Two big changes will be coming to commissaries around the world thanks to the 2017 National Defense Authorization Act (NDAA).
Currently the Defense Commissary Agency (DeCA) receives $1.3 billion in taxpayer funding annually. That funding covers the costs of operating the commissaries. Patrons are able to purchase goods at cost plus 5 percent. The 5 percent surcharge covers construction, equipment and maintenance to improve facilities.
Now the government wants commissaries to be more self-sufficient and not rely on such a huge amount of taxpayer money.
The 2017 NDAA, signed into law under the Obama administration, allows DeCA to start working on this in 2 ways. The first is introducing variable pricing and the second is creating a store brand or private label products. Variable pricing will be the first phase of this move and will start in 10 commissaries.
What is variable pricing?
Instead of the prices of goods at commissaries simply being the cost DeCA gets items at, prices now will be determined through multiple factors. This includes the cost of obtaining the item and the market price to name a few.
Commercial grocery stores use this same strategy to determine their product price points. Prices will shift with the market, but overall savings at the commissary will remain the same.
Under the new pricing model, the prices of products sold in commissaries will be based on a specific percent of savings that the same item would be sold for in commercial grocery stores in that particular region. That means that prices will no longer be uniform across commissaries and will instead vary by region and country
Don’t panic. That does not mean prices are about to skyrocket.
Each region has a specific saving percentage required under DeCA’s regional savings index. Overall, commissaries in the United States will have a 20.2% savings over commercial grocery stores. Prices vary even more overseas, so the total savings globally is set at 23.7%.
Depending on where you live, the cost of living can be higher or lower. To keep shoppers happy and enjoying the commissary benefit, different regions will see different prices, but all patrons will see a savings overall.
There are 36 commissaries in the New England area that will see a savings of 21.4% over commercial grocery stores. The 30 commissaries in the South Atlantic area will save 19.9% while the 33 commissaries in the South Central area will save 18.1%. The South Pacific area is slated for a 20.9% savings and the Mountain region will have a 17.6% savings. The North Central area only has 18 commissaries but they will all have a 20.2% savings while the 9 commissaries in Alaska and Hawaii will see 32.6% savings. Commissaries abroad will have a fantastic 44.2% savings over commercial grocery stores.
How did DeCA come up with these percentage savings?
Each market was evaluated independently and the prices were compared to commercial grocery stores in each area. Local and state food tax was taken into consideration as well as the 5 percent commissary surcharge.
The cost of living index was used to determine prices abroad. Each month all of this data will be recalculated to ensure prices stay on schedule with the appropriate savings over local grocery stores. As many as 1,400 items at each commissary will be compared to commercial grocery stores each month to ensure accuracy.
The list of the first 10 commissaries to use variable pricing has not been released as of publishing time. If we didn’t tell you variable pricing was coming, would you notice the difference?
Next time you shop at the commissary have a look around at prices and see if you notice a difference. Perhaps your commissary will be one of the first 10 to try out variable pricing.
