Within the rural plains of Northern Poland, at a distant base surrounded by farmland and pine forest, some 150 U.S. Navy sailors have a small slice of consolation via the Navy Trade Mini Mart, a spot for acquainted snacks, hygiene merchandise and the family manufacturers lots of them knew rising up.
One in all lots of of retail shops the Navy operates globally via the Navy Trade Service Command, or Nexcom, the comfort retailer in Redzikowo does not make a lot cash. Nevertheless it’s a part of a sprawling system that performs a essential function in retention, morale and in the end, U.S. nationwide safety by funneling income into packages that assist sailors and their households.
Now, that community might be in danger as bigger, savvier retail giants like Walmart, Amazon and Goal chip away at Nexcom’s U.S. market share, forcing it to do what any good retailer does when gross sales gradual: rent consultants and embark on an bold turnaround plan.
“Although we’re throughout the navy, we compete for folks’s share of pockets, proper? They’ll simply as simply … cease at a Goal, they may cease at a Walmart, however we wish them to buy right here,” stated Nexcom’s CEO Robert Bianchi, who has each a Harvard MBA and nearly 30 years of expertise as a sailor to tell his technique. “It’s a fixed problem to remain related.”
Declining gross sales, relevance
Nexcom, which might hint its roots again to the 1800s, gives lively responsibility navy members from all branches, veterans and their households with lodging entry, uniforms and discounted, tax-free merchandise via its chain of outposts. A number of the areas are sprawling shops, providing sailors entry to family names like Residence Depot, Bathtub and Physique Works and American Eagle, whereas others are smaller comfort shops, much like a 7-Eleven. Comparable variations exist throughout totally different branches of the navy.
The shops are each a perk and a essential element to supporting sailors, creating its personal “virtuous cycle,” Bianchi stated.
Except for providing low costs on family manufacturers, Nexcom’s bigger shops close to large bases in California, Florida and Virginia assist pay for smaller retailers in distant international outposts, such because the mini mart in Redzikowo. Throughout the chain, all income are funneled again into the Navy and assist to fund its morale, welfare and recreation packages, which provide sailors and their households entry to companies like day cares, gyms, counseling and group occasions.
The Navy Trade Mini Mart in Redzikowo, Poland
Handout
” you have been going to be in a gaggle of oldsters that have been form of going via the identical factor that you simply have been, proper? It was nearly like a assist group,” Bianchi stated of his expertise with the packages whereas he was within the navy. “The spouses loads of occasions are left behind they usually’re searching for connections and wanting to ascertain these relationships with people that they will lean on whereas their husband or spouse or whoever is out to sea for months at a time, and so the MWR workforce is actually good at sponsoring packages that assist all of the household, not simply the navy member.”
However gross sales have been in decline for the final 12 years, falling 19% between fiscal 2012 and 2024 and outpacing declines in whole navy personnel. The latest 12 months with knowledge accessible, fiscal 2024, noticed the bottom gross sales in practically 20 years exterior the Covid-19 pandemic.
In the meantime, dividends generated by retailer gross sales that feed MWR packages are a fraction of what they have been previously. Between fiscal 2013 and financial 2024, dividends fell 43% from $51.9 million to $29.8 million.
“The stress is there. I really feel it, you realize, and identical to a retailer, we watch our gross sales figures and each day we’re taking a look at our retail developments,” stated Bianchi. “What’s in danger is probably the degradation of this profit for all these navy members and their households all over the world and in order that’s why we take this very significantly … if we made much less cash, [MWR] might must reprioritize some issues inside their price range.”
Robert Bianchi,
Chief Government Officer, Navy Trade Service Command
CNBC
Nexcom’s gross sales declines have come at a time when retail gross sales total have grown, indicating it has been shedding market share. Its shops have turn into dated, it is behind on e-commerce and it is overlooked the retail fundamentals that preserve clients loyal, selecting to compete on value at a time when customers are searching for extra.
“They’ve good issues on the trade. I haven’t got an issue with what they carry…. nevertheless it’s simply the comfort,” Angela Emerson, a Navy veteran and Nexcom buyer, instructed CNBC throughout a current retailer go to in Norfolk, Virginia. “Amazon’s by no means closed.”
Whereas the Navy’s main aim is to guard the U.S. at sea, the more and more aggressive client panorama means it additionally must be a very good retailer, which generally means hiring assist.
