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Army and Air Force Exchange Service

The Army & Air Force Exchange Service (AAFES, also referred to as The Exchange) is the retailer on U.S. Army and Air Force installations worldwide. The Exchange is headquartered in Dallas, Texas, and its director/chief executive officer is Tom Shull. The largest of the Department of Defense's exchange services is No. 62[1] on the National Retail Federation's STORE magazine's Top 100 Retailers list.

Army & Air Force Exchange Service
Department store, Government agency
IndustryRetail
Founded25 July 1895
(General Orders No. 46)
6 June 1941
(Army Exchange Service)
Headquarters3911 South Walton Walker Boulevard, Dallas, Texas,
United States 75236
Number of locations
4,000 (all facilities)
Key people
Tom Shull, Director/CEO
Revenue
  • Increase US$8.7 billion (2018)[1]
Number of employees
35,000
ParentUnited States Department of Defense (1895–present)
Websitewww.shopmyexchange.com

In addition to their retail support for the military, the Exchange also outfits troops with combat uniforms below cost[2], and serves approximately 2.5 million school lunches per year for children attending Department of Defense Schools overseas.[3]

As of Veterans Day 2017, all military exchanges offer online exchange shopping privileges to an estimated 15 million honorably discharged veterans.[4] The exchanges launched VetVerify.org in June 2017, allowing veterans to verify their eligibility ahead of the benefit's start date.[5]

Contents

HistoryEdit

RootsEdit

 
Soldiers take a break at a post exchange in this 1914 photo.

For more than 100 years before the post exchange system was created, traveling merchants known as sutlers provided American soldiers with goods and services during times of war. Sutlers served troops at Army camps as far back as the French and Indian and Revolutionary wars.[6]

Complaints of sutlers charging premiums for substandard merchandise were widespread during the Civil War, and in 1867 the War Department created the post trader system. While intended to prevent the unscrupulous practices of sutlers, the post trader system still subjected troops to over-inflated prices and was rife with bribery and corruption.[7]

On 29 November 1880, Col. Henry A. Morrow, seeking to quell disciplinary problems resulting from troops visiting disreputable places of amusement in nearby towns, established the first American military canteen at Vancouver Barracks. There, troops were provided newspapers and magazines, played billiards and cards, and could obtain light food and drink without leaving post.

The idea was so successful that other posts began establishing canteens across the frontier, providing troops with not only a place to socialize but obtain daily necessities at affordable prices. In 1889, the War Department issued General Orders No. 10, authorizing commanding generals to establish canteens at army posts. Like the modern-day exchange system, these canteens were largely financially self-sustaining.[8]

In February 1882, the secretary of war ordered that canteens be henceforth referred to as "post exchanges." This change was due to the popular association of the word "canteen" with the bawdy, immoral behavior alleged to occur in the canteens of foreign armies. By 1895, post traders had been almost entirely replaced on Army posts by post exchanges.[9]

Early developmentsEdit

On 25 July 1895, the War Department issued General Orders No. 46, directing commanders at every post to establish a post exchange "wherever practicable." Post exchanges served two missions: first, "to supply the troops at reasonable prices with the articles of ordinary use, wear, and consumption, not supplied by the Government, and to afford them a means of rational recreation and amusement," and second, "provide the means for improving the messes" through exchange profits.[10]

For the first 45 years of the exchange system, exchanges operated independently under the direction of each post’s commanding officer, meaning there was little uniformity between exchange locations. While the War Department did not centrally control exchange operations, it did hold commanding officers accountable for their financial assets. Exchanges were also subject to annual checks by the Inspector General’s office.

With the outbreak of World War I and subsequent expansion of the U.S. Army, it became clear that the existing post exchange system was not equipped to accommodate such a large-scale effort. Gen. John J. Pershing enlisted the help of civilian service organizations to provide canteen service overseas, though they proved to lack the equipment and experience necessary to fully meet the needs of downrange troops.[11]

CentralizationEdit

During the mobilization efforts leading up to World War II, the War Department increasingly looked for ways to upgrade its antiquated post exchange system. After completing a review of existing exchanges, Lt. Col. J. Edwin Grose concluded that the Army would need to "become the operator of an extensive chain store system with world wide [sic] branches" to sufficiently meet the demands of a large-scale war effort. In April 1941, an advisory committee of five prominent retail executives affirmed this notion, recommending the creation of a central organization to oversee exchange operations.

