ECN CoverE&C Commissary News

Editorial Comment — April 2016

Numbers Game …

One major problem, as we understand it, is that the numbers just don’t add up.

To begin with, the parties working to transform the commissary benefit cannot seem to agree on exactly what the commissary benefit is — that is, exactly how much the savings amounts to. While its paid consultant comes up with shape-shifting savings percentages, and its own analysts appear to be having doubts, the Defense Commissary Agency itself as recently as a few weeks ago was officially continuing to trumpet its long-publicized overall 30 percent savings as constituting the commissary benefit.

Having apparently settled on regional market basket savings as benchmarks, they have to struggle with such thorny issues as how to deal with prices that vary not only from week to week but also from place to place while the patron’s pay remains the same no matter where in the country he or she is stationed.

Just as thorny, once a benefit figure is determined, tweaked, adjusted and settled upon, is how to — to paraphrase the language of the current law — preserve and enhance it.

DeCA’s two most widely publicized gambits to that end, stocking private label products and employing a variable pricing strategy, have yet to be tested.

To date, no one has brought forth any solid numbers to conclusively demonstrate that hoped-for   “profits” will actually materialize, or that variable pricing will be accepted by patrons as required in the 2016 NDAA. Bulletproof numbers are critical. Just because variable pricing works for the largest retail supermarkets, capable of fashioning their own private labels to finely tuned specifications, does not mean it’s going to work for a mid-sized grocer without real-world commercial experience whose customers are used to trusted brands at cost-plus prices.

DeCA’s transformation is being led by those whose pricewar knowledge comes second-hand, from consultation, reading, advice, hearsay, rumination; generals who have never themselves had to fight profit-and-loss battles.

The agency’s top civil servants, dedicated as they may be, with little or no outside-the-gate commercial grocery management experience, seem to be driven and hell-bent on turning a highly prized, tried-and-true element of non-pay benefit into what will be essentially a start-up commercial grocery business.

Many of the trappings are similar, if not identical: the setting, the equipment, the signage, the positions, the processes, the supply chain, even the types of products on the shelves. What is different is the goal.

The goal of the commissary system has up till now been to furnish an integral part of servicemember family compensation by providing top-quality grocery items at reduced prices. The goal of a commercial grocery business, like any other business, is to make a profit for its owners and operators — or in the new government-backed commercial military resale vision, to break even.

But just as there is no such thing as a free lunch, there is no such thing as a free commissary system.

As we go to press, the House Armed Services Committee and its subcommittees are preparing to mark up the Fiscal 2017 National Defense Authorization Act. Some of its proposed language glosses over military resale provisions that have been fine-tuned over the course of the past 20 congresses or so in favor of an “anything goes” flexibility that leaves the business details up to the Pentagon, making it easier to “guarantee” that a true resale benefit remains.

DeCA tells us that the private label test and variable pricing pilot program authorized by the 2016 NDAA will begin in the first quarter of FY17, but the proposed 2017 NDAA language implies — that test and pilot be damned — the authority to establish private label and alternative pricing programs can continue without regard to the results of any tests or pilot programs.

We have to ask, what’s the hurry? Cynics would tell us that it’s an election year, one of the most contentious in generations, and a done deal looks really good in resumes, curricula vitae and campaign slogans.

But with so much at stake, hurrying headlong to lock things up can too easily become a rush to failure.

DeCA is already challenged in implementing its missioncritical Enterprise Business Solution, a process that though they’re working hard at it is taking longer than expected, but is necessary to bring about changes like those currently in play.

And pushing ahead full force with untested plans supporters hope (or at best believe) might work, while tasking military exchanges with possibly having to deplete morale, welfare and recreation (MWR) funds to offset possible DeCA losses is not a prudent venture.

DeCA still has ties with brokers, distributors and manufacturers with extensive commercial grocery know-how who believe in doing the right thing for servicemembers. If DoD truly wants to protect the benefit, its leaders would do well to listen open mindedly to this group of specialists — many of whom have been at the front lines of serving the military patron and supporting the resale system for over 50 years — not tune out the things these in-store veterans might tell them, but leverage their expertise.

More deliberation is in order instead of going ahead with the current thrust to jump right in, damn the torpedoes, full speed ahead; sink or swim. Swim seems extremely difficult at this point, a real struggle with many obstacles. And Sink is too much of a risk to take.

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