In this articleWMTAMZNTGTHDBBWIAEOELCOSTNKEUAAFollow your favorite stocksCREATE FREE ACCOUNTIn the rural plains of Northern Poland, at a remote base surrounded by farmland and pine forest, some 150 U.S. Navy sailors have a small slice of comfort through the Navy Exchange Mini Mart, a place for familiar snacks, hygiene products and the household brands many of them knew growing up. One of hundreds of retail stores the Navy operates globally through the Navy Exchange Service Command, or Nexcom, the convenience store in Redzikowo doesn’t make much money. But it’s part of a sprawling system that plays a critical role in retention, morale and ultimately, U.S. national security by funneling profits into programs that support sailors and their families. Now, that network could be at risk as larger, savvier retail giants like Walmart, Amazon and Target chip away at Nexcom’s U.S. market share, forcing it to do what any good retailer does when sales slow: hire consultants and embark on an ambitious turnaround plan. “Even though we’re within the military, we compete for people’s share of wallet, right? They can just as easily … stop at a Target, they could stop at a Walmart, but we want them to shop here,” said Nexcom’s CEO Robert Bianchi, who has both a Harvard MBA and almost 30 years of experience as a sailor to inform his strategy. “It is a constant challenge to stay relevant.” Declining sales, relevance Nexcom, which can trace its roots back to the 1800s, provides active duty military members from all branches, veterans and their families with lodging access, uniforms and discounted, tax-free products through its chain of outposts. Some of the locations are sprawling department stores, offering sailors access to household names like Home Depot, Bath and Body Works and American Eagle, while others are smaller convenience stores, similar to a 7-Eleven. Similar versions exist across different branches of the military. The stores are both a perk and a critical component to supporting sailors, creating its own “virtuous cycle,” Bianchi said. Aside from offering low prices on household brands, Nexcom’s larger department stores near big bases in California, Florida and Virginia help pay for smaller shops in remote foreign outposts, such as the mini mart in Redzikowo. Across the chain, all profits are funneled back into the Navy and help to fund its morale, welfare and recreation programs, which offer sailors and their families access to services like day cares, gyms, counseling and community events. The Navy Exchange Mini Mart in Redzikowo, PolandHandout”You know you were going to be in a group of folks that were kind of going through the same thing that you were, right? It was almost like a support group,” Bianchi said of his experience with the programs while he was in the military. “The spouses a lot of times are left behind and they’re looking for connections and wanting to establish those relationships with folks that they can lean on while their husband or wife or whoever is out to sea for months at a time, and so the MWR team is really good at sponsoring programs that help all the family, not just the military member.” But sales have been in decline for the last 12 years, falling 19% between fiscal 2012 and 2024 and outpacing declines in total military personnel. The most recent year with data available, fiscal 2024, saw the lowest sales in nearly 20 years outside the Covid-19 pandemic. [embedded content][embedded content]Meanwhile, dividends generated by store sales that feed MWR programs are a fraction of what they were in the past. Between fiscal 2013 and fiscal 2024, dividends fell 43% from $51.9 million to $29.8 million. “The pressure is there. I feel it, you know, and just like a retailer, we watch our sales figures and every day we’re looking at our retail trends,” said Bianchi. “What is at risk is potentially the degradation of this benefit for all those military members and their families around the world and so that’s why we take this very seriously … if we made less money, [MWR] may have to reprioritize some things within their budget.”Robert Bianchi,
Chief Executive Officer, Navy Exchange Service CommandCNBCNexcom’s sales declines have come at a time when retail sales overall have grown, indicating it’s been losing market share. Its stores have become dated, it’s behind on e-commerce and it’s lost sight of the retail fundamentals that keep customers loyal, choosing to compete on price at a time when shoppers are looking for more. “They have good things at the exchange. I don’t have a problem with what they carry…. but it’s just the convenience,” Angela Emerson, a Navy veteran and Nexcom customer, told CNBC during a recent store visit in Norfolk, Virginia. “Amazon’s never closed.” While the Navy’s primary goal is to protect the U.S. at sea, the increasingly competitive consumer landscape means it also needs to be a really good retailer, which sometimes means hiring help. In May 2020, Nexcom hired retail consultant Melissa Gonzalez, a principal at strategy, design and architecture firm MG2, to help redesign its stores and drive growth through its “Store of the Future” initiative. Over the last few years, it’s put $20 million into fixing its stores and plans to spend $80 million more over the next three years, a significant portion of which will be used to support Store of the Future projects. “They have a lot of unique challenges with the Navy Exchange. One, no two buildings are the same, so it’s really hard to standardize things that you would then roll out once you come up with a concept, because there’s a lot of different scenarios with the architecture, with the geography, with merchandizing,” said Gonzalez. “Also, when the Navy Exchanges first started, there weren’t so many comps like you see today, Target and Walmart and some of these others who have really grown. And so what is the repositioning of their place in the industry, to their customer, with all of this evolution that’s happening?”Retail consultant Melissa Gonzalez was hired to help NEXCOM with its turnaroundCNBCWorking alongside Nexcom, Gonzalez has gone department by department, figuring out how to reformat stores, jazz up signage and communicate value based on the local demographics and respective categories. Renovating Nexcom’s stores and figuring out how to merchandise them has been a challenge, said Richard Honiball, Nexcom’s chief merchandising and marketing officer. Some of the stores are so large, they offer everything from Tempur-Pedic mattresses and dishwashers to Estee Lauder fragrances and buzzy razor brands. “The least expensive item we sell is a note card overseas. It’s about 30 or 40 cents. The most expensive item we sold last year? A diamond solitaire ring that was over $90,000,” said Honiball. “How do we merchandise it? It is challenging, which is why we don’t try to be Costco and bulk things out, or we don’t try to be Amazon and carry everything. What we try to do is curate the assortments as best we can, and I think we get it right more than we get it wrong. But when we get it wrong, we listen to the patron and we adapt.”Richard Honiball, Nexcom’s chief merchandising and marketing officerCNBCWhile the company has not yet released its annual report for 2025, it says that the turnaround efforts are taking hold. Customer satisfaction was up 2.7 percentage points in 2025, and Nexcom said it grew for the first time since fiscal 2021, with retail sales up 3.2% year over year. “Any time we’ve touched an area, it’s driving more sales,” said Honiball. “We didn’t start off saying we’re going to create the Store of the Future, but we were two or three projects in and realized that in essence, what we’re doing is creating this new environment that is much easier, it’s easier to run and it’s more engaging for the patrons.” Military style turnaroundEarlier this year, CNBC traveled to Norfolk, Virginia – home to the largest Navy base on the globe – to see both an unrenovated Nexcom department store, NEX Norfolk, and its Store of the Future test shop, NEX Oceana, to see the changes underway and how they’re improving sales at the overhauled location.As soon as customers enter the revamped store, the tweaks are obvious. At NEX Oceana, the lights are brighter, the floors are cleaner, the signage is digital and shoppers can clearly see different departments as they navigate the store. “People have become more aware of what a good setting feels like. Lighting is critical, …
