• VIRGINIA BEACH, Va.

The American Logistics Association’s (ALA) Annual Conference & Professional Development Forum, held here at the Marriott Virginia Beach Oceanfront Resort, featured numerous sessions on issues impacting military resale during this in-person event. 

 

Featuring appearances by military resale leaders — including the directors and other top hierarchy of the Defense Commissary Agency (DeCA); the Army & Air Force Exchange Service (AAFES); the Navy Exchange Service Command (NEXCOM); the Marine Corps Exchange (MCX); the Coast Guard Exchange (CGX) and the Veterans Canteen Service (VCS) — as well as other pertinent speakers, the three-day conference highlights issues relevant to military stores and their overall operations both in the United States and on a worldwide basis. 

 

Here are some significant observations that were made during the Tuesday, Nov. 4 session — the nation’s Election Day and the record-tying 35th day of the government shutdown —which was hosted by ALA President Steve Rossetti and ALA Board Chairman Stephanie Supplee, Coastal Pacific Food Distributors.

Presentations, Meeting Recordings & Articles to Available in the Military Commerce Magazine & ALA Members’ Portal

Stephanie Supplee, Coastal Pacific Food Distributors, ALA Board Chairman

On year-to-year change … 

“It is hard to believe what has changed since we all gathered. I truly feel saying that every time, but the next year, it kind of surprises us with more change. 

 

“We often hear the phrase ‘unprecedented times,’ and I don’t even think that that applies anymore. There are no ‘precedented times’ these days, the way things change and how everything moves.” 

 

On why the ALA matters more than ever … 

“Disruption has become the norm, inside of our industry, outside of our industry, changes and selling down … to be honest, that is why our association matters more than ever. 

 

“The value in the ALA is found in our collective strength. In this room, we represent companies that compete on the shelf. We compete for the business. But we stand side by side when it comes to the benefit and supporting the families behind the mission, and I think that makes us truly unique and special, in an association, and as a community.” 

 

On providing value … 

“Knowing all the change that has gone into what has happened during the last couple of months and even the last couple of weeks, our ALA team has worked tirelessly on this event, with the current government shutdown, having to pivot a lot, last minute … but I am proud of the agenda we are delivering to you this week. 

 

“I am a big proponent of providing value. Your time is valuable. We want you to be here and feel that it was worth your time. 

 

“All of this change … we are not just navigating through it. Collectively, we are shaping what comes next for our industry. There is so much value there, and working on that collectively.” 

 

Steve Rossetti, president, ALA

 

On the government shutdown … 

“Last night, we saw some movement. Democratic senators are getting together trying to work up some kind of consensus on how they could move forward. There are about 12 of them who met. 

 

“I would characterize it as inside yelling among themselves, before they yell at Democrats and Republicans. They are all trying to sort out what their position would be going forward so that they can get consensus within their respective party and then come together for a resolution. 

 

“We are starting to see the contours of what that might look like. It looks like it is shaping up as a deal that would create a continuing resolution that would run into maybe the December or January time frame … the date I heard was Dec. 19 to continue governmental operations while they work on several issues, but it is not all locked in concrete.  

 

“One is the healthcare issue. It looks like the Republicans are scheduling or coalescing around allowing a vote on healthcare to come up, with Democrats still locked in, they want to have a concrete agreement that healthcare subsidies will be restored.”  

 

On how the shutdown impacts the appropriations process and troop pay … 

“All of that is mixed up with the appropriations process. Susan Collins, chairman of the Senate Appropriations Committee, is very anxious to get a regular order of appropriations bills in place to fund the government, and all of the agencies, including the Department of War for the remainder of the year, and not getting into a continuing resolution cycle, but to break that cycle, which we have been in for a long time. 

 

“There is a lot at stake between having a continuing resolution and a regular order of appropriations for the Department of War. The DoW got about $135 billion appropriated in the ‘Big Beautiful Bill’ that was passed earlier this year, and they have been living off of that partially to fund a lot of programs, including troop pay, during the shutdown.  

 

“And for troop pay, they are looking at RDT research money, they are looking at SOFA provisions to try to find money to pay the troops. The payroll is about $18 billion per month.  

 

“We are kind of reaching a deadline on troop pay. Scott Bessent, the secretary of the Treasury, said the other day that they can pay the troops this week, but the next paycheck is going to be troublesome.  

 

On building pressure to come to an agreement … 

“The pressure is building on the respective sides, the Democrats and the Republicans. You’ve read about this in the newspaper, but in talking to staffers yesterday, they have said that there is a lot of activity right now on the respective sides.  

