"Ensuring Our Patrons' Benefits for Years to Come" Defense Commissary Agency October 25, 2017

Topics New Stores Hurricane Relief EBS Update Congressional Direction Department of Defense Direction Improving the Customer Experience Supply Chain MSO/VSO Engagement and Outreach

NAS Jacksonville, Florida New Stores NAS Jacksonville, Florida Surcharge-Funded Grand Opening held February 2, 2017 Click2Go capability incorporated

New Stores Fort Belvoir, Virginia Surcharge-Funded Grand Opening held March 30, 2017 Click2Go capability incorporated

Camp Humphreys, South Korea New Stores Camp Humphreys, South Korea Host Nation Funded Opening 2nd Qtr 2018

Thank you industry partners! Hurricane Relief Triple threat of Harvey, Irma and Maria impacted more than 30 stores Emergency Operations Center and COOP activated August 24 Commissaries were often the last support activity to close during mandatory evacuations & one of first to re-open Great team effort from dedicated employees & industry partners to take care of customers Returning to normalcy & accolades from the military community Thank you industry partners!

EBS Timeline 2016 2017 2018 2019 Month 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 Power HQ deployment Increment One Bill Back Manager deployment Category Analyzer deployment Vendor Portal Phase 1 deployment Galleria deployment Vendor Portal Phase 2 deployment Power Inventory Management deployment Increment Two Power DAX deployment Increment Three Retail One deployment R10 deployment Power Financials deployment Increment Four Power Enterprise deployment

EBS Update NCR provided on-site training at Fort Lee in support of the Vendor Portal A total of 17 Vendor Training and Onboarding sessions have been offered to date Training evaluation survey yielded positive feedback - 83% excellent - 12% good - 5% fair All participants were on-boarded into Vendor Portal after training

Congressional Direction 2016 & 2017 NDAAs Reduce reliance on appropriation through offsetting operating cost & recognized some level of appropriation is required to maintain customer savings - Variable pricing - CPI - Private Label - Consider NAF Establish & adhere to customer savings baseline - Quarterly reporting to Congress required

DOD Direction Reduce reliance on appropriation - Military Services concerned with cost of providing the benefit - Department is reviewing all compensation for possible savings Cooperative efforts - Supply chain - Joint merchandising - E-commerce - Acquisition NAF Invest in business with strategic focus – benefit, timeline, ROI

Supply Chain and Vendor Stocking Challenges Complex system involving different stakeholders - Difficult to stay aligned and maintain efficiencies - May create costs that flow through patrons and tax payers - Ultimately not keeping us at the in stock rates our patrons deserve - Supply chain structure study is underway

Bringing Back Customers Through Business Transformation Cost plus model lessened competitiveness resulting in customer loss Large retailers like Walmart (National Brands), Aldi and Lidl (Store Brands) are the recognized price leaders in the grocery business aggressively investing in lowering prices DeCA will consider multiple factors to determine strategic price (e.g., market price, cost of product, importance to customer) Our pricing strategy will maintain the patron savings baseline and generate margin to offset operating costs

Bringing Back Customers Through Improvement of Customer Experience Renewed focus on patron outreach & resale system being the “hub” for the installation Continued focus on optimization of perishable/perimeter departments - Meat quality - Produce quality - Meal solutions Maximize center store - Stock availability and stock rate - Tailoring stock assortment and resetting stores

Bringing Back Customers Through Improvement of Customer Experience Expand e-commerce starting with curb side pickup Continued collaboration initiatives with industry Resale system collaborative efforts on one stop shopping Become consumer centric - Focus on Fresh - The health halo – nutrition guide program - Instant gratification on the go (convenience) - New is nice - Experiences, products, brands

Stakeholder outreach moving forward More frequent MSO/ VSO engagement - Large scale format - ASD level and DeCA Director level - status and update oriented - Smaller scale format - DeCA senior level – more in-depth discussion oriented - Topics not limited to transformation Local engagement with Patrons (hub stores) - Will solicit patron feedback and ideas regarding how to improve the shopping experience

Working together to grow the business!! Thank you!!