On 6 June 1941, the Army Exchange Service (AES) was created.[12] On 26 July 1948, AES was renamed the Army & Air Force Exchange Service, to reflect AES’ responsibility to serve the Air Force, which was created in 1947.[13]

Since its establishment, the Exchange has been involved in 14 major military operations (to include World War II, Korea, Vietnam, Grenada, Panama, the Balkans and Operations Enduring and Iraqi Freedom) as well as several dozen humanitarian and disaster relief contingencies.[14][15]

Civilian leadershipEdit

 
Tom Shull, Director/CEO of the Army & Air Force Exchange Service

In 2012, Tom Shull became the Exchange's first civilian director/CEO, having previously served as an executive with Wise Foods, Inc., Hanover Direct, Inc., Barneys New York and Meridian Ventures. A West Point graduate, Shull served as an infantry company commander and held assignments at the White House and National Security Council.[16]

Under Shull's leadership, the Exchange has added merchandise from industry-leading brands such as Michael Kors and Disney to its assortment, reduced costs and made improvements to its website, ShopMyExchange.com. As of December 2018, the Exchange has established shipping centers inside 99 brick-and-mortar stores, reducing shipping costs and improving delivery times for customers.[17] Shull also spearheaded the Exchange's efforts to bring first-run movies to installation theaters.[18]

In 2015, Shull's emphasis on intensifying national brands, growing concessions and Express stores, strengthening the Exchange's web presence and reducing costs led the Exchange to record operating earnings of $402 million, every dollar of which was reinvested into the military community.[19] This performance, which occurred despite military personnel downsizing of 13 percent since 2011[20], represented an increase of three percentage points in terms of profitability, and was on par with or exceeded that of Walmart and Target.[21]

Veterans online shopping benefitEdit

On 8 May 2012, Shull drafted a memorandum to the Under Secretary of Defense for Personnel and Readiness proposing that military exchanges be allowed to extend online shopping privileges to honorably discharged veterans[22].

Shull presented a business case for the veterans online shopping benefit to the Department of Defense’s Executive Resale Board in August 2014. Shull said the plan could generate more than $100 million for installation quality-of-life programs within three years[23]. The Executive Resale Board voted unanimously to recommend the proposal in August 2016[24].

On 13 January 2017, the Department of Defense announced that all honorably discharged veterans would be eligible to shop tax-free online military exchanges starting 11 November 2017[25]. The expanded benefit makes online exchange privileges available to an estimated 15 million veterans.[18]

On 5 June 2017, military exchanges announced the launch of VetVerify.org, an online service where veterans can verify their eligibility to shop online exchanges. It was concurrently announced that some veterans who register would be selected to shop ahead of 11 Nov launch as beta testers.[26]

As of June 2019, nearly 90,000 veterans have verified their eligibility to shop online with the Exchange, saving more than $5 million in sales tax.[27]

Disaster supportEdit

The Exchange has a history of supporting the military responding to natural disasters. The Texas State Guard formally requested the Exchange bring support to the Texas Gulf Coast in the aftermath of Hurricane Harvey.[28] The next day, an Exchange store on wheels, dubbed a mobile field Exchange (MFE), opened its doors in Bastrop, Texas where National Guard members stocked up on water, batteries, beef jerky, shampoo, sports drinks and more.[28] A second MFE opened days later in Corpus Christi, Texas. [29]

The Exchange Logistics team sent truckloads of bottled water to Florida and Georgia ahead of Hurricane Irma.[28] They also ensured there was sufficient emergency items in stock for support, such as generators, batteries, flashlights, tarps, gas cans and first-aid kits.[30]

