Army & Air Force Exchange Service
|Type||Department store, Government agency|
|Founded||25 July 1895 |
(General Orders No. 46)
6 June 1941
(Army Exchange Service)
|Headquarters||3911 South Walton Walker Boulevard, Dallas, Texas,|
United States 75236
Number of locations
|Tom Shull, Director/CEO|
Number of employees
|Parent||United States Department of Defense (1947–present)|
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. 53 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, and serves approximately 1.8 million discounted school lunches per year for children attending Department of Defense Dependents Schools overseas.
As of Veterans Day, 11 November 2017, military exchanges started offering online exchange shopping privileges to an estimated 15 million honorably discharged veterans. The exchanges launched VetVerify.org in June 2017, allowing veterans to verify their eligibility ahead of the benefit's start date.
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.
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.
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.
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.
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.
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.
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. 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.
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.
In 2012, Tom Shull became the Exchange's first civilian director and CEO, having previously served as an executive with Wise Foods, Hanover Direct, Barneys New York and Meridian Ventures. A West Point graduate, Shull served as an infantry company commander and held assignments at the White House and National Security Council.
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. 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.
As of December 2018[update], the Exchange has established shipping centers inside 99 brick-and-mortar stores, which reduced shipping costs and improved delivery times for customers. Shull also shaped the Exchange's efforts to bring more first-run movies to military movie theaters.
Veterans online shopping benefit
On 8 May 2012, Shull drafted a memorandum to the Under Secretary of Defense for Personnel and Readiness proposing that military exchanges be allowed to extend online shopping privileges to honorably discharged veterans.
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. The Executive Resale Board voted unanimously to recommend the proposal in August 2016.
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. The expanded benefit is expected to make online exchange privileges available to an estimated 17 million to 21 million veterans.
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.
As of December 2018, more than 400,000 veterans had verified their eligibility to shop online with the Exchange.
As of November 2019, nearly 100,000 veterans have used the online benefit, saving more than $6.6 million in sales tax.
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.
This new privilege was specified in the Purple Heart and Disabled Veterans Equal Access Act of 2018, included in the John S. McCain National Defense Authorization Act for Fiscal Year 2019. The Department of Defense announced the expansion 13 November 2019.
The new patron group also has access to commissaries and morale, welfare and recreation retail facilities located on U.S. military installations.
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. 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. A second MFE opened days later in Corpus Christi, Texas.
The Exchange Logistics team sent truckloads of bottled water to Florida and Georgia ahead of Hurricane Irma. They also ensured there was sufficient emergency items in stock for support, such as generators, batteries, flashlights, tarps, gas cans and first-aid kits.
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. Just ahead of Maria’s arrival, the Fort Buchanan main store opened 30 minutes early and sold six pallets of water in 45 minutes. 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. 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. 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.
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.
The Exchange deployed an MFE to Tyndall Air Force Base after Hurricane Michael. The MFE provided essentials to those assisting with recovery efforts until the base exchange reopened 28 November 2018.
The Exchange has 13 MFEs and two barber shops that can be deployed within 48 hours of command request to disaster-affected areas.
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. The Exchange identifies healthier-for-you food and beverage choices in their main store and Express locations as well as in all of the Exchange 1,700 restaurants. The Exchange offers a variety of services such as optical centers, dental offices and durable medical equipment stores.
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.
Members of the Exchange's 13-member board of directors include Lt. Gen. Duane A. Gamble, the Army's Deputy Chief of Staff, G-4; Lt. Gen. Brian T. Kelly, Deputy of Chief of Staff for Manpower, Personnel and Services, Headquarters U.S. Air Force; U.S. Army Sgt. Maj. Michael A. Grinston and Air Force Chief Master Sgt. JoAnne Bass.
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.
In 2020, Exchange shoppers generated $218million for installation quality-of-life programs, including child, youth and school services; Armed Forces Recreation Centers; and more. In the past 10 years, the Exchange has distributed more than $2.1 billion to fund quality-of-life improvements.
The Exchange operates more than 4,000 facilities, including main stores, convenience stores, military clothing stores and theaters, across 50 U.S. states and 34 countries. Additionally, the Exchange has nearly 1,750 quick-serve restaurants such as Subway, Burger King, Popeyes Chicken, Taco Bell, Pizza Hut, Charleys Philly Steaks and Starbucks as well as over 3,600 concession operations. Authorized patrons of the Exchange include members of Active Duty, members of the Reserves and National Guard, retired members of the U.S. uniformed services, recipients of the Medal of Honor, honorably discharged veterans certified 100% disabled by the United States Department of Veterans Affairs, or when hospitalized and their dependents by the presentation of the U.S. Uniformed Services Privilege and Identification Card.
