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Ingredients exist for the resale system to flourish ... Now we need the right chefs with the right recipe ...
It's an understatement that the military resale system has been through a lot in recent years but has been fortunate enough to have withstood major full-frontal assaults on its existence. The massive cuts to appropriations ... virtually eliminating the commissary appropriation have been mitigated with a funding trajectory that, while not completely optimal, is less onerous and allows breathing room for the system to install reforms.
Privatization is not completely off the table but hard work and good friends at the Capitol turned back another full-frontal assault and helped delay any precipitous decision until the puts and takes can be carefully deliberated…and these considerations will be discussed in a review by the Government Accountability Office (GAO).
The challenge for Pentagon, Congressional, and industry decision-makers is to array all of the ingredients in the form of tools, capabilities, and yes ... risks ... and work together to come up with the right recipe that achieves the goals of:
Several templates have been set forth for the future including:
- Optimal operations
- Ensuring the well-being of a dedicated NAF and DeCA workforce
- Continued levels of patron benefits, products, and savings
- Maximum levels of industry involvement and support
- Continued ability of the resale system to support the Defense mission
- Operating with the minimum level of appropriations needed to provide optimal operations, patron satisfaction, and support of the Defense mission
All of the stakeholders and constituencies in and surrounding the resale programs are seeking information on these changes and clarity in the crystal ball:
- Report of the Military Compensation and Retirement Modernization Commission, January, 2015.
- Extensive changes to the law in Title 10 that were include in the Conference Reports on the Fiscal Years 2015 and 2016 National Defense Authorization Acts.
- A report provided by the Boston Consulting Group, Military Resale Study.
- Assessment of Opportunities for the Defense Commissary Agency and Evaluation of Consolidation in the Broader Military Resale System, June 2015.
- A subsequent report by the Department of Defense, Plan to Obtain Budget Neutrality for the Defense Commissary System and the Military Exchange System, April 2016.
- A report by GAO, DoD Commissaries and Exchanges: Plan and Additional Information Needed on Cost Savings and Metrics for DOD Efforts to Achieve Budget Neutrality, November 14, 2016.
Over the next few weeks we will be publishing a series of Executive Briefing articles breaking down these reports. We will provide a point by point analysis of the varied policies, recommendations, and mandates included in the major reports mentioned above, and other ancillary reports and findings. This will include news you can use on:
- Patrons are concerned and wondering about the impact on benefits that they earned and have come to cherish.
- Companies that invest in the resale programs are concerned and wondering about their viability in this marketplace and demands that may be placed on their companies.
- Agency employees' heads are spinning are concerned about their futures with all of the talk of outsourcing and privatization, consolidation, NAFing the DeCA workforce, hiring freezes, and funding reductions.
- Defense and Administration leaders at varied echelons are concerned about the system's ability to remain viable, and continue to make the same direct and indirect contributions to the Defense people and readiness mission.
A great deal of information is already included on your Association's Resale and MWR Center for Research website. And more information will be forthcoming at your Association's upcoming conference and workshops, including the June 14 Congressional Caucus and Public Policy Forum in Capitol Hill's Rayburn Building.
- Opportunities for enhancing the resale system
- Implications for patrons, agencies and the supporting industry
- Prospects for success and risk of failure
- Changes needed to these elements to mitigate risk
- Implications for ALA member companies doing business with military resale agencies
Hiring freeze update ...
As of press time, there have been no policy pronouncements from the Administration providing an exception to the hiring freeze for DeCA and exchanges in the DoD, VA, and Homeland Security Agencies.
ALA has been communicating with Administration (OPM, OMB, DoD) and Congressional offices to seek relief to the freeze citing:
Resale agencies are seeking relief within channels in their respective agencies. We're continuing to work it.
- Impact on the benefit
- Hardship on employees, impact on DeCA in the midst of major transformation
- Large number of family members and Veterans employed in these agencies
- Impact on beneficiaries
- Fact that it does no good to freeze hiring of NAF workers if there are no savings to the Treasury by doing so
There is an opportunity to relook the "way ahead" for Defense Resale ...
