Global Merchandising & Marketing Officer commenting in an upcoming piece by ALA business correspondent Larry Lapka on curbside service and delivery.

Candidates Trump and Biden on military quality-of-life programs. 

Trump: It isn’t only those in uniform who serve our great country but their families too. A heavy burden is placed on our military families and their unwavering dedication and support strengthens our entire nation. Military spouses help carry families through frequent moves and long deployments. They uplift communities, care for fellow military families, and sustain servicemembers through their most difficult battles. One of the great challenges for military spouses is to find a meaningful job as they move in support of their active-duty spouse. We want military spouses to be able to pursue their careers and help their families thrive. All too often military families who are ordered to move across state lines lose the chance for the civilian spouse to practice their chosen profession and have to go through costly and time intensive re-licensing. This administration is committed to continuing to fight for military spouse license portability.

 

Additionally, the Department of Defense is committed to ensuring privatized housing tenants receive quality housing and fair treatment from the Military Housing Privatization Initiative project owners that operate and maintain privatized housing. The tenant bill of rights for military families signed earlier this year helps protect our military families and is much needed progress in the right direction.

 

Finally, the most recent National Defense Authorization Act improves education, childcare, and private housing for military families, and it ends the so-called “widow’s tax,” which blocked benefits for families of fallen heroes. It also included the largest pay raise for the military in more than 10 years.

 

Our nation is eternally grateful to our military, military families, and veterans. I will continue to serve them as they have served for us.

 

Biden: Family readiness is a national security imperative. The care for this community cannot be taken for granted. My administration will treat military families as the priority that they are by: ensuring that we pay servicemembers a competitive wage; creating and promoting programming to increase economic opportunity and career advancement for military spouses; providing resources for military families, caregivers, and survivors; prioritizing support for military-connected children; and relaunching Joining Forces, the initiative started by former First Lady Michelle Obama and Dr. [Jill] Biden during the Obama-Biden administration. The Bidens are a military family, and we know that military families serve, too. After two decades of sustained warfare it is our duty to ensure that military families have the necessary support to thrive.

Government shutdown update.  Last week we reported there was a 20 percent chance of a Federal government shutdown.  The end of the fiscal year is getting close and that 20 percent is in play.  The House of Representatives will vote on the bill as early as today.  It will pass.  Then the Senate has to take up the Continuing Resolution.  The House Speaker, Nancy Pelosi is objecting to White House proposed funding for farmers.  Republicans are blaming Pelosi for backing out the agreement and Democrats are claiming they never had a deal in the first place.  Senate Majority leader Mitch McConnell is critical of the House bill.  The Senate will vote on an amended version of the House bill as early as this week.  Then more sand in the gears as some House progressives are saying that the Government funding should be used as a card in the plans to replace nominate and confirm a new Supreme Court justice.

Experience dictates that one of two things happens when we get to this stage.  They either agree and pass a CR that takes them past the election, or they can’t agree and pass very short term (one- or two-day extensions) while they hammer out the compromise to keep Government open until after the election.   We still think it’s unlikely the Government will close this year.

We’ll keep you posted.

The House version of the CR is very good news for the Veterans Canteen Service.  I reported last week that the Veterans Canteen Service was on the on the ropes due to pandemic pain.  They desperately need a lifeline.   The House version of the Continuing Resolution provides that lifeline.  The House bill says:  “The Secretary of Veterans Affairs may transfer up to $140,000,000 (From the Coronavirus Aid, Relief, and Economic Security Act) ….to the Canteen Service Revolving Fund of the Department to prevent, prepare for, and respond to coronavirus domestically or internationally.”  We have supported this funding, applaud House appropriations members for including it, and it is critical if VCS is going to avoid furloughing its dedicated workforce.

