DeCA Europe 1

Defense Commissary Agency, EuropeDefense Commissary Agency, Europe

Thomas E. MilksDirector, DeCA

EuropeHeidelberg,

Germany29 July 2009

DeCA Europe 2

DeCA Europe 3

A Taste of Yesterday

1970 1980 1990 2000 20081970 1980 1990 2000 2008

Brief Evolution of Commissaries within Our Overseas Area of

Responsibility

Taking a look back at where we've been, & how far we've come

DeCA Europe 4

1970'sStart of 1970's commissaries fall underStart of 1970's commissaries fall underauthority of each installation; most stores operate authority of each installation; most stores operate

40 hours, 5 days a week, Tue thru Sat40 hours, 5 days a week, Tue thru Sat

Start of 1970's commissaries fall underStart of 1970's commissaries fall underauthority of each installation; most stores operate authority of each installation; most stores operate

40 hours, 5 days a week, Tue thru Sat40 hours, 5 days a week, Tue thru Sat

1975 SecDef commissions Bowers Study (BG Emmett Bowers, USA),which recommends centralized agency within each Service; by 1976 each Service begins to run or refine its own system: AFCOMS, TSA, NAVRESSO & USMC MWR

1975 SecDef commissions Bowers Study (BG Emmett Bowers, USA),which recommends centralized agency within each Service; by 1976 each Service begins to run or refine its own system: AFCOMS, TSA, NAVRESSO & USMC MWR

Late 1970's larger Late 1970's larger volume stores start volume stores start

opening 6 days a opening 6 days a week, Tue thru Sun week, Tue thru Sun

Late 1970's larger Late 1970's larger volume stores start volume stores start

opening 6 days a opening 6 days a week, Tue thru Sun week, Tue thru Sun

1972 HASC acknowledges correlation between commissary operations &

personnel retention, & urges reorganization of commissary system

1972 HASC acknowledges correlation between commissary operations &

personnel retention, & urges reorganization of commissary system

As decade begins serving over 380K As decade begins serving over 380K customers from the Azores & UK customers from the Azores & UK across Europe to Turkeyacross Europe to Turkey

As decade begins serving over 380K As decade begins serving over 380K customers from the Azores & UK customers from the Azores & UK across Europe to Turkeyacross Europe to Turkey

AnkaraAnkara

RAF AlconburyRAF Alconbury

Depending on demographics & store size commissaries carry between

1,200 & 6,000 line items

Depending on demographics & store size commissaries carry between

1,200 & 6,000 line items

Operating101 commissaries

Operating101 commissaries

Beginning of decade customer savings of 20%

Beginning of decade customer savings of 20%

DeCA Europe 5

1980's

By mid-decade serving over 510K customers that now reaches to Egypt & KSA

By mid-decade serving over 510K customers that now reaches to Egypt & KSA

FrankfurtFrankfurt

When Berlin Wall opens in Nov 89 there are123 commissaries

When Berlin Wall opens in Nov 89 there are123 commissaries

1989 Jones Commission (Lt Gen Donald Jones, USAF)

recommends consolidation across

Services

1989 Jones Commission (Lt Gen Donald Jones, USAF)

recommends consolidation across

Services

Stores carry between3,000 & 8,000 line itemsStores carry between3,000 & 8,000 line items

Servicemembers part of Servicemembers part of store operationsstore operationsServicemembers part of Servicemembers part of store operationsstore operations

SigonellaSigonella

Customer savings approaches 23%

Customer savings approaches 23%

WiesbadenWiesbaden

New initiative adds Deli/Bakeries New initiative adds Deli/Bakeries

Congress mandates Surcharge of 5% in 1983Congress mandates Surcharge of 5% in 1983

By mid-decade more stores start opening 6 daysBy mid-decade more stores start opening 6 daysa week & some 6-day operations go to 7 daysa week & some 6-day operations go to 7 daysBy mid-decade more stores start opening 6 daysBy mid-decade more stores start opening 6 daysa week & some 6-day operations go to 7 daysa week & some 6-day operations go to 7 days