 

“So when will it end? I have given up on predicting … I thought it would go no more than two weeks, the record has now been broken.  

 

“A lot of people are saying that the elections that are being held today are going to have an effect, and that may be part of it. The upshot of it is for President Trump to get engaged with leadership from the respective parties and come up with the framework of a deal so that the Democrats can be comfortable allowing the continuing resolution to come out. 

 

“One option I saw the other day was that Rand Paul talked about a month-long continuing resolution so that they can get together on healthcare and have a compromise that would be voted on in a month. 

 

“There is a lot of activity going on now. The pressure is building. You read the papers, you see what is going on with SNAP and WIC, troop pay, air traffic controllers, all of this pressure is building and building. 

 

“Eventually, hopefully, Thursday or Friday of this week, going into next week, we might see a breakthrough Tuesday or Wednesday of next week. 

 

“It takes a while not only for them to get an agreement in principle, but for them to draft language and do all the mechanics and all the plumbing that is needed to bring it about.” 

 

Tom Shull, director/chief executive officer (CEO), Army & Air Force Exchange Service (AAFES)

 

On supporting troops and families …  

“We will endure. We all have the courage and the conviction, and most of all, the passion to continue to serve the best customers in the world. 

 

“I couldn’t be more proud to be part of this team and making it happen every day.  

 

“At age 60, I was so blessed to come back here to the Exchange to serve. It has been an amazing journey, I think of the honor that we get to do what we do every day, to support troops and families. 

 

“I am completing my tour now, hopefully in a few more years. This is a celebration of troops and families; that is how I look at this.” 

 

On believing in the mission … 

“We have very loyal customers. We believe in what we do, and we know that we are going to support quality of life in everything we do … 100 percent of everything we make goes to support the military and their families. 

 

“We have had another spectacular year. We are headed to $8.5 billion in sales, and that will exceed Starbucks and JCPenney, which have had their woes, but fortunately, we have had very loyal customers, which is at the heart of our success 

 

“Our focus is going to be on veterans, they are our largest growth opportunity. Now that retirees can use the benefit on the installation, and disabled veterans can use the benefit, it is a huge benefit, and we want retirees to come back on the installation.” 

 

On the Military Star Card … 

“Military Star Card benefits … we are really pushing this for many, many reasons. This card has low interest, it is another incentive to come on base and use it, either at the commissary or the BX. 

 

“It is too often getting a bad name, but it is the best credit card in the business with the lowest APR. It is the lowest because you don’t have to have a FICO score to get the card. You just have to put your hand up, give the oath to the Constitution, and you will get a Star Card. 

 

“The reason that that is important is that interest is so low, no fees, no penalties, no interest while you are serving in combat or in harm’s way, and right now, we have a program that is pretty amazing.  

 

“Because of the shutdown, we are in partnership with the commissary folks for no-interest grocery shopping, initially to the end of October, thinking that the shutdown was going to end, and now through the end of November. 

 

“We will be there every day that there is a shutdown, to make sure that you can buy your groceries at no interest, no cash until the shutdown is over, and once it is over, we will make sure there is a reasonable repayment plan. 

 

“We are not sitting on our hands. We are making it happen because we love what we do for those who serve.  

 

“This is good business. Military Star Card sales are up 20 percent. That tells you that this is a benefit that really means something, and new accounts are up 36 percent, 10,000 new accounts, and that is important to us … we need to be able to use the card off the installation, because once we do that, having served them so well during their time of need, they are going to be loyal to this brand.”  

 

On supporting recruits … 

“We support recruits during the shutdown with gift cards, because the Army ran out of money, so we needed to provide some way so they could buy essential training items in order to be fully equipped on Day One as new recruits.” 

 

On the prospect of commissary privatization, from an Exchange perspective … 

“Absolutely not. A commissary is a benefit that needs taxpayer support because it provides 23-percent savings every year to support troops and families.  

 

“My mom and dad depended on the commissary for 30 years, after they retired. They lived near Bethesda, they would go to the Navy commissary there, and they loved it.  

 

“To me, it is the foundation of the benefit we provide. Look what it is doing now, how important it is now. You are going to have crises like this, so once you take it out of the equation, you are not going to be able to continue to support the troops the way we have. 

 

“There have been problems with lodging, with barracks, a lot of problems with some of those private organizations and we don’t have that much control. 

 

“The good news about the commissaries is that it is under the control of the Defense department, now the War department.  

