DoD to Close US Commissaries?

Several recent articles have mentioned the Department of Defense is considering the closure of US based Commissaries as a way to slash hundreds of millions of dollars from defense budgets. The issue has been pursued as far as requesting a written plan from the Defense Commissary Agency (DeCA) that would outline how DeCA would close all US Commissaries.

As of right now, the Commissaries haven’t been given the kiss of death. This is an initial step to investigate the process of closing the base grocery stores, create a timeline if the closures do come to pass, and investigate the impact this could have on the active duty and retiree communities.

Commissaries Feature Large Savings – But at a Cost

Close US Commissaries

Will the DoD Close base Commissaries?

Base Commissaries are a cherished privilege among military families and retirees. They offer discounted grocery shopping, bulk discounts, and a place to shop within the base community. Most Commissaries also indirectly support ancillary businesses that set up shop outside the Commissary doors. Many of these small businesses are veteran owned and cater specifically to the military community.

Unfortunately, most Commissaries don’t turn a profit. By design, Commissaries operate on a surcharge model, pricing their goods at cost, plus a small surcharge to help cover the cost of the goods sold. But the surcharge doesn’t cover the Commissary employees, who are federal workers.

Shoppers often save up to 30% compared to the cost of food and goods bought at local stores found off base. But this comes at a cost. According to Military.com, “Commissaries rely on taxpayer subsidies of $1.4 billion a year to operate 247 stores worldwide.”





That is a huge deficit at a time when the military is being tasked with butting $50 billion a year to meet the requirements of the sequestration. DoD leaders are tasked with finding means of reducing the budget without decimating total force strength and readiness numbers.

What Would Closing Commissaries Accomplish?

In a word – huge savings. Military.com quoted potential savings of up to $800 – $900 million a year by closing 180 US based Commissaries. Overseas Commissaries, OCONUS Commissaries (e.g. Alaska and Hawaii) and 24 remote US Commissaries would remain open.

How Would Closures Affect the Military Community?

Let’s get the easy one out of the way: closing base Commissaries would remove a huge cost savings for military members and retirees. Estimates put the savings at roughly 30% compared to shopping at civilian grocery stores, and a savings of up to $4,500 per year for a family of four. That is a large amount of money to come up with for a military family or a retiree on a fixed income (See Commissary website for numbers).

But closing base Commissaries would go far beyond the impact on the family food budget. Many military spouses and retirees are employed by Commissaries, and this would not only increase the family food budget, but it would reduce the family income as well. Working for a Commissary is also a portable job which can often be transferred when a family PCS’s to another base. Portable jobs aren’t always easy to come by for military spouses.

We also touched on related small businesses which often set up shop in the same building as Commissaries, or right outside the Commissary doors. These often include barber shops and beauty salons, gift stores, and other small businesses. Many of these are retiree or veteran owned, and get the majority of their foot traffic directly from the Commissary.

Finally, the impact goes far beyond the impact to individuals – closing US based Commissaries would impact the functionality of the Commissary program. The base Commissaries are a network of 247 stores, some of which are quite large and are high volume. This gives DeCA negotiating power when making purchases. Reducing the number of Commissaries reduces DeCA’s bargaining power, reducing the discounts they can achieve when making bulk purchases. The high-volume stores also help subsidize the lower volume stores, helping reduce the costs of maintaining those stores. In other words, closing the profitable stores may not have the anticipated long-term impact the government is seeking.

Alternatives to Closing US Base Commissaries

Closing Commissaries is only one option on the table. There are some other possibilities being examined, including increasing the surcharge from 5% to 10%. While this seems like a huge increase on the surface, Commissary prices are already 30% lower than other stores, making a 5% increase much more affordable to shoppers than closing the stores outright. Some experts estimate a 5% increase in the surcharge to cost a family of 4 less than $500 a year, bringing family savings to $4,000 or more a year.




Another option is increasing the costs of food and goods worldwide to reduce the deficit and help defray the costs of shipping goods overseas. A third option mentioned includes introducing new goods to sell for a profit, including some items not currently sold at Commissaries, such as wine, beer, and beauty supplies.