DeCA and industry collaboration and sales-driven events continue to ramp up with the latest Joint Business Planning sessions.  The DeCA and ALA Joint Business Planning sessions begin today.  Many thanks Tracie Russ, Director of Sales for DeCA and her team—Barbara Merriweather, Rena Dial, Jessica Stables, Darrel Clary, Iveena Henderson, Bridget Bennett and LaRue Smith.  Also, special thanks to the ALA Commissary Council including Alex Sizemore of EURPAC, Stephanie Supplee of Coastal Pacific, Mike Bender of Proctor and Gamble, James Paseur of Tyson Foods and other members of the LA Commissary Council for pulling this event together.  We also are grateful to our event sponsors including:  Coast Pacific Food Distributors, EURPAC, UNFI, Unilever, Kellogg’s, Advantage Military, Bob Evans, Bolthouse Farms, Badia, and CRI Robert Irvine Foods.

ALA’s annual conference coming together.  Mark your calendar for a virtual ALA annual conference.  The event will run over three days.  The general sessions will kick off on October 20 from 10:00 a.m. to 3:00 p.m. EST.  There will be an open day on October 21 and the conference will pick up again on October 22, again from 10:00 a.m. to 3:00 p.m.  Agenda and registration details will be issued soon.  We are planning on a member meeting to conduct Association business from noon to 3:00 p.m. EST on October 19.

AAFES and ALA sessions shaping up.  AAFES President and Chief Management Officer Ana Middleton and her team and the ALA are launching a series of events to build on the successful AAFES and ALA session that was held on August 25, where Ms. Middleton announced the follow-n sessions.  It’s all part of a reinvigorated partnership between ALA and AAFES to increase collaboration toward powering sales that is being orchestrated by the ALA Exchange Council led by Michele Forman of Advantage Military.  Details of the sessions are being worked out but six are in the works:  ALA Members will be invited (invitation only) to six virtual workshops currently in planning phase as follows:

  • Hardlines Vice President Chris Burton-Collaborative discussion on but not limited to market share ideas/ ways to optimize military business
  • Consumables Vice President Eric Sidman- C-Store programs: Food/Beer/Wine/roller grill and other self-serve food programs in place in Express and other retail stores: Grab &Go/Beer &Wine/Roller Grill/other self-serve food items sold in Express and other stores. Looking for open dialogue and brainstorming post Covid limited to 20 vendors! Industry will lead session
  • Planning, Allocation and Replenishment Vice President Eric Boen: This session is back due to popular demand from our last session-Business Operations/driving growth and partnership.
  • eCommerce Drop Ship Vendors and other online services- If you are a small drop ship provider or other service vendor and want to participate in the online program this is your session!
  • New Members pathway- Shark Tank format, new members and potential new members may present their products to the Exchange buying group for consideration. If you ever wanted to sell to the exchange a service or product this is your opportunity to present to the commodity buyer
  • Product Information (PID) capability tool workshop (ongoing).

Look for registration details and register early as session attendance will be limited to enhance interaction.  Send your ideas for programs to bellis@ala-national.org.

Communicating the benefit and store and base access to resale patrons.  Last week, we announced a renewed effort to galvanize media partners to ramp up communications to patrons on store and base access limitations associated with the pandemic.  The effort is gathering enthusiastic support from all ALA media members including MyMilitarySavings, Military Media, Inc., MaxiSaver Group.  ALA will also be working with the recently launched AAFES Digital Garrison app to get the word out to patrons that resale is open for business and safe to shop.

DeCA Power DAX and Emerald deployment scheduled updated.  An update to the deployment of DeCA’s Power DAX store ordering system has been released by the ALA Industry EBS Transition leads Lauren Elkin, MR Logistics and Michael Easter of Spartan Nash.  In clouds the DeCA Emerald Schedule for FY 2020 and the DAX schedule for 2021.  Contact Lauren — lauren@mrlogistics.com or Micheal — michael.easter@spartannash.com for details.  The Association is very grateful to Mr. Elkin and Mr. Easter for their efforts to keep ALA members abreast of the latest developments in the deployment of DeCA’s electronic business systems.

Fed Mall open for pandemic PPE purchases.  Since February, ALA has been working with the Industrial Policy Group of the Department of Defense on a host of pandemic issues.  One issue is the availability of personal protective equipment and access to this equipment via the DLA’s Fed Mall.  Equipment includes non-medial face masks, non-medical gloves, hand sanitizer, and disinfecting wipes.  Resale companies needing PPE should go to www.fedmall.mil.