 

“To me, I don’t understand any of that discussion. I was against all [privatization efforts] when I worked for Macy’s. None of them have worked out … it is the worst thing you could ever do, and look at what has happened. They have more and more debt, and then they fail. 

 

“It is so easy to second guess what people do, and given the passion that all of the associates are committed to at the commissary, it is disturbing. 

 

“It is a phenomenal benefit. It doesn’t make any economic sense, but more importantly, it makes no sense for the quality of life for the troops and their families.” 

 

James Leahy, executive director, Veterans Canteen Service (VCS)

On priorities and goals … 

“I think it is important that you get an understanding of the unique world that the canteen service navigates each and every day. 

 

“When we have our vets, we have them for life, all ages, and it gives us an opportunity to engage with our veterans.  

 

“Promoting the VCS mission is also important, with our strategic goal being to deliver the VCS benefit to veterans. That is why the canteen service was established. 

 

“Also, I am a big believer that if you take care of your employees, they will take of our customers, so we work very, very hard to make sure that our employees have the best work environment possible, so they want to continue to work and deliver the VCS benefit to our veterans. 

 

“We want to be a model for a high reliability organization, and that is critically important to working in a very complex, immunosuppressed healthcare environment. We make sure that all of our employees understand what high reliability means, that they work in a very safe environment and that they execute our mission. 

 

“Whole health is important. We have been migrating to this business model for the past five years. It helps our veterans to understand that nutrition is a big part of their health and recovery. They can exercise but if they don’t eat right, we have a responsibility to deliver that, and make sure that they have good, healthy options when they shop and dine with us in our facilities. 

 

“Five years ago, one in four beverages sold in the canteen was water. Today, it is 33 percent, so water has become such a big part of our nutrition — all forms of water, flavored water — so we want to give our customers opportunities to make good, healthy choices beyond the comfort choices that we offer. 

 

“We also have to be financially self-sustaining. We have to be able to pay all of our costs for our fiscal year, so we don’t have to go back to Congress and say that we need another appropriation to execute our mission.” 

 

On how the business has changed, post pandemic … 

“Back in 2019, the canteen service saw almost a quarter of a million customers each day across our system, Monday through Friday.  

 

“Hourly wages back then were a little over $12 an hour. We had seen our largest revenue annually at over a half-billion dollars. And then there was a precipitous drop by March of 2020. 

 

“We have recovered from that, and we can look at the last couple of years and we can see a nice increase in revenue. This year right now, we are tracking at a 3.7-percent sales increase, we are budgeted up 4.6 percent. 

 

“We are excited about the fourth quarter this year, because the fourth quarter calendar is very friendly to retailers. Last year, it was a very difficult year, because of the 53 weeks, but this year, with an extra shopping day between Thanksgiving and Christmas, a favorable calendar will help us to deliver our fourth quarter, which is 30 percent of our annual revenue, and is the most important quarter of our fiscal year. 

 

“The challenge that we have had is that we have had to right-size our business based on our revenue, but also based on our customer business. Right now, we are tracking about 164,000 customers per day, we were budgeted up about 2 percent this year at 166,000 customers per day, so we are pretty close to that number, but we are not seeing an exponential increase to our customer level back in 2019. 

 

“We have had to take some dramatic, but tactical, decisions on how we manage our business from a personnel standpoint. We have about 2,300 employees today, running flat to last year, and as a result of that, we have right-sized some of our smaller canteens, where maybe we had food  and retail in separate rooms in the medical center, and now we have combined them, so we can be more efficient in delivering our benefit.” 

Rear Adm. (Ret.) Robert Bianchi, USN, chief executive officer (CEO), Navy Exchange Service Command (NEXCOM)

On the current situation … 

“It is so fortunate that we are gathered here today. With the government shutdown, uncertainties and everything, folks not being able to travel, events are getting axed … in fact, I just found out this morning that they cancelled the Pensacola Blue Angels homecoming show, which is kind of the, besides the Oceana Air Show, is a big deal. It is when the Blues come home after doing their whole season of flying. 

 

“I think that now, more than ever, just like in any crisis, this is the time we band together, and I think being here, collectively, is important for all of us. 

 

“It is kind of weird. It almost feels ‘COVID-like.’ Hopefully we are not into another COVID, but the fact is that we do have these crises. The difference was that during COVID, folks were getting paid and we were also getting stimulus checks, so this is really challenging for our military members and our civilian counterparts. We are struggling a little bit. 

 

“Everything that you are doing to help us during this time, we really do appreciate it. I know my fellow resale colleagues feel the same way.” 

