Agency leaders and industry partners roll up their sleeves to get down to the business of taking care of people.
ALA’s Larry Lapka report from Richmond Va.
The Roundtable was sponsored by the following companies: Advantage Military: Alder Foods; Coastal Pacific Food Distributors; Coca-Cola; Del Monte; Elite Brands; EURPAC; Flora Food Group; IBM; and Kellanova. Mars Petcare; Mars Wrigley; Military Distributor; OSCWEBCo; Purina; S&K Sales; SpartanNash Military; Top Gun Services; Tyson Foods; UNFI; and Unilever.
The American Logistics Association’s annual Commissary Roundtable, held here at the Omni Richmond Hotel, provided two days of news, insights and discussions about the current status of the Defense Commissary Agency, its commissaries, and where their focus will be in the near future.
Here are several highlights of the event’s agenda, which focused on commissary business from several angles.
ALA President Steve Rossetti opened the day’s meeting, speaking on a variety of governmental subjects related to military resale in general, including areas that he covered a few days earlier at the ALA Washington Update Webinar.
These included reshaping government; the budget process; defense spending; the Department of Government Efficiency (DOGE); commissary privatization; and tariffs.
Presenting a general overview of the conference, Rossetti thanked attendees for taking the time to be there.
“Thank you for being with us today. We are all about making this connection better. It’s so critical what we do here, and especially at this juncture.
“We’re getting ready for any eventuality. We’re already working with policymakers both in the administration and in the Congress, to soften them up for any eventuality, to make sure that they understand what’s at stake and really, what all of the implications are.
“The depth of folks are here in force to provide a lot of information. Actually, we’re looking forward to that. We’re looking for a very active back and forth discussion and how we can make this system better.
”Our position, our perspective is that the current system is the best system. When I worked over on the Hill, on the Armed Services Committee, there were some very smart Congressmen … a whole range of people who were in the business of shaping the current resale system.
“These gentlemen were wise, they cared about the troops, and they fashioned a system that really took the best of government and the best of the private sector and put it together to serve the best people in the world.
“This system is very carefully structured and balanced to make sure that we have the optimal effect for people.”
JOHN HALL
DeCA Director/CEO John Hall spoke on a number of subjects related to the commissaries.
STRATEGIC OPPORTUNITY: “We are going to use everything that is happening to make DeCA a better organization. This is a strategic opportunity for DeCA to transform itself, and that’s what we’re going to do.
“We are going to become more like a commercial grocery chain than ever before. We’re going to be a commercial grocery chain that happens to work for the Department of Defense.
SAVINGS: “That’s my goal. And by that I mean working off all the products and services, all those good things you see inside good commercial grocery chains, and while doing that we’re going to continue deliver 25 percent savings.
“So, this is a strategic opportunity for DeCA. I think you all know our legal requirement is 23.7percent. We’ve been delivering on that our steps and we are committed to continue to deliver that 25-percent savings.
“We’re actually at about 25.2 percent for the year. Really, really good things happening.
PATRON BASE: “We’ve been looking at who uses our commissaries, active-duty service members and their families. We have found that 77 percent of service members and their families are using the commissaries.
However, for retirees and disabled veterans, that’s a population we need to touch more. That’s about 35 percent.
“Overall, we have about 3.5 million households within 20 miles of their local bases, roughly about 1.7 million shoppers. And we’ve had a lot of things we’re doing to drive that number up.
IN-STOCK RATES: “Looking at in-stock rates, they are at 97 percent. So, the 97 percent translates to when a patron walks into our store, they’re going to get 97 percent of the products.
“I’m really proud of the fact that we’re there at 97 percent. We’ve got a couple of pockets that are lower than that, but we’re working on. But overall, that’s what we are averaging.
“I’m really proud of the fact that historically, we have been in the mid to upper 80s, but it is now 95 percent and creeping up to 96 percent.
“And what we did in Guam was also something we need to do better across all of the agency, and let’s get the stock assorted, right, because we changed the stock assortment in Guam. Optimize it for what? We’ve driven those in stock rates up.
