Military Update: Commissaries trying to create 'raving fans'
July 26, 2003
The director of the Defense Commissary Agency welcomes recent votes in the House and Senate to give drilling reservists and National Guard personnel unlimited shopping privileges in military grocery stores.
“They are delivering warfighting capability just as well and as often as active duty counterparts, and should be compensated as first-team members, including from a commissary perspective,” said Air Force Maj. Gen. Michael Wiedemer.
An aerospace engineer who spent most of his first 31 military years managing technology programs, Wiedemer took charge of DECA in August 2002. He is responsible for more than 275 stores, $5 billion in annual sales and a work force of more than 17,000.
In a phone interview from DECA headquarters, Fort Lee, Va., Wiedemer discussed commissary issues, including recent survey results showing gains in customer savings and satisfaction. He talked of winning back patrons who shop elsewhere since the 9/11 attacks when tighter base security made it more difficult for patrons to reach stores on base.
Drilling reservists have been able to shop in commissaries 24 times a year and while on active duty. A near-final vote by Congress to give them unlimited shopping, said Wiedemer, won’t affect checkout lines, staffing, store hours or overall costs.
Why? “I’ll give you one statistic,” he said. “We classify our most frequent shoppers as those who shop more than two times a month. Our average reservist is in that category already.”
So while unlimited commissary shopping will send a signal of support to reservists and their families, any increase in customers, Wiedemer said, “will be transparent.”
The White House’s Office of Management and Budget had opposed extending unlimited commissary shopping to reservists.
In a May 22 “Statement of Administration Policy” letter it argued that this and other initiatives — a doubling of the military’s $6,000 death gratuity and a new incentive pay for assignment to South Korea — undermine service prerogatives on managing personnel and divert resources from higher priority programs.
Commissary prices are set at cost, plus a 5 percent surcharge at checkout. DECA latest price comparison survey shows average savings, including the surcharge, is 31.7 percent, up 1.2 percentage points from 2001. The value of commissary shopping for a family of four is now $2,440.
Overall savings hovered at around 25 percent for many years. They recently climbed past 30 percent, Wiedemer said, for two reasons. One is that DECA in 2000 began paying a contractor to collect better price data on what commercial grocers paid their suppliers. This data, in effect, armed DECA managers to negotiate lower prices.
A second factor is profitability within the food marketing industry. Ten years ago, average net profit on a grocery item was less than a half percent. Today, it’s closer to 1.5 percent. Higher profits usually mean higher prices, which make items sold at cost, in commissaries, better bargains.
DECA stiffest competitors appear to be “super stores” like those run by like Wal-Mart that combine department store products with fully stocked supermarkets. Wiedemer said he doesn’t have data on how commissary prices compare against these types of stores nationwide. It would be well below 30 percent. “But I’m sure we would beat them on virtually everything,” he said.
Super stores are included in the mix of stores used in overall price comparison surveys. Strong growth in such stores across the country reflects their appeal. “They continue to be an excellent source of savings for their customers,” Wiedemer said. “Not as good as us, though.”
Commissaries don’t compete anymore solely on price, said Wiedemer. DECA since 1994 has conducted commissary customer service surveys. Results allow individual stores to target problem areas for improvement, from cleanliness of stores and courtesy of staff to timely stocking of shelves and setting more convenient store hours.
Survey says ...
The latest satisfaction survey, conducted last April, showed commissaries worldwide making gains in all areas of service and store operations. But patrons still want what they always have sought: cleaner stores, better product selection, quicker service and lower prices. Those, he said “are things we’re going to concentrate on.”
Efforts to keeps shelves stocked took a hit last year when one of DECA largest distributors declared bankruptcy. Keeping stock always has been a challenge at commissaries because patrons, on average, spend so much more, an average of $55 per transaction versus $26 for retail grocers.
A few years ago, commissaries were far behind supermarkets in modernizing their stores. That gap has narrowed, Wiedemer said. Commissary construction is financed at a rate that allows store replacement every 27 years, which is better than most defense agencies, but still behind recapitalization of stores every 20 or 21 years in the commercial sector.
In fiscal 2002, the months following 9/11, DECA officials saw commissary patrons fall noticeably and sales decline by $70 million. That’s not a trend any grocer can tolerate. Sales this year are up $60 million.
“I would like to make an appeal to anyone who reads this article: come back and take a look at our commissaries,” said Wiedemer. “Significant improvements … in the last couple of years have been designed to attract and retain customers, and get shoppers who have left the commissaries, perhaps because of long lines after 9/11, back in the store.”
The DECA goal today, he said, is to create “raving fans.”
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