increased sales and turnover, reduced inven-tory, and improved fill rates. This translates into increased customer service by being in-stock on basics, providing our customers the right product at the right time.

The renovation of over 25 PatriotStores in 2010 has resulted in a more contemporary décor and Veteran-centric focused environ-ment, which has been well received based on feedback surveys and sales increases.

Twenty-six sales events per year, up from only nine events just four years ago, has enabled us to connect consistently with our customers and be current, relevant and helpful in their lives. We have also initiated the new “Smart Choices” program, which highlights items within VCS that convey “Value, Health, and Wellness” across all lines of business.

In 2011, we will deploy our new mer-chandising and store supply chain buying system with the Oracle Retail Merchandising System (RMS), which will give our Patriot-Store chiefs, region managers and buying staff visibility over inventory by location, style, size and color. This will help us de-liver product to the right demographics on a consistent basis.

On ensuring custOmer service remains at the

fOrefrOnt …

Consistent and clear communication across all levels of the organization focuses on the VCS mission. VCS Director Marilyn Iverson and Chief Operating Officer (COO) Ray Tober talk about “exceeding our cus-tomers’ expectations” which is our customer service pledge. They set the pace for the entire VCS team, both the field and Central Office (CO) staff, by speaking about this on conference calls, in business meetings, at medical center management meetings, and when they make store visits.

We never lose sight of our customers: our Veterans, their family members, caregivers, and staff who serve them. I follow their lead

On the vcs’s recent prOgress and future

challenges …

The VCS experienced another phenom-enal year for sales and earnings growth in fiscal 2010, achieving a fifth consecutive year of top-line sales increases despite tepid consumer confidence nationally.

We have focused on the execution of key growth plans put in place in 2010, includ-ing improving the assortment and in-stocks in the snack and food business; expanding offerings in Men’s and Women’s footwear; growing our apparel businesses; and, most importantly, providing a consistent and satisfying shopping experience in all our PatriotStore locations.

Supply chain eff iciencies have been gained by launching our partnership with the McLane Co. in mid 2010, resulting in

Veterans Canteen Service Chief Merchandising Officer,Director, Retail and Vending Operations, James G. Leahy

TransformaTionThrough innovaTion:People. Planet. Technology

O n April 30, Veterans Canteen Service (VCS) Chief Merchan-

dising Officer (CMO) James G. Leahy celebrates his fourth anniversary with the VCS. Along with Director Marilyn Iverson, his time with the VCS has coincided with a period of significant sales growth for the canteen service. In the following exclusive interview with E and C News, Leahy outlines that growth and talks about where the VCS is headed during the remainder of 2011 and into the future, as it con-tinues to make Veterans, their families, caretakers and staff who serve them its top priorities.

VCS

pho

toS

During 2010, Veterans Canteen Service (VCS) initiatives in-cluded improving the assortment and in-stocks in its snack

and candy business. San Antonio, texas, patriotStore.

Leahy

APRIL 2011 | 43EXChANGE and CoMMISSARY NEWS

VCS Show & Sell

ECN043_044,046.indd 43 3/29/11 11:29 AM

“Smart Choices” campaign that highlights items in the VCS PatriotStores, PatriotCafés, and PatriotExpress (vending) that convey value, health, and wellness. Within the PatriotCafé, we offer “Smart Choices,” where the focus is on helping customers make in-formed, healthy dining decisions, for example, with the “You Can Dine for Under 500 Calories” program.

About 40 percent of our Veterans are diabetic, and VCS is very mindful of having smart choices that are heart-healthy, including sugar-free snacks, Glucerna nutritional drinks, sugar-free drinks and low-salt snacks.

On centralized buying and the rOle Of canteen chiefs and

regiOn managers …

Teamwork is an essential component for success in determining the appropriate merchandise mix by location. VCS continues to utilize our Purchase Order Management System (POMS) legacy procurement system, which is a push-and-pull manual system.

