Exchange Service officials investing in facilities

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Construction on a military installation is a sign of progress as the Department of Defense transforms. 

Army and Air Force Exchange Service officials are playing an active part in this process as the organization has completed 123 major facility projects, valued at more than $1.1 billion dollars, over the past five years to provide the right size and mix of exchange facilities where Soldiers and Airmen are stationed.

During a recessionary period, when many retailers are tightening the reins on capital expenditures, AAFES officials, who finance projects through the sale of merchandise and services, are actually accelerating facility renovations to improve service. Funding comes strictly from self-generated, non-appropriated resources and is not a burden to the American taxpayer.

"With a slumping economy, shoppers have been asking more questions about capital improvements," said Mike Gividen, Army and Air Force Exchange Service's senior vice president of real estate. "We want our customers to know we are investing in our facilities more than ever before."

As a non-appropriated government entity, funds to build new or replacement AAFES facilities come entirely from the sale of merchandise and services. While the majority of earnings generated are returned to Air Force Services and Army Morale, Welfare and Recreation programs for quality-of-life efforts, historically about one-third is re-invested into exchange operations to build new facilities or update existing stores.

"There is a direct correlation between patronage at the exchange and resulting capital improvement projects," Mr. Gividen said. "AAFES shoppers are essentially AAFES' shareholders and our goal is to be our customer's first choice. As such, we have a responsibility to properly re-invest in our facilities to provide a pleasant, first-class shopping experience."

The replacement of aging facilities begins with a thorough evaluation of factors such as age, potential demand and military transformation requirements. Once complete, AAFES' real estate team is able to identify potential priority locations that are reviewed for replacement. By the end of 2010, AAFES officials will have opened the doors to five new shopping centers including the world's largest exchange, a sprawling 490,000 square-foot multi-use retail development at Ft. Bliss by El Paso, Texas. This is in addition to six new shopping centers opened in 2009.

Since new facilities are not always financially feasible, the useful life of a main store can be extended through an image update renovation.

"Many of our main stores have years of useful life left in them, they just need a facelift," said Gus Elliott, vice president of the facilities division in charge of renovations. "As we executed renovation projects last year, we were experiencing 25 to 30 percent savings because contractors needed work. As a result, we decided to accelerate future renovations not only to realize capital program savings, but to help the local contractors with increased business during these tough economic times."

AAFES officials plan to bring twenty-four exchanges up to current retail design standards in 2010.