In a recent interview, Mike Higgins, a key member of the Military Compensation and Retirement Modernization Commission looked back at the recent decisions on the part of DoD and Congress concerning reforming the Defense Resale System …
According to Tom Philpott, Military Update via Stars and Stripes, Michael Higgins, an influential member of the commission, this month gave a frank assessment of recent congressional actions to a group of current and retired military compensation experts. Later, he agreed to allow me to share highlights of his presentation with Military Update readers.
Higgins served 20 years in the Air Force as a personnel officer and 23 more as a professional staff member for the House Armed Services Committee. There he helped generations of lawmakers set levels of military pay, determine the mix of benefits and bonuses, and grant force-shaping authorities that sustained America's all-volunteer force.
Congress seeks to deeply reduce the $1.3 billion commissary subsidy and yet "protect every aspect of the benefit," Higgins said. "I'm very close to believing that's mutually exclusive. I don't think you can get there."
Higgins conceded a personal bias that commissaries not be put at risk.
"I'm a true believer in the commissary benefit. But the one caveat to my belief that the status quo is right is if we were staring down the barrel of a doomsday scenario." That is, "if the commissary is in mortal danger."
In that case, Higgins said, there is no action "off the table to save that benefit or some aspect of that benefit." That's the situation now, he said, as defense leaders including the Joint Chiefs target the commissary subsidy to be able to use that money for more pressing readiness needs.
"We never really had [that] trigger until the 2015 budget request when DOD came out and said, 'We want the [commissary] money back.' Now I don't know how a lot of these decisions get made over in the Pentagon," Higgins said. "But I believe once they are made they are carved in stone somewhere over there. I don't care if the president changes, the secretary of defense changes, their attitude (in DOD) is not changing."
Congress has accepted cutting the subsidy as a priority, a fact that is driving changes to commissary operations. But Higgins said he remains skeptical it can be done without destroying shopping discounts.
"I don't want to be so crass as to suggest it's all about the money, but money is a big, big factor here I think," Higgins said.
Trump administration promises government wide review to spend taxpayer dollars more prudently.
U.S. President Donald Trump may be signing executive orders at a furious pace, but for defense spending, the White House and Congress are looking ahead to a thorny agenda and a shrinking schedule.
Specific information on upcoming ALA events is posted regularly on the ALA website. To learn more about each event, please click the following links:
U.S. Department of Defense
In testimony before the Senate Armed Services Committee yesterday, the military's top enlisted advisors and the acting assistant secretary of defense for manpower and reserve affairs discussed the importance of single service member and military family readiness programs. The DoD officials testified alongside executive officers for the National Military Family Association and Blue Star Families.
National Military Family Association
(The following document is extracted from "full" testimony and reflects NMFA's Executive Summary and Commissary section.)
Military families consistently tell us the commissary is one of their most valued benefits. We view the commissary as an important element of military compensation and thank Congress for fully funding it in the FY17 NDAA. However, we are concerned about changes to commissary operations that the Defense Commissary Agency (DeCA) is implementing pursuant to provisions included in last year’s Defense authorization.
Tragedy Assistance Program for Survivors
We join with our associates in The Coalition to Save Our Military Shopping Benefits in expressing our concerns about threats to the savings families will be able to achieve as the Military Resale System moves forward to achieve an estimated $2 billion in reductions [to commissaries and exchanges] over a 5-year period [2017-21], including adding private labels in the commissary. (Testimony language on page 4.)
Stars and Stripes
Retired Lt. Gen. Harold G. "Hal" Moore, an American hero known for saving most of his men in the first major battle between the U.S. and North Vietnamese armies passed away Feb. 10. Moore co-authored the book, "We Were Soldiers Once and Young," which told the story of the 1965 battle of La Drang and was later turned into a major motion picture.
U.S. Department of Defense
With the tax season upon us, service members and their families can access free tax-filing software and consultations to help them navigate the task of submitting their annual taxes. Military members and their families can visit the Military OneSource website or call 1-800-342-9647 for the no-cost "MilTax" software.
Commissary Web Posts
The following commissary items were recently posted to the ALA Website:
- Father's Day, Far East Quantities.
- Spring Club Pack, Far East Quantities #1.
NOTICES TO TRADE (NTT)
- 17-18, EDI Vendors – Regular Base Cost Validation.
- 17-20, Release of DeCA Data Attributes.
- May 2017 Reset Adds Deletes, February 10, 2017 and RSL Codes for the April and May CPI Additions.