DeCA Europe 6

1990's

DeCA establishes Your Action Line (YAL) programDeCA establishes Your Action Line (YAL) program

Start of decade over700K potential customers

Start of decade over700K potential customers

1994 Central Meat Processing Plant goes online

1994 Central Meat Processing Plant goes online

Deli/Bakery operations expand & Pasta Bars are

introduced

Deli/Bakery operations expand & Pasta Bars are

introduced

As end of decade approaches operating

65 commissaries

As end of decade approaches operating

65 commissaries

By mid-1990's customer savings measures 23.4%By mid-1990's customer savings measures 23.4%

RAF AlconburyRAF AlconburyCDC's ramp up to offer 1- to 2-day deliveries to most stores

CDC's ramp up to offer 1- to 2-day deliveries to most stores

Stores now carry 4,500 toover 9,300 line itemsStores now carry 4,500 toover 9,300 line items

Major construction Major construction denotes new stores & denotes new stores & modernization modernization projectsprojects

Major construction Major construction denotes new stores & denotes new stores & modernization modernization projectsprojects

VicenzaVicenza

Germersheim CDCGermersheim CDC

"Quality First - People Always""Quality First - People Always""Quality First - People Always""Quality First - People Always"

Region Buying OfficesRegion Buying Offices

Region Stock List Region Stock List establishes top selling establishes top selling

name brandsname brandsbased on customer demand based on customer demand

supplemented with other supplemented with other popular & unique products popular & unique products

Region Stock List Region Stock List establishes top selling establishes top selling

name brandsname brandsbased on customer demand based on customer demand

supplemented with other supplemented with other popular & unique products popular & unique products

DeCA Europe 7

2000's"A New Century of Value & Service""A New Century of Value & Service"

Over 12K line items to choose from in largest

volume stores

Over 12K line items to choose from in largest

volume stores

Fresh Express & other Fresh Express & other bagged salads make bagged salads make their appearancetheir appearance

Fresh Express & other Fresh Express & other bagged salads make bagged salads make their appearancetheir appearance

Self-Serve Self-Serve bakeries are bakeries are introducedintroduced

Self-Serve Self-Serve bakeries are bakeries are introducedintroduced

By 2008 serving overBy 2008 serving over340K customers340K customers

By 2008 serving overBy 2008 serving over340K customers340K customers CARTS - new advanced checkout CARTS - new advanced checkout

system w/self-checkouts goes onlinesystem w/self-checkouts goes onlineCARTS - new advanced checkout CARTS - new advanced checkout

system w/self-checkouts goes onlinesystem w/self-checkouts goes online

Self-serve salad barsSelf-serve salad barsSelf-serve salad barsSelf-serve salad bars

8

2008 overseas customer savings exceeds 50%

2008 overseas customer savings exceeds 50%

DeCA Europe 8

"Leadership is defined "Leadership is defined by results, not by results, not attributes." attributes."

"Leadership is defined "Leadership is defined by results, not by results, not attributes." attributes."

- Peter F. Drucker- Peter F. Drucker

2121stst Century Leadership Century Leadership2121stst Century Leadership Century Leadership

DeCA Europe 9

Where We Are Today• Strong commitment from business partners• Fully dedicated to supporting SMs & their families• 98% to 99% Region-wide average in-stock efficiency• Customer savings over 50% compared to local economy

─ Market basket surveys in UK, Italy & Germany

• High customer satisfaction ratings• User-friendly web site with consumer & food safety info

• Increased communication thru customer surveys &"Your Action Line" program

• Support to over 40 American embassies…and the Embassy Marine Houses

• Engaged in a long, irregular warBottom Line: Elevating QoL & customer satisfaction

DeCA Europe 10

Diversity in Personnel

• 2,700+ employees

• Ratio of LN to US: 1.3 to 1

• Major employer of military spouses

• High turnover in some locations

• Developing store associates

• Supporting multi-national warriors/customers

• 48 different nationalities represented

DeCA Europe 11

““The only way I know The only way I know how to operate is to how to operate is to put the consumer in put the consumer in

the center of what we the center of what we do." do."