In Might 2020, Nexcom employed retail marketing consultant Melissa Gonzalez, a principal at technique, design and structure agency MG2, to assist redesign its shops and drive progress via its “Retailer of the Future” initiative. Over the previous few years, it is put $20 million into fixing its shops and plans to spend $80 million extra over the subsequent three years, a good portion of which shall be used to assist Retailer of the Future tasks.
“They’ve loads of distinctive challenges with the Navy Trade. One, no two buildings are the identical, so it is actually onerous to standardize issues that you’d then roll out when you give you an idea, as a result of there’s loads of totally different situations with the structure, with the geography, with merchandizing,” stated Gonzalez. “Additionally, when the Navy Exchanges first began, there weren’t so many comps such as you see as we speak, Goal and Walmart and a few of these others who’ve actually grown. And so what’s the repositioning of their place within the business, to their buyer, with all of this evolution that is occurring?”
Retail marketing consultant Melissa Gonzalez was employed to assist NEXCOM with its turnaround
CNBC
Working alongside Nexcom, Gonzalez has gone division by division, determining the right way to reformat shops, jazz up signage and talk worth primarily based on the native demographics and respective classes.
Renovating Nexcom’s shops and determining the right way to merchandise them has been a problem, stated Richard Honiball, Nexcom’s chief merchandising and advertising officer. A number of the shops are so giant, they provide all the things from Tempur-Pedic mattresses and dishwashers to Estee Lauder fragrances and buzzy razor manufacturers.
“The least costly merchandise we promote is a be aware card abroad. It is about 30 or 40 cents. The most costly merchandise we bought final 12 months? A diamond solitaire ring that was over $90,000,” stated Honiball. “How can we merchandise it? It’s difficult, which is why we do not attempt to be Costco and bulk issues out, or we do not attempt to be Amazon and carry all the things. What we attempt to do is curate the assortments as greatest we are able to, and I feel we get it proper greater than we get it unsuitable. However once we get it unsuitable, we hearken to the patron and we adapt.”
Richard Honiball, Nexcom’s chief merchandising and advertising officer
CNBC
Whereas the corporate has not but launched its annual report for 2025, it says that the turnaround efforts are taking maintain. Buyer satisfaction was up 2.7 proportion factors in 2025, and Nexcom stated it grew for the primary time since fiscal 2021, with retail gross sales up 3.2% 12 months over 12 months.
“Any time we have touched an space, it is driving extra gross sales,” stated Honiball. “We did not begin off saying we will create the Retailer of the Future, however we have been two or three tasks in and realized that in essence, what we’re doing is creating this new setting that’s a lot simpler, it is simpler to run and it is extra partaking for the patrons.”
Navy type turnaround
Earlier this 12 months, CNBC traveled to Norfolk, Virginia – residence to the most important Navy base on the globe – to see each an unrenovated Nexcom division retailer, NEX Norfolk, and its Retailer of the Future take a look at store, NEX Oceana, to see the adjustments underway and the way they’re enhancing gross sales on the overhauled location.
As quickly as clients enter the revamped retailer, the tweaks are apparent. At NEX Oceana, the lights are brighter, the flooring are cleaner, the signage is digital and customers can clearly see totally different departments as they navigate the shop.
“Individuals have turn into extra conscious of what an excellent setting looks like. Lighting is essential, proper?” stated Gonzalez. “You are wanting within the mirror on the outfit you are making an attempt on. The way you look within the mirror goes to affect how a lot you need to purchase that outfit.”
How assortments are laid out issues, too.
At NEX Norfolk, the patron electronics division featured an array of TVs on the wall with little branding or rationalization of how their options differ, together with plenty of empty house. It created a lower than partaking retail expertise in a essential part of the shop providing big-ticket objects that customers take into account rigorously earlier than shopping for.
The unrenovated client electronics division at NEX Norfolk
CNBC
At NEX Oceana, the TVs have been extra organized, branding was clear and the format maximized the accessible room, permitting for extra merchandise to be on the ground to drive greater gross sales.
The renovated client electronics part at NEX Oceana
CNBC
The brand new shops have additionally improved the way in which particular person manufacturers are displayed – particularly in classes like jewellery, magnificence and attire.
For instance, within the attire part at NEX Norfolk, main athletic manufacturers like Nike, Underneath Armour and Athleta are grouped collectively, united solely by an indication overhead promoting a 20% off low cost. At NEX Oceana, particular person retailers, from American Eagle to Previous Navy, have their very own sections, creating branded buying experiences throughout the retailer that enable customers to navigate between their favourite names.