- FY 17 Guard/Reserve CONUS On-Site Sale Schedule, February 10, 2017.
- CRV Values, February 12, 2017.
To complement NTT 17-17, we would like to provide additional details regarding how industry partners can participate in the Commissary's 150th Anniversary program.
A special "door prize program" has been created for the anniversary celebration on July 1. The Points of Contact for this door prize program are listed at the end of this message. The anniversary celebration will be similar to a "mini-grand opening." DeCA will provide marketing kits to stores, and Industry will be incorporating gold d'cor and the specially created 150th logo into all of their promotions during DP 13 & 14. Also Industry may bring “demo trucks” and "product characters" as part of this anniversary celebration. All bakery contractors have come forward to provide anniversary cake slice samples to all patrons worldwide on July 1. For commissaries that do not have contractors, Industry partners have come forward to purchase cakes for those commissaries that do not have contractors.
Listed are other creative promotions that will be offered by Industry:
- March 3 – Supplier commitment to participate
- April 14 – Door Prizes to Central Locations1
- Week of April 24 – Industry Day at Central Location to build "Door Prize" Boxes for Stores
The Points of Contact for Industry’s Door Prize Program:
- Limited edition, specially labeled soda bottles for resale using the black and white nostalgic commissary photos along with a short history located on back.
- Limited edition specially printed/designed reusable shopping bags using b/w photos as well as modern full-color photos of commissaries, for resale.
- Patriot Perks Program will offer a 150th Anniversary Contest through social media – “Text to Win a Free Year of Commissary Groceries,” plus many other prizes.
- The 150th Anniversary Kids’ Coloring Contest via social media will be executed in April (Month of the Military Child) and an Industry member will judge/print the winning entries on a reusable bag for resale.
- There are radio spots from Shaquille O’Neal, Richard Petty, Ocean Spray Guys in the Cranberry Bog, Andre Roberts, Kyle Bush, and Alejandro Villanueva.
- Beginning in March and ending July 31, commissaries will use the Wall of Value as the location of the 150th Anniversary Wall of Savings! Designing a banner that would hang above this area to attract shoppers to the deals.
- Reminder: Hashtag for the 150th: #commissaryturns150; to be used on social media beginning February 1, 2017.
Locations to which your door prizes should be sent (6 total):
1015 Performance Drive
Stockton CA 95206
|MDV Spartan Nash Norfolk
1133 Kingwood Ave.
Norfolk, VA 23502
|MDV Spartan Nash Columbus
6175 Technology Blvd, Ste 1000
Midland, GA 31820
|MDV Spartan Nash SA
2330 Roosevelt Ave.
San Antonio, TX 78210
|MDV Spartan Nash Bloomington
311 North Curry Pike
Bloomington, IN 47404
|MDV Spartan Nash OK City
1101 SE 59th St.
Oklahoma City, OK 73129
Corn Flakes maker Kellogg Co said it would stop distributing its U.S. snacks business' products directly to stores and switch to its more widely used warehouse model to cut costs and adapt to a changing retail landscape.
The decision reflects the shift by shoppers toward buying groceries outside of grocery stores, as well as Kellogg's continued focus on revitalizing its snack business.
Low-brow grocer Aldi is making things a little more posh, part of a plan to steal market share from the big supermarket chains.
The discounter is spending $1.6 billion to upgrade 1,300 U.S. stores while keeping its prices low. It's the biggest remodeling investment ever by Aldi U.S., which is controlled by a faction of Germany's billionaire Albrecht family.
Drug Store News
The 2017 Product of the Year Award winners, chosen from a national survey of 40,000 consumers conducted by Kantar TNS, were announced, and some big-name brands are among those honored at the Feb. 9 awards show in New York City's Edison Ballroom. "Competition is fierce among consumer brands, with thousands of new products introduced to the market each year," Mike Nolan, CEO of Product of the Year USA, said.
The Defense Commissary Agency recently announced that Sodexo, world leader in providing Quality of Life services, will provide Deli-Bakery Services operations at 12 DeCA-run commissaries in the American South — six each in both Georgia and North Carolina. Sodexo, which already provides Deli-Bakery Services at 12 DeCA commissaries in Delaware, Maryland, Northern Virginia and Washington, D.C., commenced operations at all new locations on Feb. 1.
Are consumers bored with cereal?