Our store chiefs pull — order for resale in the store — many basic items in food, candy, snacks, beverages, underwear, pants, health and beauty care (HBC) and more. We also push — buyer directed orders — the sale event items, key electronics items,

With proper execution and follow-up, items such as the Skechers Shape-up product in Ladies and Men’s in 2010 drove those categories of business up 50 to 80 percent over last year.

Our McLane decision has had a positive impact on sales and gross margin because we are buying more frequently, delivering goods every five to 10 days in smaller orders, carrying less inventory, turning it faster and not marking dated product out of stock because we had to buy a larger minimum of items to get the best sellers.

On health and Wellness trends’ effects upOn the cOnsumables

assOrtment …

Our “Simply to Go” program in the PatriotStore has been a tremendous success, generating just under $700,000 in sales in 80 stores in the last 20 weeks of the year. We carry single-serve healthy snacks including almonds, Nutri-Grain bars, orange juice, pomegranate juice, lemonade and bottled water.

We have added the Naked juice brand procured through McLane along with single-serve cheese sticks, Landshire sandwiches and carrot sticks. They have been very well received by our customers.

Our Marketing Department has launched the

with my staff and am mindful to “think like a customer” always — when we buy an item, de-cide how we will price it, merchandise it in our stores or market it to them in our advertising. Our customers are our primary focus.

On further “Outside the bOx” mOves …

While opening on Christmas Eve does not sound like an “outside the box” move for most retailers, it was an unprecedented success for the VCS in 2010. Even with the federal holiday being observed on Dec. 24, we opened for four hours and did $1 million in sales.

Many of our employees shopped with us for last-minute gift purchases, and we provided an outstanding service to the staff and Veteran fami-lies who were visiting loved ones on Christmas.

In 2011, VCS will expand more businesses to Community Based Outpatient Clinics (CBOC). The VA has approximately 75 CBOCs that see 50,000 to 100,000 unique Veteran patients per year. The VCS’s goal is to reach out to those Veterans and caregivers that don’t typically visit larger medical centers with VCS locations.

CBOC’s represented over $800,000 in retail sales in 2010, and we are excited about the opportunity for growth. We are in the process of developing a business model for our CBOCs with stores to expand the reach of the VCS in 2011.

On the factOrs that have influenced sales …

Marketing, newness, and the supply chain have impacted sales both positively and adversely.

We created a Marketing Department, led by Di-rector, Marketing and Communications, Carey Filer, which has helped provide a consistent message across VCS in retail, food, vending and services. This has enabled VCS to become more current and relevant to our customers and, most importantly, really helped VCS become an even more integral part of the De-partment of Veterans Affairs (VA).

Newness is very important for the VCS, especially because half of our customers work and shop with us every day, so we have a tremendous challenge to be new and exciting and to trend right for them, in order to keep us top of mind when it comes time to make their purchasing decisions for their families.

Lastly, supply chain is the most critical because it affects the other two factors, marketing and newness. VCS is committed to improving our supply chain, lowering minimum purchases, increasing fill rates, and reducing shipping times.

Without a warehouse in our supply chain, we must drop ship all purchases directly to each VCS PatriotStore and PatriotCafé — which is logistically challenging — so our buying staff takes on these roles tracking ad items for sale events, expediting new ideas like Skechers Shape-up shoes, Pillow Pets, or iPads.

We run hundreds of items in sales events. If we have vendors’ ship product late, it misses the ad and disappoints our customers, and we miss our sales plan for that event.

With a focus on providing customers a consistent and satisfying shopping experience, the VCS has also expanded apparel offerings for both women

and men. St. Louis, Mo., patriotStore.

‘We never lose sight of our customers: our Veterans, their family members, caregivers, and staff who

serve them. I follow their lead with my staff and am mindful to “think like a customer” always’

—VCS Chief Merchandising Officer, James G. Leahy

EXChANGE and CoMMISSARY NEWS44 | APRIL 2011

VCS Show & Sell

ECN043_044,046.indd 44 3/29/11 11:29 AM