American Logistics Association Military Market Facts July 2011

American Logistics Association Military Market Facts July 2011

American Logistics Association A Brief Overview

Our History n 1920 Incorporated as the Quartermaster’s Association (QMA) QMA was composed of officers of the Regular Army, the National Guard, the Organized Reserves, key civilians in the federal government and leaders of industry. QMA disseminated professional information concerning all Quartermaster and related activities, and fostered and promoted a spirit of cooperation and friendly exchange of ideas among the members. n 1961 QMA becomes the Defense Supply Association (DSA) The name was changed in response to the establishment of the Defense Supply Agency, as well as the increasing responsibilities being placed upon the U. S. Army Quartermaster Corps to provide food, clothing and general supplies to all the Armed Forces under Do. D’s single manager concept. The Association was composed of officers of the Armed Forces, key civilians in the federal government and leaders of industry. n 1972 DSA becomes the American Logistics Association (ALA) To eliminate confusion with the Defense Supply Agency, the Association changed its name to the American Logistics Association and adopted the “eagle in the oval” logo. The new ALA carried forward the same objectives of the Quartermaster and Defense Supply Associations. According to an editorial in the July/August 1972 issue of ALA’s Review Magazine, the new name “was chosen to “show clearly who we are, what we do and how we intend to function. ‘American’ must always exalt the pride of patriotism…we believe in our country, in its customs, in its ideas and in its business efforts. ‘Logistics’ is defined as that branch of the military art which embraces the details of transport and supply. ‘Association’ is a union; a connection of persons or things, or a union of persons in a company or society for some particular purpose. ”

Our History n 1974 ALA reorganizes into a national trade association Led by a Board of Directors comprised of representatives from industry, the newly organized association was designed to serve industry and its related interests in military and other government activities. 2005 The ALA Board of Directors revised the mission of ALA to include a focus on Total Quality of Life and MWR/Services. The American Logistics Association promotes, protects, and enhances the military resale and quality of life benefits on behalf of our members and the military community.

Programs and Services n It is our goal to provide valuable programs and services that enable all members to operate effectively and efficiently with the military resale system and services. n ALA is the only organization that can give you the resources and the information you need to succeed. We strive to increase the visibility of the Association and enhance the services that ALA provides its members.

Contact Information n American Logistics Association 1133 Fifteenth Street, N. W. Suite 640 Washington, DC 20005 (202) 466 -2520, Fax (202) 296 -4419 www. ala-national. org

Military Exchange Market A Closer Look 50 States 2 U. S. Territories 30 Foreign Countries

Military Patrons Active Duty Demographics

Authorized Shoppers Total Shoppers Authorized 2010 12. 3 Million Source: AAFES Contingency Planning Offivce

Active Duty Military Personnel Trend Source: DMDC Dec 2008

Active Duty Demographics Male Female Age <22 202, 949 Officers 16. 3% Source: DMDC Updated Tri-anually 2011 Due 14. 6% Enlisted 83. 6% 29% 17% 32 -36 13% 37 -49 85. 4% 22 -26 27 -31 1, 186, 435 23% 17% 50+ . 01%

Military Resale Agencies • • • Defense Commissary Agency (De. CA) Army and Air Force Exchange Service (AAFES) Navy Exchange Service Command (NEXCOM) Marine Corps Exchange (MCX) Coast Guard Exchange Systems (CGES) Veterans Canteen Service (VCS)

Exchange Sales Trends In Billions

Exchanges AAFES, NEXCOM and Marine Corps Exchanges n Operate as Federal Instrumentalities - unique organizations within the Do. D n Self-funded, using few tax dollars n Exchanges pay their own operating costs from Revenues n Return earnings to Customers through payments to Morale, Welfare and Recreation Activities and investments in new, renovated exchange facilities Coast Guard Exchanges n An MWR activity; Coast Guard is part of the Department of Homeland Security Veterans Canteens n Operates under the authority of the Department of Veterans Affairs

AAFES Profile Established: 1895 Employees: 43, 000 Headquarters: 3911 S. Walton Walker Blvd. Dallas, TX 75236 -1598 Phone: (214) 312 -2001 Web site: www. aafes. com Major Distribution Facilities: Forest Park, GA; Newport News, VA; French Camp, CA; Waco, TX; Giessen, Germany; Tokyo, Japan; Yakota, Japan; Inchon, Korea; Okinawa, Japan; Honolulu, Hawaii FY 2010 Sales: $8. 476 Billion Commander: Major General Bruce A. Casella, USA COO: Mike Howard Selected Operations and Services: Retail Stores; On-line Shopping Concessions; Catalog Services Food Facilities; Gas and Auto Repair Military Clothing Stores; Movie Theaters Vending Centers, State Department Commissaries

