| Type | Department store, Government agency |
|---|---|
| Industry | Retail |
| Founded | 1895 |
| Headquarters | Dallas, Texas, USA |
| Products | department stores and franchises |
| Employees | 44,700 |
| Parent | United States Department of Defense |
| Website | www.shopmyexchange.com |
The Exchange (or AAFES or Army & Air Force Exchange Service) is an agency of the United States Department of Defense. Its dual missions are to provide quality merchandise and services of necessity and convenience to authorized customers at uniform low prices, and to generate reasonable earnings to supplement appropriated funds for the support of United States Army and Air Force Morale, Welfare and Recreation (MWR) programs. The Exchange is headquartered in Dallas, Texas and is presently commanded by Major General Bruce A. Casella. The position of the Exchange commander rotates between the Army and Air Force. The Navy operates the equivalent Navy Exchange (NEX), while the Marine Corps operates the Marine Corps Exchange (MCX) and the United States Coast Guard operates the Coast Guard Exchange (CGX).
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The Exchange is charged with generating reasonable earnings, but returns roughly two-thirds of its net earnings to its customer base through their respective MWR programs ([1]). The only congressionally appropriated money spent in the Exchange comes in the form of utilities and transportation of merchandise to overseas exchanges and for salaries of U.S. military personnel assigned to the Exchange . A non-appropriated fund instrumentality (NAFI) of the Department of Defense, the Exchange funds 98% of its operating budget, including civilian employee salaries, inventory investments, utilities and capital investments for equipment, vehicles and facilities, from the sale of merchandise, food and services to customers.
Roughly 67% of the Exchange earnings are paid to MWR programs.[1] As of 2006, more than $2.24 billion has been contributed by the Exchange over a 10-year period to the Army and Air Force to spend on quality of life improvements for Soldiers, Airmen and their families--Youth Services, Armed Forces Recreation Centers, arts and crafts, aquatic centers, post functions and golf courses.
In Fiscal Year 2006, the Exchange earned $427 million from direct sales (retail, food, and vending/services), finance revenue, and concessions on revenues of $8.9 billion. MWR and services programs received $228 million, which was distributed as follows:
The per capita dividend in 2006 was $229 for every Soldier and Airman.
In addition to funding MWR programs, the Exchange earnings are used to build new stores or renovate existing facilities without expense to the federal government. Funds to construct these new or replacement facilities come entirely from sales of merchandise and services.
The Exchange is also a major source of employment for members of the U.S. Army and Air Force family. Approximately 31% of the 47,323 the Exchange associates are military family members. Many associates have worked for years with the Exchange as they moved from one installation to another with their military sponsors. Another 1.9% of associates are military members who work part time in exchanges during their off duty hours.
The Exchange operates more than 3,100 facilities worldwide, in more than 30 countries, five U.S. territories and 50 states. The Exchange operates some 147 retail stores and more than 2,000 fast food restaurants, such as Taco Bell, Burger King, Popeyes and Cinnabon. The Exchange also provides military communities with convenience, specialty stores and movie theaters on installations worldwide. Many of these specialty stores are operated concessionaires. These concessionaires are third parties that are allowed to sell merchandise inside the Exchange operated facilities provided that the Exchange receives a set percentage of the earnings. Many of these concession shops are found in overseas locations and specialize in locally themed merchandise such as home decor, furniture, clothing, pottery, and other merchandise and even include locations in Operations Enduring Freedom (such as Camp Phoenix) and Operation Iraqi Freedom (Camp Liberty).
In the spring of 2007, the largest PX (Post Exchange) in the world opened on Fort Campbell, Kentucky. This project will construct a 165,000 square foot (SF) expansion to the existing 107,400 SF shopping center. The end position will be 164,000 SF sales area, 18,800 SF food court with 458 seats, expansion of both food concepts and concession operations.
On its website, the Exchange states its business aim is "to serve Soldiers, Airmen and their families around the world."
On May 9, 2001, The Stars and Stripes reported that the Exchange would not stock American Terrorist: Timothy McVeigh & The Oklahoma City Bombing on its shelves, nor would they allow it to be special ordered by customers at their stores. Although the Exchange has refused to sell other published materials, most of them were covered by the Honor and Decency Act, a Department of Defense policy banning certain pornographic materials.[3]
Although the Exchange facilities do not charge taxes on products (which includes excise taxes), the prices for alcohol and tobacco products are only marginally cheaper than retail stores that charge taxes. The lowest price for which tobacco and alcohol can be sold is limited by DoD directive. For tobacco products sold in CONUS, the price floor is 5% less than the most competitive local price in the local community; for OCONUS, tobacco prices fall within the range of the CONUS market. Alcohol sold in CONUS will be sold not less than 10% below the best price in Alcohol Beverage Control states, and not less than 5% below the competitive rate at non Alcohol Beverage Control states. According to the Exchange , these limits are set by the Department of Defense, per DoD Instruction 1330.9. According to the DoD, the purpose of this is to comply with the deglamorization of alcohol and tobacco policy.[4]
The Hayden Cartwright Act does require the Exchange to pay these taxes. Fuel sold to military personnel on military installations is often sold at nearly the same rate as that found at nearby civilian locations, with it becoming increasingly common to find stations in surrounding communities selling fuel for several cents less per gallon. According to the Exchange, gasoline prices are only marginally cheaper because the individual stores are required to be "competitive" with off-post locales.[5] In most locations, the exchanges are required to set prices to the exact rate of the lowest civilian rate within a certain number of miles of the installation's boundary, generally within five miles. Prices will be surveyed at each rate and the lowest price for each rate will be the price set at all fueling stations within that installation, or within that region of the installation in the case of larger installations where identical prices may not be practical. Prices may be surveyed at a rate determined appropriate for the local installation, up to multiple times per day, but not less frequently than weekly. Prices may amount to a loss for the exchange; the Exchange is the only military exchange service permitted to lose money on fuel sales.