The Army & Air Force Exchange Service (AAFES, also referred to as The Exchange and The PX or The BX) 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 oldest and the largest of the Department of Defense's exchange services, it is No. 61 on the National Retail Federation's Top 100 Retailers list.
In addition to their retail support for the military, the Exchange outfits troops with discounted combat uniforms,[3] and serves approximately 2.5 million discounted school lunches per year for children attending Department of Defense Dependents Schools overseas.[4]
As of Veterans Day, 11 November 2017, military exchanges started offering online exchange shopping privileges to an estimated 15 million honorably discharged veterans.[5] The exchanges launched VetVerify.org in June 2017, allowing veterans to verify their eligibility ahead of the benefit's start date.[6]
History
Roots
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.[7]
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.[8]
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.[9]
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.[10]
Early developments
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 masses" through exchange profits.[11]
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.[12]
Centralization
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.[13] 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.[14]
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.[15][16]
In 2015, Shull's emphasis on merchandising national brands, expanding express stores, strengthening the Exchange's web presence and reducing costs led the Exchange to record operating earnings of US$402 million, with US$237 million of those earnings reinvested into military quality-of-life programs.[18] The earnings improvement occurred during a 10.5 percent decline in military personnel from 2012 to 2017 due to operational drawdowns in the active duty forces.[19][20]
As of December2018[update], the Exchange has established shipping centers inside 99 brick-and-mortar stores, which reduced shipping costs and improved delivery times for customers.[21] Shull also shaped the Exchange's efforts to bring more first-run movies to military movie theaters.[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.[24] The Executive Resale Board voted unanimously to recommend the proposal in August 2016.[25]
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.[26] The expanded benefit is expected to make online exchange privileges available to an estimated 17 million to 21 million veterans.[22]
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.[27]
As of December 2018, more than 400,000 veterans had verified their eligibility to shop online with the Exchange.[28]
As of November 2019, nearly 100,000 veterans have used the online benefit, saving more than $6.6 million in sales tax.[29]
Expanded in-store shopping privileges
On 1 January 2020, the Exchange welcomed home disabled Veterans, Purple Heart recipients and certain caregivers—4.1 million Americans— with in-store shopping privileges.
Privileges expanded to all Veterans with service-connected disabilities, Veterans who are Purple Heart recipients, Veterans who are former prisoners of war and primary family caregivers for Veterans who are enrolled in the Department of Veterans Affairs Program of Comprehensive Assistance for Family Caregivers.[30]
The new patron group also has access to commissaries and morale, welfare and recreation retail facilities located on U.S. military installations.[30]
Disaster support
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.[31] 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.[31] A second MFE opened days later in Corpus Christi, Texas.[32]
The Exchange Logistics team sent truckloads of bottled water to Florida and Georgia ahead of Hurricane Irma.[31] They also ensured there was sufficient emergency items in stock for support, such as generators, batteries, flashlights, tarps, gas cans and first-aid kits.[32]
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.[31] Just ahead of Maria’s arrival, the Fort Buchanan main store opened 30 minutes early and sold six pallets of water in 45 minutes.[31] 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.[31] 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.[31] 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.[31]
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.[15]
The Exchange deployed an MFE to Tyndall Air Force Base after Hurricane Michael.[33] The MFE provided essentials to those assisting with recovery efforts until the base exchange reopened 28 November 2018.[34]
The Exchange has 13 MFEs and two barber shops that can be deployed within 48 hours of command request to disaster-affected areas.[35]
BE FIT
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.[36]
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.[37][38] The Exchange identifies healthier-for-you food and beverage choices in their main store and Express locations[39] as well as in all of the Exchange 1,700 restaurants.[37] The Exchange offers a variety of services such as optical centers, dental offices and durable medical equipment stores.[40]
Structure and funding
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]
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 2019, Exchange shoppers generated $217 million for installation quality-of-life programs, including child, youth and school services; Armed Forces Recreation Centers; and more.[44] In the past 10 years, the Exchange has distributed more than $2.2 billion to fund quality-of-life improvements.[44]
Stores
The Army & Air Force Exchange Service's Main Store on Fort Belvoir, VA.
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 2010, the Exchange unveiled Freedom Crossing at Fort Bliss, a $100million outdoor mall anchored by a 217,000-square-foot Exchange Main Store and including a children's play area, outdoor dining patios, shaded landscaped areas, outdoor seating, an outdoor fireplace, an interactive fountain, a lawn for community events and concerts, and more than 40 storefronts and restaurants. The mall is the first of its kind on a United States armed services base.[46][47]
Employees
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][48] The Exchange has been named a Military Friendly Employer by Victory Media, publisher of G.I. Jobs and Military Spouse magazine, for eight consecutive years, receiving the publisher's Gold Award for 2019.[49][50] The Exchange has also been named a Military Friendly Spouse Employer.[51][52] In all, about 85 percent of the Exchange's associates are connected in some way to the military.[22]
Since 11 September 2001, 4,600 Exchange associates have deployed to combat zones in Iraq and Afghanistan to support troops in combat operations.[53] 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.[16]
Since 2013, the Exchange has hired more than 44,500 Veterans and military spouses.[54] In 2018, the Exchange reaffirmed its commitment to hiring 50,000 Veterans and spouses by the end of 2020.[55]
Military Star Card
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. The Military Star Card credit card is the ECP's most successful product, with 1.6 million cardholders across the six branches and their dependents.[56] Prior to 2015, the Star Card was both a credit card offered through Chase Bank, and a store card for use exclusively at base outlets. Even though it was physically one card, it had two websites, two log-ins, two minimum payments, and two lines of credit on the customers credit report.[57] After 2015, the ECP Star Card became a store card for use on post, and existing customers were given the option of transitioning the credit card portion to a Chase Freedom Unlimited Visa or closing their account. According to an October 2016 report by CreditCards.com, the Star Card has the lowest flat interest rate among retail-branded credit cards.[58]
Like the Exchange, the Exchange Credit Program contributes a significant portion of its earnings to morale, welfare and recreation programs, furnishing $639million to MWR programs from 2006 to 2016.[59] Marketed as the "one card solution" for all purchases made on military installations, the card generated $445 million in value in 2017.[60]
United States Army Garrison Fort Buchanan, Puerto Rico, is a United States Army installation in Puerto Rico. It is located in the metropolitan area of the capital, San Juan.
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An exchange is a type of retail store found on United States military installations worldwide. Originally akin to trading posts, they now resemble contemporary department stores or strip malls. Exact terminology varies by armed service; some examples include base exchange (BX), and post exchange (PX), and there are more specific terms for subtypes of exchange.
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VetVerify.org is a shared online service of the Army & Air Force Exchange Service, the Navy Exchange Service Command, the Marine Corps Exchange and the Coast Guard Exchange. Its sole purpose is to verify eligibility for the veterans online shopping benefit, a 2017 expansion of online military exchange shopping privileges to honorably discharged Veterans.
↑ "This week, the Soldier for Life..."Soldier For Life. US Army. 10 February 2017. Retrieved 10 October 2020. […]increasing annual dividends by 6 percent as active-duty Army and Air Force personnel decreased 10.5 percent due to drawdowns.
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