What Will Happen Next?

At this point, there has been a call for DeCA to create a plan to close US Commissaries, but the plan has yet to be completed, or approved. If it is approved, it would likely be part of the 2015 budget proposal, which would put it a year out before we would see any action taken on this front. Even then, it would likely take several months to see closures take place.

The Commissaries are a huge part of the military and retiree community. It would be a shame to see them close. Hopefully DeCA and the DoD will arrive at some alternative solution(s) to keep the Commissary doors open.

Image credit: campdarby’s photostream

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Date published: December 3, 2013. Last updated: March 4, 2014.

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Ryan Guina is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is currently serving in the IL Air National Guard. He also writes about money management, small business, and career topics at Cash Money Life. You can also see his profile on Google.

Comments

  1. First it was BRAC initiative to close a staggering number of stateside military installations to save millions or even billions of dollars. However, after the last round of closures, and years later, the taxpayers are still waiting for proof of these savings and the offsets to the economic impacts to the communities near each facility closure. Now they want to go yet another step farther and close the commissaries that the military uses. Yet another impact for the young and old to endure. For many, any savings realized by shopping at the commissaries, is put in the fuel tanks to drive great distances to a base. The law makers especially these law makers in office today need to lead by example. What sacrifices are they imposing on themselves? Are they now giving themselves a 10% pay cut? Will they now go to the military hospitals for care? Are they closing their House and Senate Commissaries? Are they giving up their car allowances? Are they traveling by military air or coach class when traveling commercially? Are they losing their pay for each day the Federal Budget is not passed on time? There are countless other cuts that can be made other than impacting those who have given their all for this country.

  2. I think the author of this article has commisary and post/base exchange facilities confused: “We also touched on related small businesses which often set up shop in the same building as Commissaries, or right outside the Commissary doors. These often include barber shops and beauty salons, gift stores, and other small businesses. Many of these are retiree or veteran owned, and get the majority of their foot traffic directly from the Commissary.” I have not seen businesses located in the same building with a commissary. They are located in and next to exchange facilities. (However, locating small businesses in the commissary might be smart. The revenue from rent could be applied toward the deficit; but then there is the problem of space, isn’t there.) If commissaries are closed what will the impact be on military a member’s BAS (Basic Allowance for Subsistence.) Won’t that have to be increased to offset the cost of shopping on the economy? How will that effect the defense budget? Why waste money on more DeCA planning when it appears the best option is to increase the 5% surcharge to 10% and keep the stores open. Both young enlisted members and retired personnel really need this privilege. Don’t take it away.

    • I have been on several military installations where the Commissary and base exchange are located next to each other, and there are small shops that connect the two stores. But you are correct, most small businesses are located in or next to the base exchange. In cases where the two buildings are connected, the impact to small businesses may not be as large, but it would likely still be felt. Everyone needs food, and many people regularly shop at the Commissary. Not everyone makes regular trips to the base exchange.

      Regarding BAS, I doubt we would see any change at all. BAS is calculated on the cost for the military to provide food to their troops, not based on what it would cost for the troops to provide food for themselves. It goes back to the early days of the military when everyone lived, worked, and ate on base. When people started living off base, the military began offering troops a food allowance in lieu of providing meals. The amount was based on what the military would have spent for providing 3 meals a day.

      I do agree on the benefit of having the base commissary. Increasing the surcharge or finding ways to make it more profitable could help bridge the gap between the operating expenses.

  3. charles b says:

    I do not know how this formula is figured but I think the prices in the post exchange and on aafes are considerable higher than one can find at most comparable community stores. I have compared prices forever on aafes and have always found same, sometime better quality merchandise at a much better price.

    So I think the 30% quoted figure is very erroneous and dare Ryan to prove me wrong-I will even help. And I am not sure the commissary prices are that much of a savings. I suspect that the armed services relief fund would lose the most.

    For a long time I have wondered where all the funds go from military store sales.
    If closure becomes more serious perhaps we will get better answers. I am not in favor of closure, but would like a better unbiased accounting and a % of active military that utilize the stores on base.

