Fall 2009
Carts Across America

Specialty Retail

For thousands of troops stationed in various bases at home and around the world, shopping centers, called exchanges, operated by the Army and Air Force Exchange Service, deliver the goods. AAFES, whose motto is “We go where you go,” has operations in 183 locations—132 in the United States and 51 overseas. The exchanges are tax-free shopping centers that serve all Department of Defense military members, civilians, contractors, and their families.

AAFES does not receive any government subsidy; it works to provide quality merchandise and services to military and air force personnel and their families, and to generate income to support Army and Air Force morale, welfare and recreation (MWR) programs. The profits from AAFES operations are ploughed right back into the army’s MWR program, or to improve existing AAFES facilities.

Two types of business operate under the AAFES’ Services and Vending program: long-term concessions, which have longer contracts (up to five years)—and include service-based businesses such as barber shops, dry cleaners, and florists—and short-term concessions, which typically offer gift items and souvenirs.

The short-term concessionaires are operated on a temporary “roving” basis, which means that the retailers set up shop for short periods in different bases—typically around the region. They are at one location for as short as a week. This allows for constant turnover of merchandise with the new vendor, and keeps shoppers coming back for more.

Leasing details

For the kiosks, AAFES shopping centers are great testing grounds for new and unique ideas. Leasing terms are also a bit different—the fee structure is based on sales, and there are no fixed leasing fees. Also, maintenance and utility fees are not charged. Leasing options and charges are managed by individual shopping centers, so there is a lot of flexibility in the terms and conditions of the contract.

AAFES also takes care of the marketing and promotion of the kiosks. A typical promotion might be a bazaar for a special event such as a concert, where the kiosks are all moved to a central location where there is a lot of foot traffic.

To be considered for the short-term leasing program, a Services and Vending Source List Application must be submitted to the local exchange. For regional or nationwide opportunities, retailers would need to submit an application form to AAFES headquarters in Dallas.

Here are some examples of what the AAFES program looks like for specialty retailers…

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Fort Riley, Kansas

The 122,000-square-foot center at Fort Riley serves a mix of troops—from young soldiers new to the military, to 2-star generals. The exchange has 11 roving carts and 10 inline stores, not including the anchor. Surrounded by fields, the exchange is less than 15 miles away from Manhattan Town Center. The Manhattan mall is also close by, which means competition when it comes to attracting specialty retailers. Stanley Young, general manager of the Fort Riley exchange, says that once a retailer comes in however, he’s hooked.

Creative Expressions

This kiosk, owned by a husband and wife team, has been at Fort Riley for more than six months, bucking the trend of weeklong leases. The kiosk stocks unique, personalized products such as key chains, jewelry, and military coin holders.

Selling point: Personalized gifts while customers wait or shop.

Hot item: Framed pictures with relevant, personalized poems or slogans in them. Customers can have their picture framed, with a personal message for someone back home.
Price range: $10 to $30.

Gifts by Gladys

A true roving concession, Gifts by Gladys moves into a location, sells, and leaves within a week. The kiosk moves from one military base to another, and specializes in urban (primarily African American) art.

Selling point: Art at a reasonable price; constantly updated inventory.
Hot item: Work with important African American figures in history—paintings of Martin Luther King, Jr., and the all-black regiment called Buffalo Soldiers.
Price range: $15 to $300.

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Fort Lewis, Washington

The 100,000-square-foot shopping center serves 31,000 active duty soldiers, military retirees, and their families. What works is a combination of unusual items, general merchandise, and personalized gift items that cannot be found at regular stores. There are six kiosks at the center, mostly of the roving type.

Kiosks here sell backpacks, sunglasses, wallets and even bamboo plants. There is something for every stripe of military personnel: active duty, dependent, or retired military. Brightly colored hats with inscriptions such as “Proud Army Wife,” or “You Will Be Missed” are popular sellers. Military-themed products sell well.

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Panzer Kaserne Base, Germany

The base, located in Boeblingen, Germany, serves the four military commands located in the Stuttgart area. The 95,000-square-foot mall serves an estimated 23,000 shoppers on paper, but the number is considerably higher keeping in mind its proximity to other military installations.

