AAFES makes 'business case' for allowing veterans to shop online
By TOM PHILPOTT | | Published: August 21, 2014
Allowing 18.8 million honorably-discharged veterans to shop online through military exchange services, which also operate brick-and-mortar department stores and concessions on base, could boost store profits enough to pump more than $100 million back into base quality-of-life programs.
That’s part of the “business case” made by the Army and Air Force Exchange Service (AAFES) to the Department of Defense’s Executive Resale Board this month where Navy officials still raised concerns over the idea.
Thomas C. Shull, chief executive officer of AAFES, proposed to Defense officials several months ago that veterans be allowed to shop online through exchange service websites and, in that way, gain the same discounts on thousands of department-store items that on-base shoppers enjoy.
AAFES already is working with an outside contractor to modernize and expand its website for online shopping of current patrons, which include active duty, Reserve and Guard members, military retirees and families.
Senior policy officials who oversee Navy and Marine Corps exchange services, however, have challenged the idea, fearing “benefit creep” for veterans beyond online shopping into other military support programs. They also believe hurdles to implementing online shopping for all veterans will be higher than AAFES predicts, particularly in finding a foolproof way to verify veteran status and the character of their discharges.
Defense officials, meanwhile, have signaled they want unanimous support of service branches before they will embrace such a dramatic expansion of discount shopping, even if only online. The Executive Resale Board, which resolves disagreements between elements of the military resale system, recently asked Shull to present a business case for opening online shopping to any veteran with an honorable discharge.
Board members representing every service are reviewing that report with comments due back Aug. 29. The board’s next scheduled meeting, however, isn’t until Nov. 4. Shull told us earlier he hoped to have his plan approved by Veterans’ Day, November 11, and have the benefit available to all qualified veterans a year later.
“Each month veterans are denied the opportunity to shop online through armed services exchanges costs the [Department of Defense] $8 million to $14 million in earnings and [base Morale, Welfare and Recreation programs] $5 million to $9 million in dividends,” says the AAFES report.
Here are other points it makes in favor of a veterans online shopping benefit, what Shull’s team now refers to as the “VOSB”:
Benefit Deserved: Many service members forced to leave the military in the next 12-to-18 months in a force drawdown will have deployed multiple times to Iraq and Afghanistan but won’t have a chance to serve full, 20-year careers, the report notes. The offer of online discount shopping through exchanges “is a modest way to show appreciation.”
Also, offering veterans online discounts would “encourage ongoing involvement in the military community and sends a clear message to future recruits that our nation values and appreciates every individual’s service.”
Lean Times for Exchanges: Because of the drawdown and falling exchange patronage, store profits and exchange “dividends” to support morale, welfare and recreational activities on base “will decrease materially.” Service members and families will feel the impact on support programs.
From 2011 to 2013, AAFES total sales fell 10.1 percent. If AAFES had not taken aggressive steps to cut overhead, earnings would have fallen sharply along with dividends to quality of life programs. Though AAFES expects to come close to its target of $300 million in revenues in 2014, erosion of the customer base continues and could reduce store earnings to less than $100 million by 2017.
“Unlike commercial enterprises,” bases exchanges “can sell only within a finite and shrinking customer base,” the report says. Exchanges need to expand patronage to veterans and AAFES is well prepared to do so.
Veterans Would Shop: Given the value that military retirees place on exchange shopping, spending an average of $668 there annually, the 90 percent of non-retiree veterans who can’t shop on base could be expected to take advantage of shopping discounts even if available only online.
The report projects total exchange sales increasing across of wide range of possibility, from a low of $226 million annually to a high of $1.13 billion. This would generate $60 million to $108 million annually in added dividends to support MWR and quality of life programs, without any increase in taxpayer support of base stores, according to AAFES’ analysis.
The report discusses possible pros and cons of online shopping for veterans and finds only one “true” con – inaction by the department.
“Any delay in addressing this critical population only weakens the entire military community,” the report boldly states. It adds some movie-reel rhetoric that “speed and cooperation are of the essence.”
Meanwhile AAFES is more than doubling its selection of goods sold online to include about half of all items sold in larger exchanges, up from 20 percent today. It also promises to speed processing and shipment of orders and to expand call center operations so shoppers see a vast improvement.
Veterans should learn by November whether the business case AAFES made was strong enough to win the unanimous support of services and, therefore, of Defense officials. AAFES believes expanding online shopping to veterans would require only a change in regulation, not law.
Tricare genetic test coverage
A month later than expected, the Defense Health Agency has published online its list of genetic or laboratory-designed tests TRICARE now covers under a three-year demonstration that will end on July 18, 2017, if not extended.
Here’s the link: http://www.tricare.mil/ldt.
Beneficiaries who had to pay for any of these 35 tests since coverage first was denied back to Jan. 1, 2013, might be eligible for reimbursement.
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