    • Charles, AAFES and the Base Exchanges are different than the Commissaries. Base exchanges do not receive government funding, and run at a profit. Some of the profits are returned to the base Morale, Welfare, and Recreation fund (MWR). Better prices can often be found outside of the base exchanges, especially in the U.S. This is not always the case when located overseas.

      The numbers for the Commissary were taken from the Commissary website (I have updated the article to link to those numbers). I understand numbers can fluctuate based on location and other factors, but I don’t have the capacity or knowledge to create a study to compare prices between the Commissary and local grocery stores. Are the numbers biased – it’s possible. But I do not have the capacity to run my own study and I have not found a better source. I am happy to include a link to another source if you are aware of one.

  4. kathy henderson says:

    The figures being used are not realstic as to the savings for a family of 4… $4500 a year for food? Seriously? That’s over $400 a month in addition to what they are already spending? What a lie! Are they spending their entire salaries on food? That is $400 OVER what they are already buying and that is where the lie is. Most troops do NOT have that kind of money. If anything, shut down the PX’s s8nce most of those items can be purchase d online through the AAFES Mall.

    If the goverment keeps downsizing the military, why do the services keep building when there will be no one to occupy the structures? They are building like crazy at Ft. Hood and Bragg and Eglin AFB and more…stop building. Quit making ships and jets for the Air Force and Navy…use what we have…and, most importantly, get rid of the mentality of “use it or lose it”.

    • Kathy, the numbers given in this article came from DeCA. I have updated the article to link to the source.

      The base exchanges are different from the Commissaries in two ways: they are not supported by government funds, and they run at a profit (they also give a portion of the profits back to the military community through contributions to the Morale, Welfare, and Education programs). Shutting down the base exchanges wouldn’t help anything, and would actually harm the military community.

  5. Ryan,
    All in all a well written and informative piece…numbers aside as those can be skewed to favor one side’s argument.

    I would have to echo Bob’s comments though that military and veterans’ benefits seem to be under constant assault from elected officials (so called lawmakers with an overwhelming majority having not served in the U.S. Armed Forces) without a corresponding belt tightening on their behalf. The recently proposed bipartisan budget deal threatens to significantly slash retirement benefits for current and future military retirees, proposing to cut the annual Cost of Living Adjustment (COLA) for military retirees by 1 percent a year until reaching age 62. While 1% may seem trivial, the resulting dollar figures can be staggering when one factors in compounding over a 20 year period.

    In addition to affordable healthcare at retirement, a COLA-adjusted retirement/pension is what makes 20+ years in military service (and the sacrifices associated with it) attractive…not to mention the pride in knowing you are serving your country and making a difference. These politicians are chipping away ever so diligently at those well earned and “promised” benefits.

    Where and when will the assault at military and veterans’ benefits stop?

    • Thanks for your comment, Mel. I agree, numbers can be skewed. I also agree with the trend of cutting military and veterans benefits. Unfortunately, it seems to be part of a bigger overall government plan. When you look at the big picture, the government seems to be cutting back everywhere. For example, federal workers haven’t had an annual cost of living increase for their pay since 2010. The only raises they have received have come through time in service or promotions. There have also been recent talks about decreasing government pension plans or requiring government employees to contribute more toward their pensions. Many government programs have been cut or scaled back, many workers were furloughed during the Sequestration cuts, etc. Based on everything we have seen, I don’t think the government is specifically singling out military and veterans.

      But that doesn’t make it any easier to those who have experienced cuts. It looks like this will be the standard for the near future while the government works on decreasing the budget.

  6. Thank you, Ryan, for breaking it down into simple terms. I am a retiree dependent spouse and work for DeCA overseas in Guam. Although we are not on the chopping block, to say, we know deeply what this means to our commrades back home. I have friends all over the US, active duty and retired. The feelings are mixed on the subject, depending on where they are located and the distances to the closest commissary. It’s such a delicate subject. Thank you for presenting the information objectively. Let us hope for the best.

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