Measuring the savings at the military commissary

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U.S. Marines
U.S. Marines

Measuring the savings at the military commissary

by: Carolyn Shapiro | .
The Virginian-Pilot | .
published: September 23, 2014

When the Defense Department earlier this year proposed cutting more than 70 percent from the federal dollars provided to help run military commissaries, it provoked a fierce outcry among military personnel and their families.
 
They worried that a reduced federal appropriation would diminish the money they can save by shopping for groceries at commissaries and, at worst, cause store closures or even the collapse of the system that provides the financial benefit. Committees in both houses of Congress have since rejected the commissary curtailment in the defense bills they passed.
 
The Defense Commissary Agency, which operates 246 government-owned stores worldwide, touts an average savings for military members of at least 30 percent compared with regular retailers. But in Hampton Roads, an area heavy with competition from four major supermarket chains and giant discounter Wal-Mart, are the prices at the commissaries really that much lower?
 
That’s a question The Virginian-Pilot set out to answer less than two weeks ago. We compiled a basket of 30 randomly chosen common food and household items, priced them at the Norfolk Naval Shipyard commissary in Portsmouth and then compared prices for matching items at Farm Fresh, Food Lion, Harris Teeter, Kroger and Wal-Mart stores nearby.
 
The commissary offered savings averaging about 20 percent across the total tally at each of the five stores. Harris Teeter showed the biggest discrepancy, costing 30.1 percent more for the grocery basket, while Wal-Mart’s prices topped the commissary total by only 11.4 percent, and Kroger’s were 13.3 percent higher. Kroger owns Harris Teeter stores.
 
“Our 30 percent is the big picture,” said Richard Brink, a spokesman for the Defense Commissary Agency, known as DeCA, based in Fort Lee. He said the nearly 20 percent discount that The Pilot calculated, “which is still pretty significant,” sounded probable for the commercially crowded Hampton Roads area.
 
Even the lesser savings locally matter to a military family on a budget, said retired Col. Mike Barron, deputy director of veteran relations for the Military Officers Association of America, an Alexandria-based advocacy group for service personnel and their families.
 
“The commissary clearly does what it’s designed to do,” he said, “and it provides a savings overall.”

In Hampton Roads, the commissaries account for a sizable chunk of local grocery sales. Shoppers spent $323.7 million at the region’s six locations attached to military bases – Norfolk Naval Station in Norfolk, Joint Expeditionary Base Little Creek and Oceana Naval Air Station in Virginia Beach, Langley Air Force Base in Hampton, Fort Eustis in Newport News and Norfolk Naval Shipyard – in the fiscal year that ended Sept. 30, 2013.
 
That was almost 13 percent more annual sales than Harris Teeter tallied through March with twice as many local stores and almost half the sales of Farm Fresh, which has about seven times the number of locations as the commissaries, according to figures from Food World, a supermarket industry publication based in Columbia, Md. The commissaries stand in fifth place in Food World’s annual market survey, released in June, with a 6.8 percent share of sales among all retailers selling grocery items in Hampton Roads, including convenience stores and discount chains.
 
“We’re known for pantry-loading, which is where you go and get the whole thing,” Brink said.
 
In The Pilot’s grocery basket, the commissary’s advantage was driven by some key categories. Meats there cost less than half their prices in most cases at the other supermarkets. One exception was Kroger, which had a competitive price for prepackaged boneless, skinless chicken breasts at $1.99 per pound, compared with $2.04 at the commissary.
 
DeCA boasted about its meat prices on a wipe-off board near the commissary’s entrance the week we shopped there. It listed the deals on chicken, beef and pork and the corresponding savings at “Store A” and “Store B,” ending with an emphatic “Portsmouth Commissary It’s Worth the Trip!!!”
 
Ketchup cost a remarkably low $1.88 for a 38-ounce bottle of the Heinz brand at the commissary, 36.9 percent less than the next-cheapest price of $2.98 at Wal-Mart. The commissary got “extra savings” on Skippy Natural peanut butter, indicated on its $1.79 shelf tag, which amounted to a 28.4 percent savings on the same product at Harris Teeter, whose sale price was the next-lowest at $2.50.
 
For other items, the commissary price was no lower than the shelf tags at other stores. Food Lion and Kroger both beat the $18.99 cost for a 58-count box of Huggies Snug & Dry diapers by 20 cents, while Harris Teeter’s sale price matched it.
 
A frozen DiGiorno pepperoni pizza cost about 20 percent less at Wal-Mart, 13 percent less at Kroger and 10 percent less at Food Lion. And even the higher-end Harris Teeter offered a better deal on a 2-liter bottle of Pepsi, on sale for $1.50, compared with $1.59 at the commissary. In fact, only one of the other retailers didn’t beat the commissary price on Pepsi during our shopping period.

Commissaries sell products at their wholesale cost or close to it, so customers see the best prices that ­DeCA’s buyers can get from manufacturers. The federal appropriation, about $1.4 billion a year, covers operating costs for the stores and agency offices: the employees to procure, transport and sell the goods; electricity and other utilities; and service contractors.
 
DeCA buyers review product categories and work with suppliers to maintain a minimum savings of at least 30 percent on chilled meats, Brink said. The commissaries have become known for those meat deals, he added. Buyers also sometimes get “extra savings” on certain products, like Skippy peanut butter, when manufacturers have excess stock.
 
The total basket price in The Pilot’s calculations included the 5 percent surcharge that commissary customers pay on their total at checkout and the Virginia sales taxes collected by the other retailers. The state taxes food items taken home for consumption, which covers most groceries other than nonfood staples, at 2.5 percent and other products such as cleaning supplies at the usual 6 percent sales tax.
 
The 5 percent commissary surcharge, according to DeCA, pays for capital improvements including new stores and expansions, equipment and information technology – such as the digital wireless shelf tag system that allows the agency to change prices in some stores from a remote computer, rather than manually.
 
The commissary surcharge, at $5.27 on a $105.42 tab, was more than the taxes that the other retailers would have collected for The Pilot’s grocery basket.
 
The total tab at the commissary didn’t include one small cost that consumers generally avoid at a regular supermarket: Commissary customers typically tip the worker who bags and brings their groceries to their cars. The baggers are civilian independent contractors who work only for tips, which are expected, though not required, Brink said.
 
“It’s a thing that is a longtime service in commissaries, but it is up to you” whether to tip, he said.
 
The U.S. commissary system dates to 1825, DeCA’s website says, when stores at some Army posts allowed officers to buy goods at cost. About 40 years later, the Army expanded the privilege to enlisted men, and today, retirees and reservists across all military branches can shop there.
 
Last year, sales across the stores in 13 countries and two U.S. territories totaled $5.9 billion. DeCA’s annual report for fiscal year 2013 estimated that 5.3 million households are eligible for commissary benefits.
 
In its budget proposal released in February, the Pentagon suggested decreasing the federal appropriation for commissary operations from $1.4 billion to about $400 million over three years. The change appears on hold for now.

U.S. Sens. Tim Kaine and Mark Warner, both Virginia Democrats, fought to maintain the current appropriation and other military personnel benefits until a review of those programs is completed in February. Congress now looks poised to approve a continuing resolution to extend current spending levels to the end of the year.
 
That’s a relief to Barron and members of his organization.
 
“It was going to put the commissary really on a death spiral,” he said of the administration’s proposal. “And it’s a critical benefit.”
 
carolyn.shapiro@pilotonline.com
 
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