Retailers and Christmas.  Retailers pummeled by the coronavirus pandemic have already been making decisions about inventory, staffing and how best to connect with customers skittish about visiting crowded stores during a pandemic. The result will be a 2020 season that is transformed in fundamental ways — and unlikely to make up for the severe drops in revenue caused by the shutdowns.

Rather than enticing shoppers into stores with holiday sales events, retailers

like Walmart and Target recently said they would try to temper the crowds by closing on Thanksgiving Day and putting their best deals online earlier than usual. Instead of conversing with browsing shoppers, many store workers will be spending their time handing off purchases to people who pull up to the curb in their car.

As special as the holiday season feels to shoppers, it is crucial for stores. Holiday sales in November and December can bring in 20 percent of a retailer’s annual revenue, and 30 percent of sales for hobby, toy and game stores, while driving tremendous profitability, according to the National Retail Federation. The most recent annual report for Macy’s, which also owns Bloomingdale’s, showed that the fourth quarter accounted for 34 percent of its sales.

“What we’re really preparing for is probably the greatest e-commerce penetration within a holiday season that we’ve ever seen, and probably the largest year-over-year growth in online shopping,” said Michelle Cordeiro Grant, chief executive of Lively, an intimates and loungewear brand that mostly sells online.  On the other hand, more expensive items, like jewelry or higher end electronics, could see a boost in sales. People who haven’t lost their jobs may use the holidays as an opportunity to buy an extra special gift for themselves or their family members.

“Because some people are not spending on eating out and going to the theater and traveling, they actually have extra money to buy an aspirational product, which helps luxury and higher-end products,” said Marie Driscoll, managing director of luxury and fashion at the research firm Coresight Research.

FedEx said Thursday that it plans to hire 70,000 U.S. workers to prepare for the upcoming holiday season. That’s a 27 percent increase from last year, when the company brought on 55,000 workers to prepare for the holidays.

The announcement comes in anticipation of a holiday season in which many consumers will be housebound and reliant on online shopping — and package delivery — to buy gifts. Major retailers have already started shifting their plans to focus on e-commerce rather than in-store holiday sales events. Walmart and Target have recently announced that they will reduce crowds by closing their doors on Thanksgiving Day and putting their best deals online earlier than usual.  FedEx also announced plans to expand year-round Sunday residential coverage for its FedEx Ground service to nearly 95 percent of the U.S. population, effective September 13.  “These strategic investments will help better support what is expected to be an unprecedented holiday shipping season,” Raj Subramaniam, FedEx’s president and chief operating officer, said in a statement.

ALA is aware of and acting on the pandemic-caused patron base and store access problem.  Base commanders and local exchange and commissary officials are imposing restrictions on access.  And, it’s affecting sales because many consumers don’t know from day-to-day what the restrictions are, and many don’t bother coming at all and opt for local stores off base that they know they can get to.

Base and store restrictions are changing along with the infection rates being experienced locally.  They range from not allowing retirees on base at all, impeding or stopping access on certain days to retirees, to limiting base access to essential workers to barring eligible veteran shoppers.  At the store level, the resale agencies are imposing restrictions on operating hours. specifying days for shopping to limiting the number of people that can be in their facilities.

The problem comes when customers don’t know if they can get on base and, once they do get on base, whether they are going to be allowed in the stores.  It’s frustrating for customers to get to the gate and find out they can’t get on base that day.  Or, when they get to the store, they find out there are more restrictions.  So, many don’t bother coming at all.   That’s hurting sales at many exchange and commissary locations with DeCA reporting for the first time that active duty sales exceed other patron sales.  And, after two months of sales leaps (March and April) DeCA sales are getting clobbered by the base restrictions.  Of course, the good news is that the stores are open and there have been limited closures due to COVID infections.  That’s due to the extreme COVID prevention measures being taken by military retailers and assisted by the “mission essential” designation for commissaries that was issued by DoD in the Spring which ALA supported.