AAFES Regions (5) European Region Main Exchanges Pacific Region Main Exchanges England Italy Alaska Germany Greenland Eastern Region Main Exchanges Guam, Japan, S. Korea, Okinawa Hawaii Western Region Main Exchanges Central Region Main Exchanges Puerto Rico

NEXCOM Profile Established: 1946 Commander: Employees: 15, 000 Rear Admiral Glenn C. Robillard, SC, USN Headquarters: 3280 Virginia Beach Blvd. Virginia Beach, VA 23452 Phone: (757) 463 -6200 Web site: www. navy-nex. com Major Distribution Facilities: Norfolk, VA; Chino, CA Pensacola, FL; Naples, Italy Honolulu, Hawaii; Yokosuka, Japan FY 2010 Sales: $2. 55 Billion COO: Michael Good, SES Selected Operations and Services: Retail Stores; Concessions Food Facilities; Gas and Auto Repair Authorized Uniform Stores Vending Centers; Ship Stores

NEXCOM Districts (11) European District Northwest District Northeast District Capitol District Western District Tidewater District (HQ) Japan Guam Hawaii District Cuba Japan District Guam District Mid-South District Southeast District Puerto Rico

MCX Profile Established: 1897 Director: MG. Gen Timothy R. Larson, USMC (Ret) Employees: 3543 Headquarters: 3044 Catlin Ave. Quantico, VA 23134 -5103 Phone: (703) 784 -3800 Web site: www. usmc-mccs. org Major Distribution Facilities: None FY 2010 Sales: $925. 3 Million Deputy Director Business Operations: Ms. Cindy Whitman Lacy Selected Operations and Services: Retail Stores; Concessions Vending Centers; Gas and Auto Repair Food and Hospitality Facilities MWR Programs Marine Corps Exchanges (MCX) are a part of the Marine Corps Community Services (MCCS) on the Marine Corps bases.

MCX Facilities (17) Henderson Hall Quantico (MCX HQ) Camp Allen Barstow Twentynine Palms Camp Pendleton Miramar & MCRD San Diego Yuma Beaufort Parris Island Albany Hawaii Japan Iwakuni Kaneohe Bay Cherry Point Camp Lejeune

CGES Profile Established: 1945 Commander: Employees: 1, 600 Captain Edward Eng Headquarters: Battlefield Technology Center 1 510 Independence Pkw. Ste 500 Chesapeake, VA 23320 Phone: (757) 8424901 Web site: www. uscg. mil/mwr 2009 MWR Revenue NAF $17. 8 M 2009 APF $8. 3 M Lodges 26 Food & Beverage 24 Golf Courses 2 Fitness Facilities 33 FY 2010 Sales: $147. 8 Million Director of Operations: John Reiley Selected Operations and Services: Retail Stores Gas Stations MWR Programs Food Operations (franchised) Vending Centers

Kodiak CGES High-Volume Exchanges Port Ketchikan. Angeles North Coast, Cleveland Astoria Seattle South Portland North Bend New London Staten Cape Cod Island Humbolt Bay Petaluma Baltimore Alameda Yorktown Cape May Portsmouth Elizabeth City Charleston San Pedro Mobile (2) Honolulu Galveston New Orleans St. Petersburg Mayport Clearwater Miami Hawaii Puerto Rico Borinque San Juan

VCS Profile n n Central Buying Office Core Customers: q q q n n Patients (including relatives and friends) Staff and Medical workers Volunteers Average Retail Store size: 1, 500 -1, 800 sq. ft. Approved items are placed in VCS’ Automated Merchandise Catalog (AMC). Items on AMC are available to each canteen for ordering merchandise.

VCS Profile Established: 1946 Employees: 3, 100 Headquarters: #1 Jefferson Barracks Road Building #25 St. Louis, MO 63125 -4194 Phone: (314) 894 -1200 Web site: www. vcscanteen. com Major Distribution Facilities: None FY 2010 Sales: $219. 7 Million Director: MS. Marilyn Iverson, SES COO: Ray Tober, SES Selected Operations and Services: Retail Stores, Food Operations (Cafeterias) Personalized Services, Vending

Exchanges - Main Stores CONUS AAFES OCONUS TOTAL 116 59 175 NEXCOM 73 31 104 MCX 15 2 17 VCS 171 1 172 CGES 57 5 62 Total 432 98 530 NOTE: Resale systems combined operate thousands of retail operations including Main Stores, Shoppettes, Troop Stores, Package Stores, Sport Shops, Lawn and Garden, Fast Food, Military Clothing Stores, Gas Stations, etc.