 

On current NEXCOM successes … 

“In our convenience world, we continue to grow our private label brands, and this is another Joint Buying Alliance initiative where we are working together to increase our amount of private label offerings, we have also had some crossover, selling some of AAFES’s items in our stores, and AAFES is selling some of our NEX brands. So there are lots of opportunities there. 

 

“Micro Markets have been a huge success for us. We are up to 105, and they are all direct-run. … The number-one food item being sold in our Micro Markets across the world is Smucker’s Uncrustables. Just think of it; in our shipyards, these gals and guys will come to work, in steel-tipped boots and their work gear and they walk into one of these stores and grab a handful of them that they slip into their pockets and lunchboxes. 

 

“We have gotten some run time for our hybrid stores. We piloted these in Dam Neck. That is the concept where we take a full store, one side has more of the convenience items and then we roll the door down at 1900, and that half of the store is self serve, self-checkout, so that store is kept available to Sailors 24/7. We like that concept, and when we look to redesign and renovate some of our other stores, we might implement that so we are able to provide that real-time availability to our Sailors, because they are on shift work. 

 

“Food continues to be big for us. Many of you know we do all of the food in the Pentagon as well, so that keeps us pretty busy, but three-and-a-half-million or so transactions a year … we continue to open new concepts. Most of our operations are concession-type, but we are starting to increase more of our direct-run locations. And food trucks have also been successful. 

 

“Our Rewards Program is going gangbusters. We are at 1.4 million members, it is definitely driving footsteps, driving loyalty, and the best part of this is that our Rewards members are spending more than our non-Rewards members. We are very excited about this; they are earning their rewards and they are spending them with us, and they are not only spending that amount, but they are spending considerably more. We continue to drive that program, and we hope to expand this program across other business lines.” 

 

“The ‘Store of the Future,’ I would encourage you to visit Oceana, because since last year, we have implemented even more updates to our store layout there … and we are planning things for our main stores based on learnings that we have from Oceana. 

 

“One of the biggest takeaways is every area that we upgraded at Oceana has seen a 3-percent or so lift in sales, so it is working, the concepts are exciting, they are new, it is resonating with our patrons, so we are really happy about that, and the way we designed these, we are able to do them much more quickly. 

 

“’True Blue Deals’ … you are helping us tremendously. We had a lot of promotional noise out there, all kinds of offers, and it was confusing to our patrons. We have knocked that down, and we are focusing on monthly promotions, so some things are going to run for a whole month, if it is a special and there is still some sense of urgency there, but these are good deals, in addition to our every day low prices, these are targeted deals, and it has really help drive footsteps into our stores.” 

  

OTHER SPEAKERS 

Others who spoke during this day’s meeting included: 

• Keynote Speaker: Rear Adm. (Ret.) Mike Studeman, former commander, Office of Naval Intelligence 

 

• Challenge of the Rapid Integration of Technology: Dave Raley, Operation Stormbreaker, chief digital business officer, Marine Corps Community Services (MCCS)

 

• Trade, Policy, Global Supply Chains: David Spooner, former U.S. chief Textile negotiator, U.S. Trade Representative Office (USTR) and assistant secretary of Commerce for Import Administration

 

• Artificial Intelligence For the Consumer Industry: Tzarni Mangosong, partner/principal, Ben Stiller, general manager (GM), ConvergeConsumer and Ed Johnson, consumer industry innovation leader, Deloitte 

 

• Boosting Veteran Participation In the Exchange and Commissary Benefit: Bob Carey, executive director, National Defense Committee.

 

AWARD PRESENTATIONS 

The ALA presented its Distinguished Service Award to Rep. Jen Kiggans (R-Va.), Richard Ray, Vice Chairman, S & K Sales Co., and Tim Smucker, Chairman Emeritus, The J.M. Smucker Company for their work supporting service members and their families. 

 

TRIBUTE 

Ms. Ginesa Madar, was posthumously honored for her service to military resale. Her husband, John, accepted the presentation. 

 

EVENT SPONSORS 

Sponsors of the three-day event included Advantage Military; Acosta Group; Alder Foods; Aramark; Coastal Pacific Food Distributors; Coca-Cola; Deloitte: Elite Brands; EURPAC; Fairlife; Flora Food Group; Lactalis USA; Mars Petcare; Mars Wrigley; McLane; National Industries For the Blind; Nestle Purina; OSCWebco; Procter & Gamble; Red Bull; S & K Sales; Shabo; J.M. Smucker Co.; SpartanNash Military; Spyrt Worldwide; Top Gun Services; Tyson Foods; and Unilever.