Before Hurricane Maria made landfall, the Exchange team began funneling emergency shipments of supplies, such as generators, batteries and water, to areas in the storm’s path.[28] Just ahead of Maria’s arrival, the Fort Buchanan main store opened 30 minutes early and sold six pallets of water in 45 minutes.[28] As Maria’s intensity grew, an emergency list of health and personal care products, as well as pallets of bottled water, were staged throughout the Southeast for immediate shipment, with a focus on the fastest methods of transportation once the storm had passed.[28] Just two days after the storm hit, while 90 percent of the island was still struggling with power issues, 30 associates reported to the Fort Buchanan Exchange to begin cleaning the facility to expedite opening.[28] They were also scheduling local contractors to perform a safety inspection on the fuel pumps, which were damaged in the storm, in order to get them back up and running as soon as possible.[28]

In the wake of Hurricane Florence in September 2018, more than 4,000 packages of batteries, thousands of cases of water as well as generators, gas cans and flashlights were delivered to Fort Bragg and Seymour Johnson Air Force Base by the Exchange Logistics team.[14]

The Exchange deployed an MFE to Tyndall Air Force Base after Hurricane Michael.[31] The MFE provided essentials to those assisting with recovery efforts until the base exchange reopened 28 November 2018.[32]

After a 7.0 magnitude earthquake hit about seven miles northwest of Joint Base Elmendorf-Richardson in November 2018, Exchange associates rallied to clear damage and reopen quickly for service members and their families.[33]

The Exchange has 13 MFEs and two barber shops that can be deployed within 48 hours of command request to disaster-affected areas.[34]

BE FITEdit

The Exchange is partner in the Army Healthy Communities and Air Force Smarter Fueling initiatives under the Office of the Secretary of Defense, Operation Live Well.[35]

BE FIT is an Exchange initiative focused on the readiness and resiliency of military members and their families. Exchange stores feature athletic wear, shoes and gear, and the Exchange's Community Hub BE FIT page offers fitness articles and videos.[36][37] The Exchange identifies healthier-for-you food and beverage choices in their main store and Express locations[38] as well as in all of the Exchange 1,700+ restaurants.[39]

The Exchange carries more than 450 BE FIT-approved items, including fresh fruit, yogurt; hard-boiled eggs; trail mix and nuts; tuna; grass-fed meat snacks and jerky; veggie chips; frozen entrees; bottled water; and more.[39] In 2018, the Exchange opened more than 50 name-brand restaurants, all with better-for-you options, including Qdoba, Starbucks, Panda Express, Subway, Boston Market, Sarku and, in Europe, Bun D.[40]

To complete BE FIT's holistic approach, the Exchange offers a variety of wellness services, such as optical centers, dental offices and durable medical equipment stores.[40]

Structure and fundingEdit

Part of the Department of Defense, the Exchange is directed by a board of directors responsible to the secretaries of the Army and Air Force through the Chiefs of Staff. As a non-appropriated fund activity, the Exchange self-funds 98 percent of its operations, with revenue coming from the sale of goods and services. The majority of the 2 percent in appropriated funds is used to fund transporting goods overseas to Americans stationed abroad.[41]

Members of the Exchange's 13-member board of directors include Lt. Gen. Aundre Piggee, the Army's Deputy Chief of Staff, G-4; Lt. Gen. Brian T. Kelly, Deputy of Chief of Staff for Manpower, Personnel and Services, Headquarters U.S. Air Force; U.S. Army Sgt. Maj. Daniel A. Dailey and Air Force Chief Master Sgt. Kaleth O. Wright.[42]

EarningsEdit

One hundred percent of Exchange earnings are invested back into the military community. Two-thirds of Exchange earnings support military quality-of-life programs, while the remaining third is used for new store construction and facility costs at no cost to the federal government.[43]

In 2018, the Exchange generated $386 million in earnings.[44] Of this, Exchange shoppers contributed $223 million to installation quality-of-life programs including child development and fitness centers.[44] In the past 10 years, the Exchange has distributed more than $2.3 billion to fund quality-of-life improvements.[15]

StoresEdit

 
The Army & Air Force Exchange Service's Main Store on Fort Belvoir, VA.

