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Base stores struggle with drop in sales

By: tom philpott Military Update
February 11, 2018 Updated: February 11, 2018 at 4:15 am
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photo - tom philpott,
tom philpott, 

Sales at on-base grocery stores have fallen 6 percent in the past year, 21.3 percent since 2012, putting the shopping benefit at greater risk, say commissary executives.

The worry is that falling sales leave commissaries open to criticism that they're losing relevancy as a military perk, or becoming too costly for taxpayers to support, given the fierce competition from commercial grocers.

The Defense Department's top two executives overseeing commissaries have conceded falling sales must be reversed.

But both also said they are confident current actions to transform commissaries into "businesslike" operations can succeed. The steps include: phasing in variable pricing to replace the tradition of selling base groceries at cost-plus-a-5-percent surcharge; offering commissary label goods to deepen discounts; and, in time, adopting at least for new hires the more flexible wage schedule used in military exchanges, which run on-base department and convenience stores at a profit.

Leading commissary operations since November has been retired Navy Rear Adm. Robert Bianchi. He is interim director of the Defense Commissary Agency while remaining CEO of the Navy Exchange Service Command.

He said he's working to drive down costs and woo shoppers.

The first obstacle in his way is a "significant" drop in commissary sales, from $6.1 billion in fiscal 2012 to $4.8 billion in 2017. The sales slide has continued into fiscal 2018 though at a slower rate.

Resale experts agree it's a worrisome trend in an industry that keeps profit margins razor-thin in their battle to keep customers.

"I'm very concerned" with falling sales, said Stephanie Barna, acting assistant secretary of defense for manpower and reserve affairs.

"Any drop, particularly a drop of the magnitude you're just described, there's not a day that goes by that we're not talking about 'How do we counter that?'"

It was Barna who persuaded Bianchi to take on his assignment during the most challenging period commissaries have faced. The special hiring authority she used so Bianchi could apply to commissaries his profit-and-loss acumen from years' running exchanges will expire in early June.

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To comment, write Military Update, P.O. Box 231111, Centreville, VA, 20120 or email milupdate@aol.com or twitter: Tom Philpott @Military_Update

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