“And guess what we’ve seen. We’ve seen a 20-percent increase in sales.
“What did we see? We were carrying items that didn’t sell that we cut, and so we’re now looking at that at the enterprise level to make sure we can get the right stocks across all 335 stores.
“That’s really important because I wondered if we drove our stock absorption rate higher and stock rates up what would happen, but we’re seeing the corresponding increase in sales, at the least cost.
“We didn’t always have the right approach, but I’m really proud of what we’ve done in Guam.
CURRENT SALES: “Looking at the sales for April, we are seeing an 8-percent sales increase. A lot of that has to do with Easter.
“Sales are falling late this season; we think we’re probably going to see sales go down a little bit below that 8 percent. Maybe we’ll end up with a 5-percent increase for the month, but it’s really been a good April for all of our consumers.
PRODUCE: “We are trying to build a statement. You have all heard me say that. We have always said produce has been one of the weaker areas and one that we need to improve.
“Probably savings have gone from 9 percent to 14 percent in the last 10 months. So, we’re working really hard, and not only have positive sales come from that, but the delivery times have improved.
“We have improved in stock rates, and thus, produce has improved, and quality has improved as well.”
CHANGING THE PERCEPTION: “So Korea’s looking really good. Japan’s looking really good. We have to get better, but really, really happy with our increase in programs and increase the quality of products.
“Now we have to figure out how to make our customers that that the quality is there because that’s an area we’ve been through. We’ve got to get customers to believe that and continue to impress on them that perception, and so anybody can help with that.
“We have a plan to help out with that, but we need to change that perception of the customers so that we can draw them back into our stores for the great products and prices that we have. We daily bakery sales are increasing.
“We’ve changed some of the contracts we’ve had, and we’re going to change other contracts as we go along.
“In a number of our categories, especially prepared foods, we’re seeing a lot of increased sales there and that is really helping out our Soldiers, our service members and their families.
SALES GOALS: We have a positive return on investment. I do believe we are one of the few that delivers more than we received, specifically last fiscal year.
“We do deliver that. We’re $133 million more in savings. But I also want to deliver $8 billion in sales.
“The way we think we can do it is to have a goal of holding our cost at the rate of inflation.
“Everybody said we’re gonna do this without asking for more money, right? We’re going to do more with no more.
“We must lower the cost of doing business inside, a lower cost of doing business inside DeCA. But by the way, when we do that, that amplification of the benefit becomes even greater than it is right now.
“You probably tracked me related to the coupons that we sent out under my signature; we sent them a coupon for $25 off. Look it up. We obtained 66,000 relationships that generated. I know there’s a positive ROI. That was a positive ROI and we’re seeing those customers come back into our stores.
“They redeemed that coupon and extended the benefit for their families.
ENTERPRISE BUSINESS SYSTEM: “I’ve been talking about this since I’ve been here and I can tell you now we’re very close to contract. We are very close to contracting and that’s going to transform the way we do business in data, and it is certainly one of the reasons, going forward, to transform the way we do business.
“I’ve mentioned this before. I am the only authority that can approve any software changes to that system. The reason I’m forwarding that is I have too much experience with DoD changing businesses to fit processes and then we it doesn’t happen, we don’t get the volume, we don’t get the benefit.
“Not only that, but we don’t get the power of the system, especially when it comes to integrated operations and making integrated decision making.
“So many things go into a stock assortment decision. In the systems we have already done, please help us with that in a way that we need.
“We’re going to get this system and we’re going to take three years; we have to take our time to do it.
“Over time, I think what you’ll see is that our systems start to reflect, and our processes start to reflect, more change than we currently see, so we are really excited about that.
“I think we can demonstrate, through the Department of Defense, how a government agency can wield such a system.
DELIVERY CONTRACT: “Getting a delivery contract is crucial for our operations.
“There are some hurdles left that we’re going to work really hard to get. We need this to work. Our customers need this to work.
So, the average basket in our stores is $65. Online ordering, which a customer picks up, is $120.