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 $100 million 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.
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. 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. The Exchange has also been named a Military Friendly Spouse Employer. In all, about 85 percent of the Exchange's associates are connected in some way to the military.
Since 11 September 2001, 4,600 Exchange associates have deployed to combat zones in Iraq and Afghanistan to support troops in combat operations. 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.
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. 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. 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.
Like the Exchange, the Exchange Credit Program contributes a significant portion of its earnings to morale, welfare and recreation programs, furnishing $639 million to MWR programs from 2006 to 2016. Marketed as the "one card solution" for all purchases made on military installations, the card generated $445 million in value in 2017.
- "The Army & Air Force Exchange Service 2019 Mission Report" (PDF). The Army & Air Force Exchange Service. 23 June 2020.
- "The Army & Air Force Exchange Service 2018 Annual Report" (PDF). The Army & Air Force Exchange Service. 22 May 2019.
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- Habgood, Carol; Skaer, Marcia (October 1994). One Hundred Years of Service: A History of the Army & Air Force Exchange Service (PDF). Army & Air Force Exchange Service. pp. 16–18. ISBN 9995489228.
- "Post Exchange System". JAG Law Review. VIII (5): 33. September–October 1966. Retrieved 5 September 2017.
- Habgood, Carol; Skaer, Marcia (October 1994). One Hundred Years of Service: A History of the Army & Air Force Exchange Service (PDF). Army & Air Force Exchange Service. pp. 19–21. ISBN 9995489228.
- "Post Exchange System". JAG Law Review. VIII (5): 34. September–October 1966. Retrieved 5 September 2017.
- Habgood, Carol; Skaer, Marcia (October 1994). One Hundred Years of Service: A History of the Army & Air Force Exchange Service (PDF). Army & Air Force Exchange Service. p. 39. ISBN 9995489228.
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[…]increasing annual dividends by 6 percent as active-duty Army and Air Force personnel decreased 10.5 percent due to drawdowns.
- "Honorably discharged veterans will soon get to shop tax-free". Associated Press. 20 July 2017. Retrieved 10 October 2020.
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- "Department of Defense Expanding Access to Commissaries, Military Exchanges and Recreation Facilities". va.gov. US Department of Defense. 13 November 2019. Retrieved 13 December 2019. This article incorporates text from this source, which is in the public domain.
- "Exchange Ready to send support to Puerto Rico following Hurricane Maria". Alamogordo Daily News. Retrieved 24 January 2019.
- "Exchange Ready to send support to Puerto Rico following Hurricane Maria". Alamogordo Daily News. Retrieved 24 January 2019.
- VICTORA, WENDY. "Slowly approaching normal: Tyndall base exchange to reopen". Northwest Florida Daily News. Retrieved 23 January 2019.
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- "AAFES Develops BE FIT Program to Promote Healthier Food & Beverage Options". Convenience Store News. Retrieved 23 January 2019.
- "Camp Foster Exchange's BE FIT wellness offerings keep Marines ready, resilient | Stripes Okinawa". okinawa.stripes.com. 23 January 2019. Archived from the original on 24 January 2019. Retrieved 23 January 2019.
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- "Exchange Remains Committed to Hiring Veterans, Military Spouses". DVIDS. Retrieved 23 January 2019.
- "'Better for Veterans': Exchange Named a 2020 Military Friendly® Employer". DVIDS. Retrieved 25 June 2019.
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- 14 May, Week of; Military.com, 2018. "AAFES Hiring Veterans, Spouses". Military.com. Retrieved 24 January 2019.CS1 maint: numeric names: authors list (link)
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- "The Exchange | About Exchange | Exchange Quick Facts". www.aafes.com. Retrieved 23 January 2019.
- "New Star Cards Hitting Mailboxes Now". Military.com. 29 September 2015. Retrieved 9 April 2021.
- "30% Interest for a Store Credit Card". PR Newswire. PR Newsire. Retrieved 20 October 2016.
- "About ECP". MyECP.com. Exchange Credit Program. Retrieved 29 January 2016.
- "The MILITARY STAR Card Earns Service Members, Families $27.5 Million in 2017". DVIDS. Retrieved 30 January 2019.
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