The attire part on the renovated NEX Oceana location highlights particular person manufacturers like American Eagle
CNBC
Marta Cruz, a navy partner whose husband is a veteran of each the U.S. Marines and the U.S. Coast Guard, instructed CNBC that NEX Oceana seemed totally different when she was there for a buying journey in February. It was much less crowded, the garments have been extra organized and it was simpler to push her cart round.
“It appears to be like good,” stated Cruz. “It is higher now.”
A number of the adjustments to the wonder part at NEX Oceana are already resulting in improved gross sales patterns. Up to now, the Bathtub and Physique Works part was in a cavernous tunnel separating the division retailer from a since shuttered grocery retailer, removed from the remainder of the wonder division. Now, the retailer’s space has higher signage and is located with the remainder of the wonder merchandise and fragrances, main gross sales to leap 40% between 2023 and 2024 at NEX Oceana.
The tunnel the place the Bathtub and Physique Works part was
CNBC
The brand new Bathtub and Physique Works part at NEX Oceana
CNBC
“We have already transformed 20 of the 25 important shops, and we’re seeing will increase throughout the board. In magnificence, our magnificence gross sales are up within the excessive single digits,” stated Honiball. “They’re performing three to 400 foundation factors higher than the principle chain.”
A number of the adjustments have additionally been about making the shops extra agile to allow them to tweak departments and assortments quickly primarily based on the evolving wants of sailors. Up to now, making adjustments was a expensive endeavor that might take years, dragging on each profitability and gross sales whereas the renovations have been happening.
“We do not have the luxurious as we speak, in retail total as an business, however particularly inside navy retail, throughout the Navy, to have these lengthy drawn out tasks,” stated Honiball. “If client habits is shifting, if somebody’s going extra towards sure manufacturers or going extra to sure merchandise or shopping for in a sure manner, we wish to have the ability to adapt far more quickly as a result of the calls for of somebody who’s within the navy can change in a nanosecond.”
‘An excessive amount of of a ache’
Because the retail business grows more and more aggressive, and giants like Walmart and Amazon turn into tougher to beat, it’s normal to see warring large field shops attempt to copy each other and undertake one another’s methods to take market share.
That is true at Nexcom, too, however the shops even have a singular worth proposition as serving simply folks linked to the navy.
“It is nicer folks as a result of we’re all navy,” stated Kathy Pawlak, the partner of a veteran Navy pilot and dependable Nexcom shopper. “I do not like going within the civilian nastiness.”
There are distinctive advantages that include buying at Nexcom shops. If a servicemember is in uniform, they get entrance of the road privileges, and in the event that they’re having a problem with one thing, there’s entry to “white glove service” to deal with their distinctive wants, stated Honiball.
“That is form of our secret sauce,” stated Bianchi. “When a household or a sailor walks in right here, one out of three folks they’re interacting with most likely has walked a mile of their sneakers, proper? So that they get it. They perceive if that child is crying within the aisle and whoa, daddy’s gone, you realize, or no matter, they get it as a result of they most likely moved, or they most likely had a dad or a mother who was gone they usually can actually empathize with that.”
A service member checks out at a Navy Trade retailer in Norfolk, Virginia
CNBC
Although Nexcom has these benefits, it nonetheless has to compete in a retail setting the place comfort and worth matter greater than ever, particularly for the subsequent technology of customers. Many purchasers interviewed by CNBC stated one of many important the explanation why they do not store at Nexcom extra usually is as a result of there is a Walmart or Goal nearer by, or it is simpler to order from Amazon.
Nexcom has moved on-line, however its digital storefront might be clunky. Some objects require clients to name in to position their order and customers want navy credentials to go online.
“It is like this large rigmarole to attempt to get logged on. It is form of a ache,” stated Melissa Wadington, whose partner is within the Navy. “It is simply not price it for me. It is an excessive amount of of a ache.”
Already 5 years within the making, Nexcom’s turnaround will take at the least one other three years and tens of millions extra in funding. Not like many different navy packages, Nexcom shouldn’t be primarily funded via federal appropriations, however is relatively a self-sustaining machine via its personal retail gross sales, making its potential to develop – whereas additionally affecting a turnaround – essential for its survival.
“There isn’t a time to take a seat idle on this retail setting,” stated Bianchi. “I will not mislead you and inform you that the competitors is not fierce. It’s. I imply, we combat. We combat to keep up that loyalty.”