“Think about how much more benefit we can deliver to our customers. How much more we can combat food insecurity when we get this delivery contract in place?
“It is really going to be a game changer for our customers and then we have the Common Access Card, which will accentuate benefits when that comes to fruition.
“The availability of delivery is really going to make it very, very convenient for service members to purchase something from DeCA and have it delivered to where they are.
“This is something we’re working very hard on and I’m very excited about it.
DeCA’s Deputy Director Karen Davis provided attendees with an overview of her priorities, calling on her vast experience with Defense and Federal acquisition and her work to provide focus on the DeCA mission of taking care of people.
SUPPLY CHAIN TRANSFORMATION: “I know we’ve been talking about this for quite a while, though I guess since I became directly involved with DeCA, I have been talking about this.
“But we are still proceeding, where this is kind of going to be a very deliberate decision, because we’re talking about potential huge transformation of the way our supply chain works. So, we gotta get product, and we gotta get it right.
“Joel Lockhart, director, Supply Chain Directorate and Jim Flannery, acting executive director, Sales, Marketing and eCommerce, have been working diligently over the past year or more on this.
“We need to make things more like what is done in the commercial world, and to modernize the way we buy products. And so that’s another effort that will help us to engage.
PERSONNEL: “There are some key people … We have to figure out a place to keep people, but in terms of, you know, the size of the organization.
“No governmental hiring freezes have affected us or anything like that. We’re asking for some extensions on some of those to hire some people, but the longer it goes, the more likely it will start to have an effect.
“And so, we’re seeking some exemptions from the Department to keep order in our stores and to keep our CDCs operating.
BETTER DEFENSE PARTNER: “I just wanted to make sure you know that I truly believe that we’re in a period where we need to use this opportunity to make our world even a better partner for defense.
“Some things, like a commercial cultural change, will give us an increased agility and increased ability to drive price cost.
“So really, the things that I have been working on since I’ve been here directly are now farther along than they’ve ever been.
“I think we have some prospective success there. Once again, thanks for being here and really thanks for your partnership and supporting those perspectives.”
OTHER SPEAKERS
Other speakers who took the podium at the day’s conference included the following DeCA executives:
Harold Whittington, director, Multi-Functional Capabilities Team (automation, transformation of systems, streamlining processes, time-consuming processes replaced by integrated system, real-time data, reduction of human error)
Robert Culbreth, director of Sales, Non-Fresh (joint growth plan; joint business plan; every day low prices (EDLP) assortment optimization; slow movers; club packs; integration with supply chain capabilities)
Joel Lockhart, director, Supply Chain Directorate and Jim Flannery, acting executive director, Sales, Marketing and eCommerce (prerequisites for supply chain transformation; reject report; fill rate)
Norman Brown, director of Marketing (patron outreach with coupons and digital marketing)
DeCA EXECUTIVE CITED
During the day’s meeting, Category Manager/Merchandiser Iveena Henderson was cited by ALA for her upcoming retirement after 35 years in the business.
Robert Bunch, the agency’s executive director of Store Operations, who plans to retire later this year, gave another of his inspiring talks at the conference.
“It is a pleasure to be here and to speak, and to see familiar faces. For those that know me, this might be the final opportunity to speak to you.
“I am retiring in September. I will have had 50 years of federal service, and 30 years with DeCA. These last 30 years have been the best years of my life, and we’re going to talk a little bit about that.
“The very first ALA event that I ever spoke at was in Anaheim, Calif., 21 years ago. And I will tell you that no one at DeCA knew who I was. And at the time, I didn’t know who I was.
“I didn’t know if I was a store worker, a store manager, or a store director because we did it all. Guess what? We’re still doing it.
“We are, as a group, we are probably the only people in the world that have had monumental successes and we walk around like we have gotten to where we need to get. I’m telling you, embrace the success.
“Since Oct. 1, 2021, we are up 17.49 percent in sales. Show me anybody outside the gate who have a 17.49 percent increase in sales. They average 1 point something percent for a year. I am not a mathematician, but I can figure out that we are doing pretty darn good.
