Yes, the economy is hurting, but it is important to remember that in the midst of economic chaos, American men and women are in harm’s way. With the nation engaged in two wars, it is more critical than ever that support systems are in place for troops at home and abroad. This is the role of the Marine Corps Exchange (MCX), and recent investments in improving retail operations are paying dividends.
“This past year has been tough for retailers in general, and we are ecstatic to see the strategies we are building on positioned us well for hard times,” said Cindy Whitman Lacy, head of retail for MCX.
The MCX system has been serving Marines and their families since 1897. Its mission is to support the Marine Corps’ war-fighting capability, and in the case of its retail arm, MCX provides Marines with the option to buy quality merchandise for a good value.
“Our stockholder is the Marine, and we have a dual mission when it comes to the exchanges. We earn a dividend for our stockholder, and part of it is measured in price savings,” said Michael Tharrington, deputy director of business operations for MCX. “Because we are always aware that our stockholders are Marines, we want to offer quality goods and services at the lowest possible price to provide a cash dividend used to support their recreation programs and quality of life pursuits.”
Today, the system consists of 17 main exchanges, 69 Marine marts, 40 branch stores, and six independent package stores. Locations sell everything from magazines and guns to Martha Stewart and Brooks Brothers brands. MCX also deals with the ongoing challenge of supporting Marines in theater in Afghanistan and Iraq. In recent years, the organization underwent a transformation, overhauling virtually everything in a continuous improvement effort to streamline, improve the shopping experience, and reinvent the brand.
One of the most important steps was centralizing buying rather than having each main exchange buy on its own. The organization also upgraded merchandising software and established a retail capitalization strategy to determine how to reinvest back into main stores.
By consolidating buying power and narrowing distribution channels, MCX can now leverage its buying strength. It has become more important to key vendors but as a smaller retail organization remains very adaptable and can look for new business ventures. That is why MCX exchanges became the first location to offer Brooks Brothers products, which previously sold only in company stores.
At the same time, however, the organization is still decentralized when it comes to command and control, allowing each base commander to run exchanges according to the needs of the base.
“It is easy to argue that we should centralize all exchange operations and not just buying,” Tharrington said. “But if we took the exchanges away from local commanders, it would have a negative impact on the synergy at the installation level between exchanges and the other programs they work with to support the quality of life at that base.”
The solution was to connect all exchange stores under one brand image. MCX brought in JWT (formerly J Walter Thompson, a leading advertising agency), the company credited with branding the Marine Corps, to help develop a new brand identity for the exchange. The result was a blue MCX logo with a red blood stripe across the middle above the words Core Brands, Corps Value.
“The new logo represents the Marine Corps’ strength and plays on the strengths we have as a retail organization, which is that we offer significant brand names for less than you can find elsewhere,” said Whitman Lacy. “We have a natural affinity with the brand already established within the Corps itself. The logo celebrates our differences, and that was the bedrock of this image campaign.”
Know the customer
Although any active duty or retired member of all military branches can shop at MCX locations, the organization is keenly aware that unlike outside retailers trying to market to baby boomers, its market is young. Two-thirds of Marines are in their first term, 66% are under 24, and 17% are teenagers. Because the average Marine will always be young, the branding initiative stayed with neutral colors that won’t go out of fashion and tie into the signature Marine blue and red.
Stores are also being redesigned for comfort. Main aisles are 12 to 15 feet wide while secondary and tertiary aisles are at least 10 feet wide. Stores are well lit, and department indicators are on walls rather than hanging from ceilings to remove the cluttered feeling. Exchanges offer a price-match guarantee if someone finds the same item at a lower price elsewhere and has a Star Card credit card offering so Marines can access credit without massive interest rates.
The organization reaches out to family members as well. The Super Star Student program helps parents reinforce good grades for school age kids, giving prizes for bringing in a good report card. The Mommy & Me program also gives families a gift after a new child is born.
The result of these efforts has been tangible. In fact, where the new concept is in place, sales increases have been 20% to 40% during the last few years depending on location. Sales stayed strong during the last quarter because it was easy to shop at the exchanges and have confidence in purchases made. Sales in December were up 6.5% and will be up more than 9% for the year.
“Customer satisfaction index scores went up for the fifth year in a row as well. These indicators assure us that this strategy is taking us in the right direction,” said Whitman Lacy.
By working with the College of William and Mary on retail management strategies and retail excellence with Penn St., MCX is engaging the academic world to help with workforce development. Most of the staff is civilian, so MCX is working to develop new intern programs and recruiting capabilities.
With six of the main exchange locations rebranded thus far, Whitman Lacy said every store will be done during the next seven years. The challenge will be sustaining changes and improvements made at completed exchanges and finishing the job with the rest.
“We need to prepare the staff to represent us and give them the skills to resolve problems at the first encounter in a way that makes the customer want to come back,” Whitman Lacy said. “We will also continue to learn how to communicate with the Millenials and Generation Yers who are our core customers, reaching out to them in print, and using viral marketing online.”