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Navy Exchange

The Navy Exchange (NEX) oversees more than 300 NEX retail stores on 92 naval bases worldwide, varying in size from small self-checkout convenience stores to large department stores. In 2020, NEX enlisted MG2 to partner with them in a department-by-department exploration into how to redefine value at its owned locations. This exploration encompassed Beauty, Consumer Electronics, Kids, Footwear, Home, Jewelry, Food Hall and Provisions – all utilizing Oceana base store as the anchor test store. 

Once implemented at Oceana, the NEX team worked with MG2 to leverage learnings from the pilot location to apply a guide for further iterations and eventually a rollout playbook to adapt and scale each department’s evolution. 

Goal:

Due to the continued elevation of the competitive landscape, NEX has invested in evolving and elevating their value proposition to their patrons by reimagining the store experience department by department.  

“Thirty years ago, it was really convenient because everybody lived on base, but now more families live off base.

It’s about creating a sense of excitement, a sense of community, a sense of belonging, and being able to allow patrons to check more off their list.”

– Rich Honiball, EVP and global chief merchandising and marketing officer for the Navy Exchange Service Command (NEXCOM)

Let’s not think of
ourselves as the military store;
let’s think of ourselves as
a retail destination.

Process: 

The MG2 Advisory Team, in partnership with our design team, took a multi-pronged approach to assessing how each department could best support consumer needs. 

This included:

  • An audit of brand insights (both qualitative and quantitative) as well as competitive benchmarking analysis
  • Evaluating consumer trends (for example: identifying the desire to shop for beauty products in store by regimen)
  • Surveying the NEX consumer audience as it relates to opportunities to elevate in-store experiences and identify key drivers to make Navy Exchange their shopping destination
  • In-person field interviews – immersing ourselves on base with new recruits and sailors and talking with store management to learn first-hand where they are seeing gaps both experientially and operationally in store

This evaluation identified opportunities beyond price to deliver value across the fleet of locations. Through a deep dive analysis into trends and customer pain points and desires, including areas that provided demystification, we could identify drivers and preferences to inform the in-store experience evolution, allowing the Navy mission to be more deeply reflected in the spaces visited by sailors and families.

Based on the insights and research the MG2 Advisory Team brought forward, MG2 designed stores that provided greater space for storytelling, fostering excitement and a sense of community. As a result of these findings, the NEX team revamped each department, reimagining the customer journey, merchandising, wayfinding and operational change.

Beauty Initiative Highlight / The Results Are in the Data:

The beauty department redesign was first introduced in the Oceana store in 2022, followed by the Pensacola Navy base store in Florida. Post Oceana’s redesign: The beauty departments now demystifies customer discovery. The products which had been arranged by brand alone are rearranged by regimen instead. New end caps feature educational tips and how-tos and a flexible space in the new beauty department hosts special events and live streaming.

The post-redesign sales increases have been significant:  

  • Oceana beauty department sales rose by over 10% year over year compared to the same period prior. In the remodeled Pensacola store, sales increased by 6% Y/Y. 
  • Beauty Zone increased 510 bps to Tidewater, 820 bps to Enterprise. 

“The way that the departments are structured and organized elevates the product, elevates the experience, and makes it easier for the customer to find what they’re looking for…”

– Rich Honiball

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