“But not only that, we have transactions up 17.8 or 17.9 percent over the same period. It is due to a lot of blood, sweat and tears, and not just ours, yours too.
“But guess what? It seemed like we were on a death knell for 10 years, with a 5-percent decline in sales every year. And we couldn’t figure it out.
“But when we figured it out, with Mr. Moore and his leadership coming in, guidance, direction, and with the efforts that we have started, we have done nothing but rise.
“I think if you were to look around the building, around some of your offices, people left, and it just hurts my soul. It hurts, because we have to embrace the successes.
“When I first took the stage, I had the distinct honor of being on that stage with Pat Nixon. As a matter of fact, one of the first coins I received in the 1980s was presented to me by Pat Nixon on that day. It holds a place of honor in the coins that I have.
“But what really held an honor in my heart for me was that he had the faith and confidence to allow me to get up on the stage in front of 480-some-odd people and deliver a speech about ‘raving’ fan.
“We had all of these things on the market telling us that we had to be better than we already were. At the end of the day, all we had to do was to look in the mirror, each and every one of us, we had to look in the mirror and take those little victories.
“We may not win every battle that we fight, so we have to savor the victories that we have, and by the end of the year, we will probably be up 18 percent.
“Now again, I am not a mathematician, I check boxes, but when you get that high and get those kinds of numbers, that tells me that we are successful, we are doing what we need to do.
“I think we kind of operate — this is something that I came up with, I didn’t read it in a book or anything — but I kind of think we manage and we operate by teeter-totter.
“Sometimes we are up, sometimes we are down, and sometimes we crash. We’ve all been there. And those crashes … it was the worst thing in the world that could happen.
“But you know what? You kind of get right back on that teeter-totter. And you always figure that you can drop again. It happens, and we went through that for about 10 years.
“And at the end of the day, we came back together, and we came back together stronger, with a fire, because what can we do? We have to figure it out.
“We all know what we do. We are really good at what we do. We are distributing groceries to us. We are facilitating the sale of groceries to us.
“What we do is to get the cotton-picking stuff on the shelf and we deliver a benefit. I don’t care how hard you look, at the end of the day, that service member … for 30 years, I have dedicated myself to this agency and delivering that benefit.
“How many of you have been in the room with me and I’ve gotten emotional about this? They raise a hand and they swear an oath, and they have gone into harm’s way so that we don’t have to.
“There are a lot of veterans in this room, and they put on that uniform, and moving forward, we wanted to do something else and something better.
“When we lose some items, why? We lose. And we always have to keep that ‘why’ at the forefront.
“Why am I doing what I am doing? We aren’t making any money at it, but when you see that young family with a child, and I see a lot of you handing them a gift card. You watch their faces light up, because now they can buy something that they thought they couldn’t buy.
“You have made our gift card program a success. The first gift card given out by this organization was on June 29 years ago at the Fort Bliss, Texas, commissary, to a wife with two kids.
“Those gift cards, from Marshall Reavis of SVM, have been the ones that we have given out for all of those years, and that is why we do what we do.
“Every year, Progressive Grocer presents a list of the top grocers. Without fail, they put that list out. And without fail, DeCA is part of that list at number 62 out of the top 100.
“And to think about who we are competing against, and to think that we are only about 235 stores strong, but if you think about it, we are accomplishing so much.
“The National Retail Federation puts out every year the Top 100 Retailers, not just grocers, retailers, DeCA was at number 87.
“That is a success to be embraced. We need to embrace the successes so that when we have those little bad turns, they don’t overwhelm us.
“Right now, there isn’t a person in this room who doesn’t watch what is going on with an administration that has changed and all of the changes.
“Some people say, ‘We won’t make it through, they sky is falling.’
“But we will survive. We are bigger, better and stronger. And we are that way because we are together. I said it the last time I spoke … we might be dysfunctional, but we are a family, because we can take those little nuances that our brothers and sisters endure because we can embrace them at the end of the day, and they are still our brothers and sisters.
