MSM 2017 Panel

Senior Executives Answer Questions at 2017 MSM/GM Conference

Exchange managers and senior leaders descended upon Frisco, Texas, March 7-10 for the annual 2017 MSM/GM Conference. The theme this year was “Front Line Family,” celebrating the Exchange core value Family Serving Family and the support we give to troops at the tip of the spear.

There were many new faces at this year’s conference. New managers had the opportunity to meet seasoned Exchange managers and leaders and network with team members who consider the Exchange more family than business. The conference is an opportunity to learn the Exchange’s strategic priorities, as well as network with vendors and see their new merchandise at the expo.

President/Chief Merchandising Officer Ana Middleton kicked off the conference before joining a panel of senior executives including Director/CEO Tom Shull, Deputy Director Mike Immler, Chief Operating Officer Dave Nelson and Senior Enlisted Advisor Chief Master Sgt. Luis Reyes. Director of Corporate Communication Judd Anstey moderated the session.

“There are a lot of new faces this year. It is up to our seasoned main store managers to introduce these new managers to the family, teach them about networking and why these MSM/GM conferences are so important.”

President/CMO Ana Middleton

Below is a portion of the Q&A session. Look for more questions and answers on the MSM portal site.

Q: What is the state of the company? Is the Exchange healthy? 

Tom Shull: As retailers shutter stores (Macy’s, JCPenney’s, Sears, etc.), online competition increases and the commissary attempts to “transform,” the state of the Exchange (because of you) remains strong. Compared to 2012, we have contributed to an increase of approximately $850 million on an annualized basis toward the DoD budget through a combination of continual focus on earnings improvement and reduction of APF consumption. We have successfully increased annual dividends despite active-duty Army and Air Force personnel decreasing by 10.5 percent due to drawdowns. There simply is not an example in retail in the last 40 years of the magnitude of our turnaround. While the organization is “extremely healthy,” there are many outside forces that are swirling around that could affect us. Our best insurance for continued success is to please our customers.

Q: What’s the future of the leasing initiative? How will that affect the way we contract and how sales are apportioned?

Mike Immler: Going forward, the Exchange may be able to attract more national brands by following an approach more common in the commercial real estate industry that includes industry standards and lease outline drawings. Leasing is a different model of doing our contracts. We are working closely with retailers to determine which business model works best for the Exchange and them. A new EOP 33-01 is being developed to provide additional guidance on leasing in our Community Development Initiative and Entertainment Center locations. When the lease model is mixed into traditional Exchange locations, sales will report under the facility number and Exchange roll up as they do today for other businesses in the mall. The only difference is how the terms of the agreement may be written.

Q: What are the new design initiatives for both main stores and Expresses?

Ana Middleton: Main Store initiatives are continuing to a small select group of stores, and we are always working to improve the experience. This year we will be looking to develop enhancements to current designs to include possible digital solutions. While that is in development, we are going to spend a majority of our focus in 2017 on Express locations. We are in the process of rolling out our pilot store at Ft. Riley and will continue to adjust that model for further roll out.

Q: What is the outlook this year and next for Ship from Store? How will small exchanges be impacted?

Dave Nelson: The 2017 plan is to have 58 locations (to include PAC and EUR) by end of year. This program assists with store inventory being more productive and reducing the inventory commitment needed to maintain the customer experience. Smaller exchanges are being reviewed to participate in the program

Q: Is there any chance will have a mobile application similar to Best Buy or Target? Currently, the Extra App takes us to the full website that our customers have problems using.

Chief Reyes: Since 2014, there’s been an “app-splosion.” Today, there are more than 3 million apps available in Apple’s App Store. Competition is fierce, and the app deletion rate is at its highest ever. People want their apps to provide a solution. Apps that don’t provide a solution get deleted. The Exchange is currently planning to replace the Extra App with an enhanced shopping app with features similar to Best Buy, Target and Kohl’s. We know we have room for improvement in this arena and are taking steps to create a product worthy of downloading, keeping and using.

Q: We do a good job, but need to do a great job telling the Exchange story to our community. What are we doing right and what could be done better?

Tom Shull: We have a great story, we need to aggressively tell it to installation leadership, our customers and our teammates. This starts at the top. SVPs and VPs should not go to an installation without a courtesy office call to installation leadership. VPs and GMs play a critical role in sharing the relevancy of the organization to every member of the military community. Our relevancy and competency are about to be tested as never before. We need to double-down with respect to communication, and everyone plays a part in telling our story. No one can do what we do. We’re a lifeline for troops serving in far-flung places. We go where other retailers can’t or won’t—including dangerous warzones and remote locations. Success with respect to this communication is easily identifiable. Does your community understand the vital role your store plays in supporting readiness and resiliency? If not, get with Corporate Communications and your installation PAO and regularly communicate the unique capabilities we bring to Soldiers, Airmen and families who rely on your team to make their lives better.



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