Category performance would seem to indicate so, with overall sales dollars down 2 percent at total U.S. food stores with sales of more than $2 million for the 52 weeks ending Nov. 19, 2016, according to Schaumburg, Illinois-based Nielsen. Even the sales dollars of hot cereal, that recent media darling, were down 1.9 percent during the same time period.
Two of the most influential groups in the food industry are asking companies to change those pesky "expiration" or "sell by" labels on packaged food.
The labels, you see, don't mean what they appear to mean. Foods don't "expire." Most foods are safe to eat even after that "sell by" date has passed. They just may not taste as good, because they're not as fresh anymore. Companies use the labels to protect the reputation of their products — they want consumers to see and consume their food in as fresh a state as possible.
Drug Store news
Organizations are throwing away billions of dollars annually on customer loyalty programs that just don't work like they used to.
This was revealed in the Accenture report, "Seeing Beyond the Loyalty Illusion: It's Time You Invest More Wisely." The study gauges the experiences and attitudes of 25,426 consumers around the world about their current loyalty relationship with brands and organizations. Millions of loyalty points are sitting dormant, and the majority of U.S. consumers (78 percent) are retracting their loyalty at profit-crushing rates.
Whole Foods Market said it has launched a partnership with data-analysis firm Dunnhumby and accelerated its rollout of category management.
At the same time, the Austin, Texas-based retailer trimmed its sales forecast for the year, announced the planned closure of nine stores and said it would dial back its new-store development plans. The company no longer has a goal of operating 1,200-plus stores, said Whole Foods CEO John Mackey in a conference call discussing first-quarter financial results.
Food Business News
US Foods has agreed to acquire All American Foods, a broadline distributor. Financial terms of the transaction, which is expected to close at the end of February, were not disclosed.
Established in 1988, All American Foods offers more than 4,000 stock-keeping units to nearly 1,000 customers throughout Rhode Island, Massachusetts and Connecticut. The company has annual sales of approximately $60 million.
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Retail sales in 2017 are expected to grow roughly in line with last year's 3.8 percent gain, as rising wages, lower unemployment and a solid housing market drive consumer confidence higher.
However, with many tax and trade policies still up in the air under the Trump administration, consumers are expected to continue being methodical with their spending.
While Target Corp. may be cutting some internal innovation initiatives, it hasn't lost its appetite for working with start-ups.
The Minneapolis-based retailer is launching a new program called "Target Takeoff" to help support health- and wellness-related start-ups through a sort of mini-accelerator. It's one of a growing number of programs in the Twin Cities aimed at helping young companies develop and connect with the major retailers in town.
As new business technologies come on the scene, even in nonretailing industries, food retailers should pay close attention to how these solutions could benefit their supply chains, according to Paul Chang, global supply chain subject-matter expert at Armonk, New York-based IBM. That's exactly what Bentonville, Arkansas-based Wal-Mart has done by launching a test with blockchain, a database technology that has already been in use in the financial services industry for several years. IBM co-developed the technology being used in the experiment.
Retailers are looking for answers when it comes to the House Republicans' proposed border adjustment tax, and nobody seems to have them, analyst Simeon Siegel told CNBC.
"The backdrop here is the consumer wins, and it's tough to be a retailer," Siegel, an executive director at Nomura Securities, said in an interview on CNBC's "Power Lunch." "As bad as it can be ... we don't even know."
The Wall Street Journal
The clock is running out on Sears Holdings Corp.'s turnaround.
The struggling retailer bought some breathing room through moves to raise more than $1.5 billion in recent weeks, but investors are growing increasingly doubtful that Sears will ever get back on track.
The Dallas Morning News
IKEA plans to open its third local store, this time in Fort Worth.
The Swedish home furnishings superstore said it expects to open the store in 2019 at the southwest corner of Interstate 35W and N. Tarrant Parkway.
The 289,000 square-foot store will be built on 27 acres and will have 900 parking spaces. Pending approvals from the city, construction is expected to start in the summer of 2018. Construction will create about 500 jobs, Ikea said, and the store will have a staff of 250 people.
It sounds like the perfect solution to one of retail's biggest problems.
If consumers grow bored with runway fashions by the time they hit stores, and wait to buy miniskirts when the weather turns warm, brands should adjust their calendars to bring shoppers merchandise when they want it.