“Think about your lives and think about your siblings. If anyone this room tells me that they never had a cross word with a sibling, or with a parent, or with a family member, or with a close neighbor, I’m checking my wallet to make sure it’s still in my back pocket.
“That’s life, and life ain’t easy. There are hiccups, there’s up and downs, and there’s that teeter-totter again.
“And at the end of the day, what do we want? We want a balance. Sometimes you are up, sometimes you are down. It is OK to be down, because that will make us stronger when we come back.
“this agency, and there are some people sitting out there that have been with this agency since the agency started … I didn’t start with the agency; I started five years after … but I wouldn’t change anything that has gone on or happened to me over the years.
“I have the greatest job in the world, and I get to take care of the greatest people. And at the end of the day, that’s what it’s all about. That is the ‘why’ to our ‘what.’
“We have in our stores, and you have been in our stores and you have seen them, special carts called Carolina Carts. A young lady patented that cart. She did it because she couldn’t get her physically- and mentally challenged child into the store. So, she designed this cart.
“When you think about it, she did it through the military so we could take care of our servicemen and women that came back a little bit less than when they left.
“So, we take care of everyone. It used to be that we only took care of the 100 percenters. We now take care of all disabled veterans regardless of their disability. And we are able to do that with your support.
“It wasn’t just DeCA going out and fighting the battle. The ALA, and the ALA board, were fighting for us by fighting for them. And it is a battle worth fighting.
“At the end of the day, I sleep pretty well. And I get up every morning, and I think to myself, ‘Bob, you’ve got to give 100 percent today, no matter what.’ And then every night, I look in the mirror and sometimes I say, ‘You didn’t make 100 percent.’
“But I will tell you that I gave the best that I could. I gave 11,000 people the best that I could, everyday.
“Over the last couple of years, we had added an additional day onto our stores, on 113 stores we added an extra day.
“Guess what? We didn’t give them any extras, we didn’t give them any extra money to operate, we just said, ‘Make it so,’ and they listened.
“This agency, from 1991 to 2012, went from basically zero dollars, when they opened the first store, to $6 billion in sales. That’s a hell of a leap.
“We could have fallen on our knees and said, ‘Woe is me … it’s like Chicken Little and the sky is falling … nothing is right and everything is going to be bad,’ but we didn’t … you didn’t.
“You continued to support us. There is not a company in this room that did not stand with this agency. And you get to stand with us as we go forward.
“We’re in it to win it. We have to think about ourselves, we have to think about our lives, we have to think about where we are going.
“There are few roads with only straight lines. There are twists, there are turns, there’s bends, there’s ups and downs.
“Sometimes we don’t know where we are going in the car but we end up somewhere. I used to ask people when I was driving around how to get to a certain place, and they would tell me, ‘You’re lost,’ and I would tell them, ‘I’m not lost, I ‘m just not sure about where I’m going.’ And then usually, someone would help us.
“That’s what you’ve done for us. You’ve helped us to grow. You have helped us to be a better version of what we first started out to be.
“No one had an idea of what we wanted to be. Am I lying? We really didn’t know what we were going to become or what we saw when we first started.
“Since I started, there have been a number of directors. I didn’t get to meet Gen. Dreska, but I did get to serve under Gen. Beale, as a general and as a civilian, and Gen. Courter, Mr. Sakowitz, Joseph Jeu, Adm. Bianchi, Bill Moore, and now, John Hall.
“At the end of the day, they all had challenges, and how they faced those challenges showed their mettle. But it also showed yours.
“You could have all turned your backs and said, ‘This ain’t profitable. Let’s go home.’ But you didn’t do that. You stuck with us, and we’re sticking with you.
“I used to tell people, ‘How high is the water on the horizon?’ But I know how to tread water. I hope you do too, because we are going to tread it together. We have a long way, and we have miles to go.
“This benefit is important. We have seen the worst of folks, and we have seen the best of folks. Sometimes, we have seen the worst of ourselves. I have. I have looked in the mirror and didn’t like what I saw. But I made adjustments, I adapted.