The Exchange operates more than 4,000 facilities, including main stores, convenience stores, military clothing stores and theaters, across 50 U.S. states and 34 countries. Additionally, the Exchange has more than 1,700 quick-serve restaurants such as Subway, Burger King, Popeyes Chicken, Taco Bell, Pizza Hut, Charley's Grilled Subs and Starbucks as well as over 3,600 concession operations.[41] Authorized patrons of the Exchange include members of Active Duty, members of the Reserves and National Guard, retired members of the U.S. uniformed services, recipients of the Medal of Honor, honorably discharged veterans certified 100% disabled by the United States Department of Veterans Affairs, or when hospitalized and their dependents by the presentation of the U.S. Uniformed Services Privilege and Identification Card.[45]

Modern base and post exchanges (called BX in the Air Force, PX in the Army) provide tax-free goods – including name brands such as Michael Kors, Coach, and Ralph Lauren – to authorized shoppers. In addition, some Exchanges host concession malls with a variety of vendors and storefronts.

In November 2017, the Exchange unveiled its third-largest shopping center at Camp Humphreys, a $64 million shopping center anchored by a department store, food court and mall with a strong name-brand presence. At 300,000 square feet, the new shopping center is five times larger than the 14-year-old facility it replaced.[46] Collaboration among the Exchange, United States Forces Korea and contractors allowed the shopping center to open earlier than expected, giving Soldiers and military families a taste of home during the holidays. The new building was part of the relocation and transformation at Camp Humphreys.[46]

EmployeesEdit

The Exchange employs nearly 35,000 associates worldwide in the United States, Europe, the Pacific and the Middle East. Of these, about 6,300 are military spouses, nearly 12 percent are veterans and 2 percent are active duty, reserves and the national guard.[41][47] The Exchange has been named a Military Friendly Employer by Victory Media, publisher of G.I. Jobs and Military Spouse magazine, for seven consecutive years, receiving the publisher's Gold Award for 2019.[48][49] The Exchange has also been named a Military Friendly Spouse Employer.[50][51] In all, about 85 percent of the Exchange's associates are connected in some way to the military.[18]

Since 11 September 2001, nearly 4,800 Exchange associates have deployed to combat zones in Iraq and Afghanistan to support troops in combat operations[52]. The Exchange currently operates 49 stores in contingency zones in countries such as Afghanistan, Kuwait, Iraq, Saudi Arabia, Jordan, Qatar, United Arab Emirates, Romania, Cyprus, Bosnia and Kosovo.[15]

Military Star CardEdit

The Exchange also operates and funds the Exchange Credit Program (ECP), a program established by Congress in 1979 to protect service members from predatory lending and offer responsible credit solutions to customers.

The Exchange Credit Program's Military Star Card counts approximately 1.6 million cardholders from all branches of service, including qualified dependents, among its members.[53] The Exchange Credit Program markets Military Star as the "one card solution" for all purchases made on military installations. In total, the Military Star Card generated $445 million in value in 2017.[54]

Like the Exchange, the Exchange Credit Program contributes a significant portion of its earnings to morale, welfare and recreation programs, furnishing $639 million to MWR programs over the last 10 years.[55]

According to an October 2016 report by CreditCards.com, the Military Star Card has the lowest flat interest rate among retail-branded credit cards.[56]

In November 2018, the military exchange store credit card rolled out a mobile app, MILITARY STAR Mobile, that allows shoppers to make payments, sign up for push notifications and view account information, including all transactions and past billing statements.[57] Biometric security features ensure that all account information stays safe.[57]

