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ECN CoverE&C Commissary News

Editorial Comment — December 2015

Not Drinking the ‘Kool-Aid’ …

On Thanksgiving Day, the nation’s active, reserve and retired servicemembers and their families had a little less to be thankful for than they had a year ago, because of provisions regarding the military resale system included in the 2016 National Defense Authorization Act that President Obama signed the day before.

Sent to him by the 114th Congress, the legislation virtually unravels the careful work of countless preceding Congresses that sought to protect and uphold the military resale benefit. The 2016 NDAA threatens to undo countless decades of industry and patron investment in the system, and worse yet, provides scant protection for patron savings and satisfaction. And that is the part that matters most — protecting patron savings and satisfaction.

Under strong and constant pressure from Pentagon budget cutters, the commissary is on the reform block, with the idea being to try to remove it from the non-pay compensation category to a more commercialized, competitive and selfsustaining model.

It’s convenient for them to suggest we all drink the Boston Consulting Group’s “Kool-Aid” — which amounts to little more than the budget cutters‘ desired endpoints served back in a different guise, by a hired consultant, with scant granular data.

Within BCG‘s thesis, there was barely enough statistical presentation and pseudo-knowledge — “we believe this, we believe that” — to get them to where DoD budget cutters told them they needed to be.

And so, on the watch of this Congress, or maybe a few Congresses down the road when all the side-effects of suggested or possible “pilot programs” have kicked in, patron benefits will be in grave danger of being eroded by variable pricing and private label tests that open up all kinds of possibilities for dubious financial assumptions.

When it comes to spending on programs that have been cultivated to maximize recruitment and retention — putting aside for a moment strange and abrupt fluctuations of patronage since sequestration and furloughs — the Pentagon appears increasingly reluctant to invest in its military families‘ well-being.

It‘s small consolation that the pilot programs loosely sketched out in the NDAA are only tests. Or that Congress has not yet approved variable pricing authority, which is the linchpin for introducing profits by reengineering savings — cut savings on meat here, grow profits on private label there, cut savings on dairy and produce here, increase a few pennies in savings on loss-leaders there.

With private label, the taxpayer must contemplate the hiring of more government employees and outside consultants to stock the shelves, plan the merchandising, manage the entire private label program.

It‘s hard to believe that this makes sense when DeCA has spent decades streamlining and making things smaller, by outsourcing much of its supply chain and shelf stocking to industry and the disabled. It‘s hard to believe that private label will pay for all the extra hiring of staff to stock and oversee goods that nobody else will touch.

But put between a rock and a hard place by Congress, DoD will soon have to spend money on investigating, staffing and quite likely piloting such a series of risky and expensive tests, while pushing out longstanding brands, along with their associated marketing and merchandising support; brands that have been selected through category management principles and proven their value to commissary patrons.

Before spending a great deal of time, money and effort to develop and test private label offerings, it might be a good idea for DeCA to carefully examine the data it has collected on its Value Brands program, which offers patrons much the same benefits as a private label program would. If Value Brands haven‘t helped maintain or increase foot traffic, what makes anyone think DeCA‘s private labels will?

Private label and variable pricing — they are a generic variety of Kool-Aid that we are just not drinking. But putting the caboose ahead of the locomotive, consultants and private label specialists have already descended on DeCA, and the train appears to be running off the benefit tracks into the realm of competition with Main Street, USA.

DeCA was a well-run, finely tuned operation for many years. Sure, it had some hiccups; all businesses hit bumpy roads. It just may be time for DeCA to make some changes. But first, DoD needs a truly independent panel — not a hired consultant — to take a hard look at when and why DeCA sales have dropped, and why morale is at what might be an all-time low, and why there are more and more reports of frustrated and dissatisfied patrons who are tired of empty shelves.

If Congress and DoD truly wish DeCA to actually compete with grocery stores outside the gate, they are going to have to spend more than ever to bring in expertise that is trained to compete with commercial grocers — DeCA was never designed to do that. It was always a benefit that just happened to look like a business. Not the other way around.

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