The clientele is mostly comprised of mature, senior military personnel, and the specialty retail offerings reflect that demographic. All five centers in the kiosk are roving. Artistic gift items are the hottest-
selling products.

Mai Yu Asian Gift Imports

This kiosk has been roving in and out of AAFES locations for the past four years. Most products are imported from China, and include Tiffany lamp reproductions, small figurines, and handmade wristbands.

Best Sellers: Tiffany lamp reproductions. Electrical sockets in the kiosks give shoppers a peek into how the lamps will look when switched on.
Price range: $160-$300 for the lamps; other items start at $10.

Giovanni Filomena Cutlery

This kiosk features cutlery from Solingen, Germany, known the world over for its knives. The company that manufactures the cutlery focuses on the military, and works on special arrangement with American and NATO forces. The kiosk roves in and out of the shopping center every quarter.

Selling point: High quality cutlery with a brand that is strongly associated with the military.
Best Sellers: The knife sets, which are all handcrafted.
Price range: $100-$400.

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Schofield Barracks, Hawaii

This 130,000 square-foot exchange serves mostly single soldiers, families of soldiers, and army retirees who have settled in Hawaii. There are an estimated 20,000 families that shop at this location, which has eight retail kiosks, and a potential to bring in more. The kiosks are mostly roving, and the most common merchandise is usually gift items for families, and something for the home.

B-Mart

This operation spreads across two adjacent kiosks, and is run by a single person. The kiosk mainly sells island memorabilia. Some of its products include island-themed lampshades, T-shirts, and mugs, and bamboo plants.

Selling point: A product at every price range, with a subtle Hawaiian touch.
Best-Sellers: Island print merchandise—especially mugs, as they make a great portable gift.
Price range: $1 for some of the jewelry, to $300 for some of the lamps.

Welcome to Paradise

This kiosk, which features island-specific art by Hawaiian artist Garry Palm, carries hundreds of paintings and some local favorites.

Selling point: A piece of Hawaii, back to the mainland. It’s also a reminder of the soldier’s tour of duty, with reasonable prices.

Best-Selling item: Paintings of island natives, and island flora and fauna.
Price range: $2 to $200

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Patrick Air Force Base, Florida

Patrick Air Force Base is home to 2,500 active duty members. AAFES serves dependents and retirees around the base, which is located in Central Florida. The base is located near Cape Canaveral, Kennedy Space Center, and Cocoa Beach, attracting a fair number of tourists. However, the shopping center also serves a good many military retirees and their family members. The shopping center’s 18 kiosks are geared toward providing shoppers with unique merchandise they might not find in regular malls.

An unnamed kiosk here sells wood models of airplanes and some models of motorcycles. They are quite popular in the target demographic, and are seen as great gifts and collectibles.

Selling point: Models of almost all popular vehicles available, so that there is something for all branches of service.
Best-Selling Item: Models of military helicopters.
Price range: $45- $75

Another roving kiosk features Asian art and giftware, and includes china, vases, and porcelain figurines.

Selling point: A reminder of military personnel’s time in Asia, especially for retirees.
Best-Selling item: Porcelain vases and figurines
Price range: $10-$75

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Osan Air Force Base, Korea

The shopping center at Osan Air Base is four years old, and around 177,000 square feet. It serves more than 8,100 people—6,300 military, 1,000 attendants and dependents, and around 500 civilians, mostly contractors. Its specialty retail division is quite extensive—with 28 kiosks—and features ceramics, embroidery, and several Korean arts and crafts. The shopping center, one of the largest AAFES operations in Korea, attracts military personnel from other bases in Korea as well.

At the most popular kiosk here, shoppers can have their personalized messages and images burnt on to wood. The kiosk is one of the longest running at Osan, and started operations in January 2005. The price depends on factors such as the kind of wood used and the intricacy of the graphic to be etched.

Selling point: Unique, personalized gifts with amazing detail in the finished product.
Best-Selling item: Personalized messages with an image of the soldier.
Price range: $12 – $60

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Meera Rajagopalan

Meera Rajagopalan is a freelance writer who writes for publications in India and the U.S. She has extensive experience reporting on niche businesses and can be reached at meera_tg@yahoo.com
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