Keeping stores open and stocked is no accident.  It is the result of extraordinary efforts by ALA and its member companies up and down the supply chain including highly sensitive distribution hubs and and CPG manufacturers (particularly meat-packing plants), military sales brokers  to keep their workers safe and disinfect facilities to keep operations open, trucks rolling and shelves stocked, with most CPG companies recognizing the unique and critical requirements of the global military channel and stepping up with product allocations in a scarce commodity environment.  It’s the result of extraordinary efforts by employees and management of the resale agencies to keep exchanges and commissaries open and products moving in a sporadic surge environment.  It’s the result of shelf stocking companies and other in-store support industry workers who showed up and delivered during the pandemic.  Simply put, it’s been a remarkable collaborative and orchestrated team effort; one that kept military families supplied at a time when they faced great fear and uncertainty.  The pandemic tested the strength and resilience of the military resale channel.  Consumers had their needs met and commanders had their family readiness and mission needs fulfilled—world wide and under extraordinarily difficult conditions.

Communication…communication…communication.  The pandemic has complicated everything.  And, when you have situations where employees have to interact with consumers, it adds another dimension and extra level of complication to the shopping equation.  Infection preventive measures are of course critical.  And, once infection preventive measures are in place, communication with employees and consumers is critical to reassure them that the shopping experience is safe.  This is further complicated by base access and in-store restrictions and it is critical that we let shoppers know when they can shop.

There’s not much we can do about what base commanders determine as their need to protect their communities.  And, there’s not much we can do about how local commissaries and exchanges adapt to the changing restrictions and make determinations on the best access practices to protect their employees and customers.

But there is something we can do about informing patrons; And we are.

All of us in the military channel need to up our game on communications.  We are working with ALA member media partners to take the daily information put out by DoD and the resale commands and get that information directly into the hands of military consumers on a timely basis.  We’ll be ramping up the echo chamber by working to push information to and working with our media partners beginning with MyMilitarySavings.com (which has direct contact with millions of military consumers), and others in the print and digital media business in this channel to push information to consumers to let them know the rules and restrictions that are in place at the base gate and at the stores.

ALA gets a daily feed from DeCA that is rolled up from input they get from their stores daily.  We will, in turn, move to use this and other information to update local information to let patrons know the latest on safe stores and base access.

We will be working with the resale agencies and the installation commands within the Army, Navy, Air Force and Marine Corps to leverage their communications vehicles and enhance their media reach to get timely information into the hands of the consumers to let them know shopping is safe and let them know when the stores and bases can be accessed.

Further, we will be reaching out to the Department of Defense to work with them to get information into the hands of the military consumer as soon as possible.  DoD has a vast reservoir of information on every eligible military patron.  It’s housed at the Defense Manpower Data Center and fed daily be the military services.  We’ll be getting together with them to see how we can accelerate consumer contacts through Defense channels in concert with our media members.  We will do this through ALA’s participation in an organization called the Federation for Identity and Cross Credentialing, a coalition of organizations to examine innovate ways to access bases and computer networks.

Many of you have been seeing various HPCON levels at bases.  This is the guide for how stringent base and store access rules are imposed.  DoD has a protocol for dealing with public health emergencies.  HPCON of “Health Protection Condition” is the DoD’s term and it, in turn, provides guidance for base commanders to limit access at the gate and for base store operators to develop store restrictions.  There are five levels:

HPCON Zero (normal)

HPCON Alpha (limited)

HPCON Brav0 (moderate)

HPCON Charlie (substantial)

HPCON Delta (severe)

We’ll be updating you on the progress of the communication efforts and encourage any companies that have communications capabilities to join the effort either by direct contact with ALA Headquarters or through the ALA Commissary and Exchange Councils.

Pentagon News/Military News:

House passes funding patch to avert government shutdown
(Defense News) The House passed a stopgap spending measure on Tuesday to avoid a government shutdown and keep the Department of Defense and other federal agencies operating through Dec. 11.

Retired 3-star McMaster says he never heard Trump insult the military
(Military.com) Former National Security Adviser and retired Army Lt. Gen. H.R. McMaster said Tuesday that he never heard President Donald Trump make insulting remarks about the military and veterans during his 13 months in the White House.

3. Where Trump and Biden stand on foreign policy
(Wall Street Journal) President Trump and Democratic opponent Joe Biden have profound differences in key areas of U.S. foreign policy, but hold similar views about some major goals, including limiting troop deployments to the Middle East and Afghanistan.

