Fortunately AAFES has the opportunity to counter the potential decline in sales. With retail facilities operating in Europe and Asia, AAFES has the opportunity to increase sales in an area where the outside economy is unreasonable to shop in. Military service members receive cost of living allowance to offset the difference in cost of living off the economy. Despite having additional income the difference in price makes shopping AAFES more desirable as the customer's first choice.
Social and cultural factors are perhaps the most critical when developing retail merchandise assortments. AAFES customers consist of military service members whom are mobile and global customer and are exposed to many global trends. According to the U.S Department of Defense demographic report, military active duty personnel stationed overseas consist of 7.4% stationed in Europe, and 6% in Asia. For this reason AAFES continues to practice market development by bringing products that customers have been exposed to in one country and can continue to buy when they move to another.
Government intervention in the retail industry can put damper on business objectives. AAFES is not exempt from the possibility of mergers. In 2004 the Department of Defense proposed merger of AAFES, the NEX (Navy Exchange), and MCX (Marine Corp Exchange). The motion which would eliminate 2,500 jobs never took place, however AAFES is still planning for the coming of the Unified Exchange. This is evident in the joint ventures which have occurred amongst the exchanges to cut costs and increase buying power.
With the government slowly lifting bans on restrictions on categories of merchandise, AAFES must prepare themselves for the moment that other changes could take place. Suppliers must be identified, merchandising practices decided upon, and more. In doing this AAFES will lose no time in planning to capture additional sales.
Creating customer loyalty has been an ongoing priority and challenge for retailers. Technology has allowed retailers to implement loyalty programs that also track consumer purchases.
Amongst change in demand in consumer electronics is the decline of CD music sales in favor of mp3 sales. AAFES can expect the