January 11 2017
Changes to the Commissary
October 1, 1991, the Defense Commissary Agency (DeCA) was activated as an operating agency and officially became the owner and operator of all U.S. military commissaries worldwide. The consolidation of each service commissary system was done as a money saving measure. Twenty-five years later another change will be affecting your commissary shopping experience. Commissary customers will start seeing private label products, more commonly known as generic products, on shelves in May 2017, and a new method of calculating savings and similarly like 25 years ago there are concerns expressed about unintended consequences.
Through arrangements with distributors, commissaries are able to sell products at cost, plus a 5 percent surcharge. It is because the distributors have been supportive of DeCA, that DeCA has been able to offer significant price cuts on many of the items one would find on the shelves of your local commissary. DeCA has stated that there is an average of 30 percent savings which is based on taking approximately 38,000 items annually that commissary shopper’s typical purchase nationally and comparing those exact same items in off base civilian facilities. The introduction of generic products stem from DoD officials wanting to test price changes in an effort to reduce the $1.4 billion annual subsidy without increasing prices.
The US will be divided into seven regions and “Comparable Shopping” will be done within the local community where commissaries are located. The average savings is expected to vary depending on the location and cost of living, but the goal is not to make the savings equal across the nation. The objective of the new methodology is to develop a more accurate representation of what items are being purchased and where the savings are occurring.
Example: if a hypothetical North West region showed a 40 percent savings and a hypothetical South West region showed a 20 percent, resources would not be taken from the NW and diverted to the SW to try and get close to a 30 percent savings for both. Rather DeCA would use that 40 percent and 20 percent as baseline for their respective regions and try and find other ways to improve service and savings but to never go below the baseline for the region.
Officials are negotiating with suppliers to lower prices on about 8,000 items that the commissaries, in turn, will mark up, using the additional revenue to pay for operating costs. Additionally, officials will adjust prices on about 1,000 items across 10 pilot test stores. Lowering prices on some common goods, that commercial stores market aggressively at local grocery stores. The goal is to be more competitive with prices military consumers may find off base, raising prices on other items that have traditionally offered a bigger savings than those found in commercial stores.
DeCA will be doing the local comparison shopping with the three most likely competitors of that local commissary, with at least one competitor being a “Super Store”, such as a Costco or Super Walmart. The comparable shopping will be done on a monthly basis until DeCA has a good established baseline of savings. DeCA will also continue discussions with law makers about the progress and ways to improve the commissary experience for the military service members and eligible patrons.
Generics are sold at local grocery stores and some big chain grocery stores even have their own brands of food; and tend to be significantly cheaper than the name brands. Joseph Jeu, DeCA’s CEO said, “Our customers have been asking for private label for a long time,” and cited a DeCA survey in which 60 percent of respondents said they would like to see commissaries offer private label products. Some concerns surround those distributers that provide products to DeCA. The fear is that these distributers will be forced to reevaluate their business with DeCA if they feel that their products are being minimalized by having less shelf space or they are unable to sell as much and therefore are unable to offer their products at such a reduced price. This may change the dynamic of the relationships that DeCA has built between distributers over the past 25 years.
Defense officials have been exploring other expense-reduction ideas, including a plan to privatize all or part of the commissary system. One important thing to remember is when military families go thru a permanent change of station, the commissary prices will not be as consistent as they once were. There may be a few more options, and you should expect an overall savings compared to local grocery stores. There will be the occasional grocery item that could be found cheaper in a local market, but taken as a whole after factoring in cost of living expenses the goal is to ensure the Commissary is still a good deal.
Fleet Reserve Association (FRA) opposes any proposal to reduce funding for military commissaries. The Association advocates that military commissaries and exchanges are an essential part of the military benefit package. FRA’s on-line survey, conducted last year, indicates that 50 percent of active duty respondents and nearly 61 percent of retirees rated Commissary/Exchange privileges as “very important.” FRA believes that commissary, exchange and MWR programs contribute significantly to a strong national defense by sustaining morale and quality of life for military beneficiaries.
To issues that could affect your quality of life visit the FRA Action Center at http://action.fra.org/action-center/