““The only way I know The only way I know how to operate is to how to operate is to put the consumer in put the consumer in

the center of what we the center of what we do." do."

-Diane Dietz, EVP and CMO, Safeway-Diane Dietz, EVP and CMO, Safeway

2121stst Century Leadership Century Leadership2121stst Century Leadership Century Leadership

DeCA Europe 12

Customer Count Comparison

500

600

700

800

900

1000

1100

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

FY09 FY08

Co

un

t (0

00)

Co

un

t (0

00)

FY09 vs. FY08

Customer transaction TD: $43.77 in FY09 vs. $42.82 in FY08

DeCA Europe 13

Commissaries By Services' Location

• 54.7% of our stores are on Army posts─ Represents 47.5% of our sales

• 35.7% are on Air Force bases─ Represents 42.7% in sales

• 9.6% are on Navy installations─ Represents 9.8% in sales*

*Includes sales to NEXMARTs

DeCA Europe 14

Scope of Operations

3 thru 6

7 thru 11

12 thru 19

20 thru 42

1 thru 2

RA

NK

ING

20% 20% 20% 20% 20%

• 54.7% of our stores, the smallest stores, deliver 20% of sales

• Our 11 leading volume stores, 26% of total, deliver 60% of sales

Note: Commissary store sales only

DeCA Europe 15

CCSS '08 vs. '07SURVEY QUESTIONS 2007 2008 Change

Bakery Quality/Selection 4.55 4.64 2.0%Low Prices/Overall Savings 4.51 4.58 1.6%Well Stocked, Full Shelves 4.57 4.64 1.5%Meat Quality/Selection 4.61 4.68 1.5%Produce Quality/Selection 4.54 4.60 1.3%

Deli Quality/Selection 4.59 4.65 1.3%Checkout Waiting Time 4.57 4.62 1.1%Other food items (dry goods, frozen foods, dairy) & variety of selection 4.59 4.64 1.1%Convenient Hours 4.63 4.66 0.6%Entrance/Sales Area/Restroom Cleanliness 4.68 4.72 0.9%Overall Satisfaction (How did we do?) 4.72 4.77 1.1%Store Layout and Time Required to Shop 4.63 4.67 0.9%Attractive Displays/Store Décor 4.65 4.68 0.6%Courteous, Friendly and Helpful Employees 4.79 4.81 0.4%

CCSS REGION SCORE (Best in DeCABest in DeCA) 4.61 4.67 1.3%

'09 survey results pending'09 survey results pending

DeCA Europe 16

Europe Military Strength

UNCLASSIFIEDSummer 2009Summer 2009

SOCEURSOCEUR Stuttgart, GermanyStuttgart, Germany

SOCEURSOCEUR Stuttgart, GermanyStuttgart, Germany

USAFEUSAFERamstein, GermanyRamstein, Germany

USAFEUSAFERamstein, GermanyRamstein, Germany

USAREURUSAREURHeidelberg, GermanyHeidelberg, Germany

USAREURUSAREURHeidelberg, GermanyHeidelberg, Germany

USNAVEURUSNAVEURNaples, ItalyNaples, Italy USNAVEURUSNAVEURNaples, ItalyNaples, Italy

MARFOREURMARFOREUR Stuttgart, GermanyStuttgart, Germany MARFOREURMARFOREUR

Stuttgart, GermanyStuttgart, Germany

DCDRDCDRUSEUCOMUSEUCOM

Stuttgart, GermanyStuttgart, Germany

DCDRDCDRUSEUCOMUSEUCOM

Stuttgart, GermanyStuttgart, Germany

Military StrengthMilitary StrengthUSAREURUSAREUR 45,74045,740USAFEUSAFE 26,960 26,960 NAVEURNAVEUR 6,5806,580MARFOREURMARFOREUR 140140SOCEURSOCEUR 1,800 1,800USAFRICOMUSAFRICOM 1,3001,300TOTALTOTAL 82,52082,520

