The Army & Air Force Exchange Service balances profitability with community

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Serving military troops, families and veterans at home and abroad, the Army & Air Force Exchange Service operates more than 2,700 facilities around the world. The organization exists to make the lives of military veterans and families better, and about 85 percent of its 34,000 associates are connected to the military. But when it comes to running the business, it’s not much different from any other retailer. “You have to innovate to survive,” says Director and CEO Tom Shull. Established in 1895 and earning an impressive $8 billion in sales last year — and the No. 61 spot on STORES Magazine’s Top 100 Retailers list — the Exchange now provides everything from Wi-Fi to food courts to combat uniforms. And last year, the Exchange opened its online shopping benefits to honorably discharged veterans.

On this episode of Retail Gets Real, Shull discusses how the Exchange supports the military in all aspects of life and embraces innovation.

The Exchange has the 11th largest transportation fleet in the country, but to get the comforts of home to members of the military stationed overseas, the company takes advantage of Transportation Command, which ships combat gear and equipment to troops. The Exchange invests 100 percent of its earnings into improving quality of life for military, like fitness centers and child care. “It’s a tough balancing act,” Shull says about focusing on maximizing earnings versus stretching dollars to have the biggest impact on the community. “[We have to] deliver those earnings to support all those critical programs.”

Tom Shull (center) brought ‘The Exchange’ badges for co-hosts Bill Thorne (left) and Sarah Rand (right).

Tom Shull (center) brought ‘The Exchange’ badges for co-hosts Bill Thorne (left) and Sarah Rand (right).

Like any other retailer, the Exchange is also committed to improving customer service and shopping experience. “We are really leaning forward to adopt all the technology that's needed to stay competitive,” Shull says. The company launched a state-of-the-art website to rival top retailers’ ecommerce capabilities, and the investment has paid off: Online sales are up 50 percent; sales in physical locations are up as well.

Listen to the episode to learn more about how the Exchange helps active-duty service members and veterans.

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Sarah Rand is a co-host on NRF’s Retail Gets Real podcast. Meet all the co-hosts and learn more about the show.