“Well, that is what the agency did. We looked into the mirror and saw things of ourselves that didn’t look too pretty.
“We need to change. We need to adapt. We need to take care of each other. And that is not internal to DeCA. It encompasses and embraces all of you.
“We’ve all been up and down … I’ll bet that there isn’t a person in this room that doesn’t know a veteran, is a veteran, or knows someone who is a disabled veteran. That is what we are about. Make no mistake about that.
“There are two important words to remember: ‘We do.’ And I incorporate that every day, because at the end of the day, I am doing something. I hope it’s the right thing; sometimes I’m not sure.
“We do deliver the benefit. And I believe with my heart that we need to celebrate that. And service members buy groceries to feed themselves, their families, and in some cases, their friends and neighbors. We don’t have the grocery police on that last one. I would be a liar if I said that I never did anything like that.
“But why not help our families? They need our help. You are still family, and you are still with us. And we are still growing, growing the business.
“We do matter. And everyone in this room matters to someone. Our companies matter to someone.
“And your companies have their board of directors. For their bottom lines, they are looking for their dividends to go up a little bit. So, it is up to us to help. We don’t account for a whole lot of it, but I can tell you that we appreciate your business. They can’t do it without you, so we matter.
“And I don’t care what administration there is on the Hill. What we care about most is delivering that benefit.
“And as I stand here, I say ‘thank you.’ I thank each and every one of you for the contribution you make to us to deliver that benefit.
“What we do is important, and we do it together.
“Now I am going to leave you alone. Thank you.”
OTHER SPEAKERS
Other speakers who spoke to attendees at the day’s conference included the following DeCA executives:
Brooke Pfister, chief, Resets and Planograms (total store resets; perishable resets; store voids)
Todd Heasley, chief, Promotions (how industry can help with issues, family pricing signs)
Panel Discussions:
Robert Culbreth, director of Sales, Non-Fresh
Iveena Henderson, category manager/merchandiser
Darrell Clary, category manager/merchandiser
Robert Bunch, executive director of Store Operations
Jim Flannery, acting executive director, Sales, Marketing and eCommerce
Bonita Moffett, director of Sales
Joel Lockhart, director, Supply Chain Directorate
ALA VOLUNTEERS CITED
Rossetti thanked all the volunteers give their time to serve on the various councils and committees that are the heartbeat of the association.
“The association is just that,” he told attendees. “It is a group of people getting together with a common interest, and with fundamental goals in mind related to the commissary benefit.
“As part of that, we have volunteers. These are people who work in the industry, but they take time from their day jobs, and come together to work for the common good, whether it is on the Commissary Council, the Exchange Council, or any number of councils and groups to forward this process.
“The philosophy that I have as the president of the association is that the members own the association. You have an investment in the organization, you own it, I work for the membership, and I do that through the Board of Directors, another group of people who step forward, who volunteer their time for the common good, with Coastal Pacific’s Stephanie Supplee as this year’s chairman.
“All of these folks take a lot of time out; we have been active on a lot of different levels, and we are getting more active, so we are asking them to come forward and to sacrifice more of their time.
“I just wanted to acknowledge these folks, letting our DeCA partners know about the intense level of involvement, and the skin in the game, that not only the committee and board members have, but that ALA members have.”
Rossetti noted that the ALA is “a sliver of the industry. Yes, we are the industry trade group, and the recognized industry trade group, but not all industry is represented, or are members, of ALA … hopefully, one day, they will be.
“I think that what that tells you, for our government partners, is that these people, who are volunteering and giving up their time, are advocating for this business, because they are people who we can lean on in the tide, they are rising above it. They are interested in floating everybody’s boat.”
He also individually thanked Andy Lassiter, head of the Commissary Council, for working closely with DeCA “in this complicated environment to pull everybody together. Kudos to you and your team for your dedication and service.
And he also cited the organization’s DeCA partners. “With your busy schedules, to spend these couple of days with us, we hope that it is time well spent on your side; it is definitely time well spent on our side. Thank you for taking the time to be with us.”