See alsoEdit

ReferencesEdit

  1. ^ "The Army & Air Force Exchange Service 2017 Annual Report" (PDF). The Army & Air Force Exchange Service. 10 July 2018.
  2. ^ "Across Europe and Tip of the Spear, Exchange Delivers a Lifeline to America". Army & Air Force Exchange Service. 27 July 2017.
  3. ^ Jowers, Karen (2 May 2018). "School lunch prices going up for most DoD students overseas". Military Times. Retrieved 23 January 2019.
  4. ^ "Army & Air Force Exchange Service Earns NDTA Innovative Logistics Service Award". DVIDS. Retrieved 23 January 2019.
  5. ^ "Your questions answered about the new veterans online shopping benefit". Military Times. 10 June 2017.
  6. ^ Habgood, Carol; Skaer, Marcia (October 1994). One Hundred Years of Service: A History of the Army & Air Force Exchange Service (PDF). Army & Air Force Exchange Service. p. 1. ISBN 9995489228.
  7. ^ "Post Exchange System". JAG Law Review. VIII (5): 21. September – October 1966. Retrieved 5 September 2017.
  8. ^ Habgood, Carol; Skaer, Marcia (October 1994). One Hundred Years of Service: A History of the Army & Air Force Exchange Service (PDF). Army & Air Force Exchange Service. pp. 9–12. ISBN 9995489228.
  9. ^ Habgood, Carol; Skaer, Marcia (October 1994). One Hundred Years of Service: A History of the Army & Air Force Exchange Service (PDF). Army & Air Force Exchange Service. pp. 16–18. ISBN 9995489228.
  10. ^ "Post Exchange System". JAG Law Review. VIII (5): 33. September – October 1966. Retrieved 5 September 2017.
  11. ^ Habgood, Carol; Skaer, Marcia (October 1994). One Hundred Years of Service: A History of the Army & Air Force Exchange Service (PDF). Army & Air Force Exchange Service. pp. 19–21. ISBN 9995489228.
  12. ^ "Post Exchange System". JAG Law Review. VIII (5): 34. September – October 1966. Retrieved 5 September 2017.
  13. ^ Habgood, Carol; Skaer, Marcia (October 1994). One Hundred Years of Service: A History of the Army & Air Force Exchange Service (PDF). Army & Air Force Exchange Service. p. 39. ISBN 9995489228.
  14. ^ a b "Exchange Operations Returning to Normal after Hurricane Florence". DVIDS. Retrieved 24 January 2019.
  15. ^ a b c "Benefit Fact Sheet". MyArmyBenefits.com. U.S. Army. Retrieved 26 September 2016.
  16. ^ "Civilian CEO moves to modernize military's retail business". LATimes.com. Los Angeles Times. Retrieved 27 March 2013.
  17. ^ "Shipping Upgrades Make Spirits Brighter for Exchange Shoppers". DVIDS. Retrieved 23 January 2019.
  18. ^ a b c Rubino, Joe (26 September 2017). "Colorado-born Tom Shull has a gift for U.S. veterans: Tax-free online shopping". Denver Post. Retrieved 27 September 2017.
  19. ^ "Exchange director/CEO focuses on making life better for Airmen at Creech, Nellis AFBs". AerotechNews.com. Nellis Bullseye. Retrieved 4 November 2016.
  20. ^ "Honorably discharged veterans will soon get to shop tax-free". APNews.com. Associated Press. Retrieved 11 August 2017.
  21. ^ "This week, the Soldier for Life... – Soldier for Life | Facebook". www.facebook.com. Retrieved 6 March 2017.
  22. ^ "AAFES chief: Let 22 million vets shop exchanges online". Stars & Stripes. 5 June 2014. Retrieved 22 August 2017.
  23. ^ "AAFES makes 'business case' for allowing veterans to shop online". Stars & Stripes. 21 August 2014. Retrieved 22 August 2017.
  24. ^ "The Pentagon is closer to extending a generous new benefit to millions of veterans". MilitaryTimes.com. 16 August 2016. Retrieved 22 August 2017.
  25. ^ "DoD to Open Online Exchange Shopping to Veterans". defense.gov. 13 January 2017. Retrieved 22 August 2017.
  26. ^ "Veterans can register now for chance at early access to online military exchange shopping". MilitaryTimes.com. 5 June 2017. Retrieved 22 August 2017.