PlusPlusReserve/NG (daily avg) c. 3,800Reserve/NG (daily avg) c. 3,800

Military StrengthMilitary StrengthUSAREURUSAREUR 45,74045,740USAFEUSAFE 26,960 26,960 NAVEURNAVEUR 6,5806,580MARFOREURMARFOREUR 140140SOCEURSOCEUR 1,800 1,800USAFRICOMUSAFRICOM 1,3001,300TOTALTOTAL 82,52082,520

PlusPlusReserve/NG (daily avg) c. 3,800Reserve/NG (daily avg) c. 3,800

USAFRICOMUSAFRICOMStuttgart, GermanyStuttgart, Germany

USAFRICOMUSAFRICOMStuttgart, GermanyStuttgart, Germany

SACEURSACEURMons, BelgiumMons, Belgium

SACEURSACEURMons, BelgiumMons, Belgium

DeCA Europe 17

Support over 340K customersin 50+ countries

NORWAY, FINLAND,NORWAY, FINLAND,SWEDEN SWEDEN

LIBERIALIBERIASOMALIASOMALIA

ETHIOPIAETHIOPIA INDONESIAINDONESIA

KYRGYZSTANKYRGYZSTAN

SENEGALSENEGAL

the AZORESthe AZORES

DeCA Europe 18

Downrange Support

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

AAFES Kuwait AAFES Iraq

FY02FY03FY04FY05FY06FY07FY08$

Ship

ped

(000

's)

Bottom Line: Supporting troops deployed to Iraq & Kuwait

DeCA Europe 19

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DeCA Europe 24

““Growth is the only Growth is the only evidence of Life." evidence of Life."

““Growth is the only Growth is the only evidence of Life." evidence of Life."

- John Henry Newman- John Henry Newman

2121stst Century Leadership Century Leadership2121stst Century Leadership Century Leadership

DeCA Europe 25

CY2009

• Negligible year for transformation─ Army on track to reduce strength by about 1,000

• 1 commissary scheduled to close─ Neubrücke Commissary 1st Qtr FY10

• St. Mawgan NEXMART closes

DeCA Europe 26

Sales & Sales Forecast

449.8

61

467.8

59

488.8

56

468.1

53

473.7

49

486.6

42

474.2

41

0

100

200

300

400

500

FY03 FY04 FY05 FY06 FY07 FY08 *FY09Forecast

FY

Sal

es I

n

$M

# Stores at end of each FY# Stores at end of each FY# Stores at end of each FY# Stores at end of each FY FY salesFY sales FY salesFY sales

*Initial forecast decrease due to ongoing unit deployments & to lesser extent continued Army transformation

DeCA Europe 27

FYTD 2009 Sales/Transactions July 2009 ($K)

*Sales/Transactions through July 19

Sales *FY 2009 FY 2008 Diff %

East $2,268,321.1 $2,168,677.9 $99,643.2 4.59%

Europe $368,260.0 $351,847.0 $16,413.0 4.66%

West $2,119,077.9 $2,052,320.4 $66,757.5 3.25%

Total $4,755,659.0 $4,572,845.3 $182,813.7 4.00%

Transactions *FY 2009 FY 2008 Diff %

East 32,735,004 32,128,970 606,034 1.89%

Europe 8,941,364 8,637,365 303,999 3.52%

West 34,045,243 33,652,961 392,282 1.17%

Total 75,721,611 74,419,296 1,302,315 1.75%

DeCA Europe 28

Monthly Sales/Transactions July 2009 ($K)

*Sales/Transactions through July 19

Sales *FY 2009 FY 2008 Diff %

East $147,894.7 $149,680.7 -$1,786.0 -1.19%

Europe $23,687.9 $22,999.7 $688.2 2.99%

West $137,389.1 $139,673.5 -$2,284.4 -1.64%

Total $308,971.7 $312,353.9 -$3,382.2 -1.08%

Transactions *FY 2009 FY 2008 Diff %

East 2,152,405 2,164,674 -12,269 -0.57%

Europe 577,746 552,513 25,233 4.57%

West 2,203,193 2,228,277 -25,084 -1.13%

Total 4,933,344 4,945,464 -12,120 -0.25%