In the last few years, several proposals and studies have been linked to the Department of Defense closing U.S.-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 that would outline how it would close all U.S. 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 time line 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
Like Base Exchanges, military commissaries are a cherished privilege among military families, retirees and the newly eligible disabled veterans and caregivers. 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 cutting $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 two words – huge savings. Military.com quoted potential savings of up to $800 to $900 million a year by closing 180 U.S.-based commissaries. Overseas commissaries, OCONUS commissaries (e.g., Alaska and Hawaii), and 24 remote U.S. 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 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.
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 that can often be transferred when a family PCSs to another base. Portable jobs aren’t always easy to come by for military spouses.
We also touched on related small businesses that often set up shop in the same building as commissaries, or right outside the commissary doors. These often include barbershops and beauty salons, gift stores and other small businesses. Many of these are retiree- or veteran-owned stores and get the majority of their foot traffic directly from the commissary.
Finally, the impact goes far beyond the impact on individuals – closing U.S.-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.
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Alternatives to Closing U.S. Base Commissaries
Closing commissaries is only one option on the table. There are other possibilities being examined, including increasing the surcharge from 5%-10%. While this seems like a huge increase on the surface, commissary prices are about 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 four 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 U.S. 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.
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Kimberly says
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.