Military retirees and families are getting an extension on ID card renewals
(Military.com) Military dependents and retirees now have through the end of June 2021 to access benefits using ID cards that expired this year, thanks to an extension of temporary ID card rules issued in response to the COVID-19 pandemic.

Senators push to extend care to 34,000 more veterans for Agent Orange diseases
(Military.com) Senators have ramped up efforts to add three new diseases to the Department of Veterans Affairs’ list of Agent Orange-related diseases, pressing the House and Senate Armed Services Committees to include them in the final version of the national defense policy bill.

Military personnel, families now may travel to more than half of US military installations worldwide
(Stars & Stripes) More than half of U.S. military installations worldwide have lifted travel restrictions put in place to prevent the spread of the coronavirus, according to the Pentagon.

3 Marine families file lawsuit for ‘slumlord level’ privatized housing at Camp Lejeune
(Marine Corps Times) A new lawsuit from three Marine Corps families claims the privatized landlords at Camp Lejeune, North Carolina, let military family housing fall into squalor to maximize profits.

INDUSTRY NEWS

Amazon Fresh ‘built to outlast’ other grocery retailers

(Amazon looks to reshape the Grocery shopping eexperience)

“At first glance, Amazon Fresh looks a lot like a conventional grocery store: It’s not too small and it’s not too big, it carries all the items found in a full-service grocery store, and its meat, seafood and deli departments offer fresh prepared items, grab-and-go as well as pizza,” he explained. “But a closer look reveals that Amazon Fresh is a digitally integrated grocery store, merchandised for today’s customers, that provides a seamless shopping experience. Its low break-even sales volume means that it can operate profitably in intensely competitive markets.”

Online grocery to more than double market share by 2025

Online grocery will swell to 21.5% of total U.S. grocery sales by 2025, more than doubling its current share of the overall grocery market, a new study by grocery e-commerce specialist Mercatus and research firm Incisiv projects.

Grocery Retailers continue to push on-line shopping:

Southeastern Grocers expands on-demand delivery with Uber partnership 

Lowe’s looks to invest in diverse entrepreneurs 

Lowe’s has launched a pitch contest in partnership with Daymond John of “Shark Tank” that aims to advance diverse small businesses and entrepreneurs. Participating businesses will be able to receive mentoring from John and pitch their products directly to top Lowe’s executives, in the hope of getting their products on the home improvement retailer’s shelves

Report: Retail sales continued to rebound in Aug. 

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(Spencer Platt/Getty Images)

US retail sales grew 0.6% in August from the previous month, marking the fourth consecutive month of growth, according to the Commerce Department. Overall growth slowed from 1.2% in July as some consumers’ additional unemployment benefits ended, but sales of clothing, furniture and electronics rose as families prepared for a back-to-school season that for many meant

RESALE NEWS:

Focusing on family meals: Commissaries help customers save money as they shop for the products to cook more at home

at the Naval Base Norfolk, Virginia, Commissary. The Defense Commissary Agencyhopes military families focus on …

Commissaries honor Air Force’s 73 years of service

supplied by the Army Quartermaster Corps. AFCOMS managed Air Forcecommissaries until the creation of the Defense …

Defense Commissary Agency Privacy Act Program

‘s website. The Defense Commissary Agency will publish any future internal policy implementing the Privacy Act in DeCA …

Military AutoSource Partners With TrueCar To Expand Its Program To The U.S.

of Military AutoSource is authorized by The Exchange (AAFES) and Navy Exchange (NEXCOM) and maintains operations in close to 70 …

Naval Base Guam visitor control center to reopen following thorough facility disinfection

guidelines from the Centers for Disease Control and Prevention and Commander, Navy Installations Command (CNIC). On Wednesday, …

Army & Air Force Exchange Service Celebrates 100th Starbucks Location

-964-6940. Facebook-friendly version: The Army & Air Force Exchange Service’s 100th Starbucks retail licensed store had its grand…

Mark your Calendar

Date                                               Event                                              More Information

Pending Coordination                 NEX-MCX Virtual Update                           TBD

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

October 20,and 22 , 2020                   ALA National (Virtual) Convention           Virtual Event

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