Exchange Sales vs. America’s Top Retailers Sales (Billions) Wal. Mart $408. 214. CVS $98. 7 Costco $71. 4 Home Depot $66. 1 Target $65. 3 Walgreen $63. 3 Lowe’s $47. 2 Best Buy $45. 0 Sears $44. 04 Kohls $17. 1 U. S. Military Exchanges Source: NRF online 2009 $14. 04

Exchange Resale Systems Business Drivers n n n Pricing equal to or lower than best customer Voluntary Price Reduction (VPR) Favorable payment terms Marketing funds for: üIn-store demos üPremiums, give-a-ways üTruckload and parking lot sales üContests, sweepstakes üClerk training üScholarships continued. . .

Exchange Resale Systems Business Drivers n Advertising funds for: q Weekly tabloids, In-store flyers q Special programs n Prepaid freight Warehouse allowances Business Processes q Vendor Managed Inventory (VMI) q Pre-ticketing for certain kinds of merchandise n n

Ship Stores Profile Established: 1909 Headquarters: 3280 Virginia Beach Blvd. Virginia Beach, VA 23452 Phone: (757) 463 -6200 Web site: www. navy-nex. com Major Distribution Facility: Yokosuka, Japan FY 2010 Sales: $79. 2 Million Source Commander: Rear Admiral Glenn C. Robillard , SC, USN Vic President, Ship Stores Program: Charlie Vaughn Selected Operations and Services: Retail Stores; Vending Machines Laundries; Barber Shops

What Makes Ship Stores Unique? n n n Investment in inventory is constrained q limited storage and display space Assortments reduced to best selling SKU’s Majority of sales occur while deployed Captive market when at sea Store hours restricted while in port or repair yards Requires 24 -72 hour turnaround for deliveries

MWR/ Services MWR, GSA, Department of State

MWR Operations Morale, Welfare and Recreation

MWR is a term given to a complete range of community support, quality of life programs, services, and activities that are provided to members of the Armed Forces and their families on military installations throughout the world.

Operations n n n Each of the military services operates MWR activities Each military service has its own MWR organization, and while they manage similar activities, each does so in its own manner within the broad policy mandates of Do. D Operations are generally decentralized, but there is growing trend toward regional operations in Army & Navy.

Program Funding n n MWR operations are funded with a combination of tax payer funds (appropriated) and self generated funds (non-appropriated) referred to as “APF” and “NAF” respectively NAF is generated through the sale of goods and services by both MWR operations and the Exchanges (dividends)

Programs Categories “A” Title Mission Essential Funds 100% APF Program Examples Fitness Center, Intramural Sports, Libraries, Rec. Centers “B” Community Support 35% NAF 65% APF Youth Program, Child Dev. Center Outdoor Rec. , Rec. Pool “C” Business Operations 100% NAF* Category may determine type of contracting procedures utilized q APF: Defense Federal Acquisition Regulations Supplemental q NAF: Do. D and Service Specific Regulations ** n Do. D Directive 4105. 67 n Do. D Instruction 4105. 71 Source: DMDC Clubs, Golf, Bowling, Retail Stores, Snack Bars Restaurants, Lodging, Marinas *With some limited exceptions ** www. defenselink. mil

MWR’s Most Frequented Facilities Air Force Army Fitness Facilities Libraries Outdoor Rec. Clubs and Entertainment Fitness Facilities Gyms/fields Bowling Libraries ITT Navy Marines Fitness Facilities ITT Fast Food Venues Outdoor Rec. Gyms

Army MWR Operations Headquarters: U. S. Army Community and Family Support Center (CFSC) 4700 King Street Alexandria, VA 22302 Commander: BG Reuben D. Jones, USA COO: Rich Gorman, SES Phone: (703) 681 -7472 Web site: www. armymwr. com General Information: 2009 Revenues: $1. 6 B APF $1. 1 B NAF Employees: 29, 904 Contains data on: Lodging, Sports, Recreation, Construction, Contracting (How to Do Business), Contracting Officer Listing, Armed Forces Recreation Centers, Child and Youth Programs and more Facilities: Child Care 73 Lodging Operations N/A Golf 56 Fitness 207 Clubs, food, beverage, entertainment 227 Key HQ Phone Numbers: Family Programs: (703) 681 -5375 Soldier Programs: (703) 681 -7398 Recreation: (703) 681 -7226 Business Programs: (703) 681 -5203 NAF Contracting: (703) 681 -5244 NAF Construction: (703) 681 -1506 Army Installation Management Agency (IMA) Chief, MWR & Family Support Branch: Arnie Cole Phone: (703) 602 -1812