Yet as the third season of "see now, wear now" winds down at New York Fashion Week, evidence is mounting that the decades-long tradition of showing fall collections in the spring will be tough to shake.
The Lakeview, Chicago neighborhood is getting a second new Target store this year.
Target plans to open a 31,000 square-foot store at 3300 N. Ashland Ave. in October, the retailer said. Target previously had announced plans for a store at 3200 N. Clark St., set to open in July.
The Associated Press
Dollar General is planning to create 1,000 jobs across the state of Georgia this year with the addition of new stores as well as a new distribution center.
The Goodlettsville, Tennessee-based company said in a news release that it wants to add 1,000 discount stores and create about 10,000 jobs across the country in 2017.
News outlets report that Dollar General currently has more than 700 stores and more than 5,000 employees in Georgia.
CSP Daily News
While the Trump administration's goal of easing regulations on businesses is generally welcome among retailers, some are worried about the extent of deregulation or the potential side effects of a protectionist trade policy.
Convenience Store Decisions
More and more, consumers are looking at convenience stores as morning destinations. This includes the growing demand for bakery products. In fact, studies show that about 29 percent of C-store traffic by occasion occurs during the breakfast/brunch rush. For pointers on how to build a breakfast/bakery combo, Chad Dewberry, merchandising manager, foodservice for McLane Co. shared with CSD some industry insights.
Convenience is king to the consumer, and nowhere does speed and efficiency influence the customer experience more than refueling. Ahead of her session on Revolutionizing Retail Convenience at Retail's BIG Show 2017, we spoke with Carolyn Yapp, Shell Retail's general manager of customer transactions, data and marketing, about how the organization is using data insights to streamline the customer experience.
Convenience Store Decisions
What's in Store 2017 found mobile payment options will soon replace physical credit cards as shoppers' preferred payment method at supermarkets, as they're more secure and convenient.
What's in Store 2017 is the latest edition of the annual trends publication from the International Dairy Deli Bakery Association.
Convenience Store News
Much of the latest tobacco legislation has been coming from the state level, but 2016 brought one major change at the federal level: the final deeming rule.
In 2011, the Food and Drug Administration announced that it would regulate electronic cigarettes under its authority spelled out in the Family Smoking Prevention and Tobacco Control Act of 2009. The first step was to establish its authority to regulate tobacco products not explicitly noted in the 2009 measure. These newly deemed products include electronic cigarettes, cigars, pipe tobacco, and hookah. Five years later, the final deeming rule went into effect on Aug. 8, 2016.
CSP Daily News
What does it take to propel convenience-store foodservice into a truly competitive space with restaurants?
A great-tasting, high-quality menu is a must, but top-notch service, solid convenience attributes that squarely meet customer expectations for fast and easy meal solutions, and a brand identity built around freshness and variety are all crucial elements, too.
Convenience Store News
It is the age of gourmet coffee and its connoisseur creatures, otherwise known as millennials. But are today's convenience stores up to the higher java challenge?
The data indicates the convenience channel could benefit from making more of an effort. From the latest preparation techniques to sourcing the beans themselves, going the extra gourmet mile is what the new generation of coffee lovers want; they are clearly not satisfied with their parents' drip brew, according to the National Coffee Association.
One of the favorite performers for Hawaii's military is returning. Gary Sinise & the Lt. Dan Band are coming to Joint Base Pearl Harbor Hickam Feb. 17 to perform a free concert at Freedom Tower. The concert is being hosted by the Gary Sinise Foundation in partnership with Morale, Welfare and Recreation.
A longtime and fervent supporter of the U.S. Armed Forces, Sinise and his 12-member band have performed at bases around the world, including 14 times in Hawaii since 2006. As Sinise explained, plans to come back to Hawaii began in December.
Temple Daily Telegram
The Army Community Services and Fort Hood Family and Morale, Welfare and Recreation hosted the first Hood Howdy event of the year.
This is the 23rd year Fort Hood has hosted the biannual event.
More than 100 organizations from the military installation and the surrounding communities participated in the event, which drew more than 1,500 attendees. Twenty-five companies also took part in a mini job fair, with some — such as H-E-B — conducting on-the-spot interviews.
7701 Las Colinas Ridge, Ste. 800, Irving, TX 75063