This article by Karen Jowers originally appeared on Military Times, the nation's largest independent newsroom dedicated to covering the military and veteran community.
Food inflation is affecting prices at grocery stores everywhere — including commissaries — but commissary officials and industry are taking steps to lessen the impact on their customers and offer bargains where they can.
Commissaries have some distinct advantages over civilian retailers when it comes to holding down prices.
Over the 12 months ending in July, the cost of food at grocery stores and supermarkets rose overall about 2.6 percent, according to the Consumer Price Index. Prices in all major grocery store food categories rose in that time frame, with increases ranging from 1.2 percent for nonalcoholic beverages, to 5.9 percent for the category of meats, poultry, fish and eggs.
The Defense Commissary Agency is experiencing about the same level of grocery price increases as commercial retailers have seen, said DeCA spokesman Kevin Robinson. “DeCA has received price increase updates from suppliers at the same time they inform commercial retailers.” These price increases have affected virtually every category in the store, he said.
DeCA’s category managers continually work with suppliers, to include negotiating the best cost of grocery products, he said.
“In addition, DeCA is statutorily required to sustain an overall patron savings of 23.7 percent against local market basket averages. Where we must increase prices, we ensure we are consistent relative to industry price increases,” Robinson said.
But while grocery suppliers’ prices have increased, the commissary stores have a major advantage in holding down prices for customers, which increases the “value proposition” of the commissary, especially during an inflationary environment, said Steve Rossetti, president of the American Logistics Association, a trade group of manufacturers and distributors who supply products to military stores.
“The commissary has the advantage that its labor costs and a lot of costs that contribute to inflation are picked up by the taxpayer. So commissaries should do well in an inflationary environment. They have a firewall against a lot of costs that are associated with other retailers because they are subsidized,” Rossetti said. DeCA receives about $1.1 billion annually to operate 236 commissaries around the world.
Aside from the increased suppliers’ costs affecting civilian and military grocery stores alike, civilian grocery stores have experienced increased labor costs, which in turn get added into the price of the groceries. There are about 14,000 commissary employees worldwide, and their salaries are paid by the taxpayer, which is why commissary customers are able to get that 23.7 percent average worldwide savings that is mandated by law.
Suppliers’ costs for moving products have gone up — labor costs, increased transportation costs such as fuel and trucking costs, and costs related to COVID protection measures. “Across the board, commercial and military, they don’t expect the distribution costs to normalize until mid-next year,” Rosetti said.
Some manufacturers have taken steps such as reducing the numbers, sizes and varieties of products to make production lines more efficient, Rossetti said.
Where manufacturers can control prices, they are, Rossetti said. “But when commodity prices increase, they have to pass that along.
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“I’ve been told by all our major manufacturers that they’re doing everything they can to hold the line on prices,” he said. Until the law was changed to allow “variable pricing” several years ago, commissaries were required to sell items at the cost from the supplier, plus a 5-percent surcharge added at the cash register. Now commissary officials can mark up items — or mark down items.
Rossetti said suppliers are anxious to work with commissary officials to provide more promotions, if they can be assured that those reduced prices from the suppliers are passed on as savings for customers and not to pay for commissary operating costs.
Among the efforts between commissary officials and industry is the August initiative “Come Home to Savings, Shop Your Local Commissary,” offering more daily, weekend and seasonal savings opportunities during the month. This effort is in addition to ongoing programs like the “Your Everyday Savings” or “YES!” program that ensures commissaries stay competitive with commercial stores on the pricing of popular products, and their private store brands.
Commissary officials, like those at other grocery store chains, navigated the disruption of the global supply chain during the pandemic to maintain grocery products on the shelves. But they’re still in the process of trying to bring back a number of customers who couldn’t get to the commissaries when base access restrictions were at their highest, Robinson said.
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