  27. ^ Jowers, Karen (27 December 2018). "Here’s how veterans have saved at least $4 million shopping at the online exchange". Military Times. Retrieved 23 January 2019.
  28. ^ a b c d e f g h "Exchange Ready to send support to Puerto Rico following Hurricane Maria". Alamogordo Daily News. Retrieved 24 January 2019.
  29. ^ "Exchange Ready to send support to Puerto Rico following Hurricane Maria". Alamogordo Daily News. Retrieved 24 January 2019.
  30. ^ "Exchange Ready to send support to Puerto Rico following Hurricane Maria". Alamogordo Daily News. Retrieved 24 January 2019.
  31. ^ VICTORA, WENDY. "Slowly approaching normal: Tyndall base exchange to reopen". Northwest Florida Daily News. Retrieved 23 January 2019.
  32. ^ Pawlyk, Oriana (30 November 2018). "Tyndall Reopens Base Exchange as 4,000 Airmen Return to Base". Military.com. Retrieved 24 January 2019.
  33. ^ "JBER team wins Best Large Exchange 2019 Director/CEO Cup". Joint Base Elmendorf-Richardson. Retrieved 8 July 2019.
  34. ^ "Exchange Deploys Mobile Field Exchange to Assist with Recovery Efforts in Florida". DVIDS. Retrieved 23 January 2019.
  35. ^ "AAFES Develops BE FIT Program to Promote Healthier Food & Beverage Options". Convenience Store News. Retrieved 24 January 2019.
  36. ^ "AAFES senior enlisted advisor visits JBER". Mat-Su Valley Frontiersman. Retrieved 23 January 2019.
  37. ^ "Focus on Fitness: Meet the Exchange's New BE FIT Ambassador". DVIDS. Retrieved 23 January 2019.
  38. ^ "AAFES Develops BE FIT Program to Promote Healthier Food & Beverage Options". Convenience Store News. Retrieved 23 January 2019.
  39. ^ a b "AAFES senior enlisted advisor visits JBER". Mat-Su Valley Frontiersman. Retrieved 23 January 2019.
  40. ^ a b "Camp Foster Exchange's BE FIT wellness offerings keep Marines ready, resilient | Stripes Okinawa". okinawa.stripes.com. 23 January 2019. Retrieved 23 January 2019.
  41. ^ a b c "Exchange Quick Facts". ShopMyExchange.com. Army & Air Force Exchange Service. Retrieved 29 January 2016.
  42. ^ "Exchange Leadeship". ShopMyExchange.com. Army & Air Force Exchange Service. Retrieved 11 January 2017.
  43. ^ "Shopping the Exchange generates $219 million for military quality-of-life". StuttgartCitizen.com. 7 June 2018. Retrieved 23 January 2019.
  44. ^ a b "Air Force Retiree Services". 7 June 2018. Retrieved 10 July 2018.
  45. ^ "The Exchange – Exchange Stores – Authorized Patrons".
  46. ^ a b "Camp Humphreys Exchange Shopping Center Opens In Time for Holiday Shopping". The Exchange Newsroom. 20 November 2017. Retrieved 8 July 2019.
  47. ^ "Exchange Remains Committed to Hiring Veterans, Military Spouses". DVIDS. Retrieved 23 January 2019.
  48. ^ "Army & Air Force Exchange Service Named a Military Friendly Employer® for 2019". DVIDS. Retrieved 24 January 2019.
  49. ^ Blyth, Ian. "Is The Exchange (Army & Air Force Exchange Service) a Military Friendly Employer?". Military Friendly. Retrieved 24 January 2019.
  50. ^ 14 May, Week of; Military.com, 2018. "AAFES Hiring Veterans, Spouses". Military.com. Retrieved 24 January 2019.
  51. ^ "2019MFSE". 2019MFSE. Retrieved 24 January 2019.
  52. ^ "The Exchange By The Numbers". ShopMyExchange.com. Army & Air Force Exchange Service. Retrieved 10 July 2018.
  53. ^ "The Exchange | About Exchange | Exchange Quick Facts". www.aafes.com. Retrieved 23 January 2019.
  54. ^ "The MILITARY STAR Card Earns Service Members, Families $27.5 Million in 2017". DVIDS. Retrieved 30 January 2019.
  55. ^ "About ECP". MyECP.com. Exchange Credit Program. Retrieved 29 January 2016.
  56. ^ "30% Interest for a Store Credit Card". PR Newswire. PR Newsire. Retrieved 20 October 2016.
  57. ^ a b "MILITARY STAR Launches Mobile App for Streamlined Customer Experience". DVIDS. Retrieved 30 January 2019.

External linksEdit