Monday, October 29, 2007

Selling to the Army & Air Force Exchange Service (AAFES)

PURPOSE OF THIS BLOG



The purpose of this blog is to be a powerful resource and serve the needs of

a) Consumer Products Manufacturers looking to capture market share in the military retail channel and

b) Non military brokers and rep agencies who have never sold to the military exchanges, and are interested in doing so.



OVERVIEW of AAFES http://www.aafes.com/

First, a brief overview on AAFES, and the various opportunities to do business with them.

The Army & Air Force Exchange Service (aka AAFES), is headquartered in Dallas, TX. Of the various Military Exchange Services, AAFES is by far the largest when it comes to volume and number of stores. For the year ending Dec '06, AAFES sales were $8.9 billion. There are over 200 AAFES Main Stores worldwide. Over half these Exchanges are comparable to a cross between a Wal-Mart and a Macy's in terms of square footage and the name brand merchandise sold there.



AAFES's motto is "We Go Where They Go" as they are committed to go where the troops are in both wartime and peacetime. A modern day example of the dedication of AAFES to the Soldier and Airman can be seen in the dozens of TFE (tactical field exchanges) which opened since '01 in support of Operation Iraqi Freedom and Operation Enduring Freedom. AAFES PX's in Iraq and Afghanistan have been a great source of comfort and morale building for our troops in the battle zone.



WHO CAN SHOP AT AAFES

Only authorized shoppers are permitted to buy merchandise in the Exchanges. These include active duty and retired military and their spouses. The Exchanges work hard to provide a savings to their customers over the outside retailers, and are not required to charge sales tax.

The discounts and tax savings are an important benefit which is often cited by military personnel who chose to enlist and reenlist.



DECIDING IF YOUR PRODUCTS WILL SELL AT AAFES?



Who are your largest retail customers you sell to now? If you answered Wal-Mart, Target, or Best Buy, the odds are quite high AAFES HQ Buyers would be interested in seeing your line.

If your products are sold in any major national chain (s), chances are you can and should be doing significant business with AAFES.



WHAT ARE THE BEST SELLING CATEGORIES AT AAFES?

Dept Sales FY '06



Food $309,740,080

Beer/Ale $240,526,955

Toiletries $302,147,136

Cosmetics /Fragrance $210,848,401

Mens Clothing $191,232,271

Womens Lingerie $ 91,197,702

Linens Domestics $ 82,159,256

Kitchen Pots/Pans $53,561,599

Giftware $40,472,560

Small Appliances $109,529,088

Hardware $91,323,182

AAFES STORES WITH HIGHEST SALES VOLUME FY'06

Ft. Bragg $217,687,734
Ft. Lewis $177,703,180
Ft. Hood $165,958,742
Camp Foster $171,674,792
Kadena AB $120,422,856


WHO ARE THE LEADING BRANDS SOLD AT AAFES?

Proctor & Gamble $96,030,305
Nike $45,444,867
Toshiba $41,787,440
Unilever $29,850409
Whirlpool $29,324,436
Quaker Oats $26,271,351
Levi Strauss $23,067,849
Hanes $21,215,737
Coach Leather $18,626,804
Under Armour $16,649,480
Poulan $15,126,806

There are 834 manufacturers and suppliers to AAFES that each did over $1 million in sales. There are another 460 companies that had sales of $500k-$999k in '06. Clearly, AAFES is a powerful retailer who your company should consider doing more business with.

WHAT ARE YOUR OPTIONS FOR SELLING TO AAFES?
Once your company decides you'd like to sell products to AAFES, you must then decide to:
a) Use your own Sales Force
b) Use an outside Military Broker who specializes in calling on AAFES and NEXCOM.

There are advantages and disadvantages inherent in using your own Sales Force. You are now asking them to call on a Retail Channel they may know nothing about. The AAFES Buyer doesn't know your Sales Manager and may not even give them an appointment. No appointment = No sales.

Most of the more successful companies doing business with AAFES have hired an outside military sales broker or military rep agency. Watt / Spohn Universal, http://www.wattspohn.com/ , is an example of one such agency. They are located in Dallas, the same as AAFES Headquarters, and represent a number of manufacturers just for the military exchanges. Military Brokers generally are already working with the Buyers, and have much greater ease in getting Headquarters Buyer Appointments.

CHOOSING THE RIGHT MILITARY EXCHANGE BROKER
There are about 6 or 7 what we call 'full service' Military Brokers. Besides calling on the AAFES HQ Buyers, these Brokers also maintain a network of local Store Service Merchandisers and Product Demonstrators to insure your products are in stock, properly displayed, correctly priced, etc. Full service Military Brokers also assist in local store promotions, and provide Sales Associate Training at store level.

TRADE ASSOCIATIONS
The American Logistics Association (aka ALA) is the primary trade association for the military exchange business. ALA is made up of various suppliers and brokers, and holds annual conventions and conferences that include Senior Management Guest Speakers from AAFES, NEXCOM, Marine Corps, Coast Guard Exchanges and the Veterans Canteen Service. ALA can be contacted at http://www.ala-national.org/

CONSULTANTS
There are individuals who have years of business experience with AAFES, and are available to hire on a monthly or as needed consulting basis. Should your company be in need of a Military Exchange Sales Consultant, feel free to contact us at militaryexchangebiz@gmail.com . Military Exchange Biz offers a monthly e-newsletter. Yearly subscriptions are available for $149 payable by check to "Military Exchange Biz."