Marine Corps MWR Operations Headquarters: U. S. Marine Corps Personal and Family Readiness Division 3280 Russell Road Quantico, VA 22134 -5103 Director: MG (Ret) Timothy Larsen General Information: 2009 Revenues: $510, 588 M NAF * $463, 069 M APF* Employees: 6, 167 Cat A & B 5, 844 Cat C 2008 Recapitalization: $20. 1 M Contains Data On: Semper Fit (rec. /fitness), Family Programs, Business Ops Programs, Personal Services (child/youth), Construction, Contracts, MCX Sites, Buyers Lists, Sales Reports, How to Do Business Facilities: Fitness 53 Food Ops 228 (84 NBFF) Lodging 14 Golf 11 *estimated Dep. Dir. Business Ops: Ms Cindy Whitman Lacy Phone: (703) 784 -9501/9816 (fax) Web site: www. usmc-mccs. org Key Phone Numbers: Dep. Dir. Business Operations: (703) 784 -3800 Public Affairs: (703) 783 -9517 Retail Branch: (703) 784 -3800 Services Branch: (703) 784 -3800 Food & Lodging: (703) 784 -3800

Navy MWR Operations Commander, Navy Installations Command (CNIC) Director, Fleet & Family Readiness Programs: John Baker Phone: (202) 433 -4544 Director, Fleet Readiness Programs: Christian Mehrer Phone: (202) 433 -4538 Headquarters: Commander Navy Installations Command (N 9) 2713 Mitscher Rd SW Washington DC 20373 -5802 General Information: 2009 Resources: $493. 3 M NAF (includes NEX Dividends) $344. 5 M APF (Direct) Employees: 15, 336 (NAF, APF, FN, and MILPERS) 2009 NAF Recapitalization: $69. 3 M Facilities: Fitness 105 Golf Courses 34 RV Parks 487 Food Ops 423 Contains Data On: Fitness, motion pictures, ITT, Business Activities, Facilities and Acquisition, Community Support (child/youth), Public Affairs, (How to Do Business) HQ POCs: F&FR Support Center: (Tom Mc. Fadden) (901) 874 -6618/6812 (fax) Web site: www. mwr. navy. mil Other HQ POCs: F&FR Service Center: (Tom Mc. Fadden) (901) 874 -6618/6803 (fax) Marketing/Communications: (901) 874 -4243 Fitness/Fleet Rec: (901) 874 -6802 Media Resources/Motion Pictures: (901) 874 -6537 Recreation: (901) 874 -6640 Food Service: (202) 433 -4640 Lodging Program: (202) 433 -4621 Child and Youth Programs: (901) 874 -6699 Facilities & Acquisition: (901) 874 -6674 Computer Services: (901) 874 -6520 Finance: (901) 874 -6592 Personnel: (901) 874 -6716 Training: (901)874 -6735

Air Force Services Operations Headquarters: U. S. Air Force Services Directorate of Services 1770 Air Force Pentagon Washington, DC 20330 -1770 General Information: 2009 Revenues: $756. 7 M NAF $813 M APF Employees: 47, 247 Director: Charles E. Milam, SES Deputy Dir: Horace L. Larry Phone: (703) 604 -0010/0321 (fax) Web site: www. afsv. af. mil Contains data on: Aero Clubs, Child and Youth, Fitness and Sports, Tops in Blue, Lodging, ITT, Mortuary Affairs, Survivor Assistance, Career Program, Faculty Design Guides, Libraries, Golf, Clubs, AFNAFPO, Public Affairs and News 2009 Recapitalization: $100. 7 M Facilities: Fitness Centers 115 Fast Food Ops 108 (Clubs Only) HQ POCs: Programs Policy: (703) 604 -0738 Armed Forces Entertainment: (703) 604 -2429 Child & Youth: (703) 604 -6421 Golf Courses 66 Lodges 93 continued. . .

Air Force MWR Operations: Air Force Services Agency 10100 Reunion Place, Suite 500 San Antonio, TX 78216 -4138 Commander: Col. Sandy Adams, USAF Phone: (210) 652 -6207/7041 (fax) www-p. afsv. af. mil Web site: www. afnafpo. com Includes How to Do Business, Acquisition Data, Smart Buy Program A. F. Services Agency POC’s Community Prgms: (210) 652 -3371 Rec & Business: (210) 652 -3193 Fit & Sports: (210) 652 -7021 Mkting & PAO: (210) 652 -4945 Lodging: (210) 652 -8875 Food: (210) 652 -2619 A. F. NAF Purchasing AFNAFPO HQ AFSVA/SVC 10100 Reunion Place, Suite 304 San Antonio, TX 78216 -4138 Director: (210) 652 -5426 Purchasing Div: (210) 652 -5426

The Military Market Facts Presentation has been brought to you by the American Logistics Association. Advocates for Military Total Quality of Life www. ala-national. org