Stronger euro hikes sales at commissaries
January 25, 2004
KAISERSLAUTERN, Germany — It’s a declaration that may lead some to think of that fictitious patriot with a white goatee and a star-spangled top hat.
“I want your dollar,” says Melvin Fox.
While Fox is known to sport a goatee, he’s no Uncle Sam. And he’s not the type of guy to go around with an upturned palm in search of a handout.
“I’m a grocer,” Fox said.
Specifically, Fox is the director of operations for the Defense Commissary Agency-Europe, the same folks who help people put bread on the table and cookies in the goodie jar.
This past year they also helped move mountains of foodstuff to U.S. forces engaged in Operation Iraqi Freedom. Downrange, especially in Kuwait, where sales increased by 193 percent, business boomed.
“The troops come first,” Bonnie Kanitz, the director of DECA-Europe, said in an interview last summer, “and the retail stores come second.”
Overall, DECA-Europe saw its sales rise 5.5 percent in fiscal 2003, which concluded Sept. 30. Total sales for its five zones, which stretch from Britain to Bahrain, fell just shy of $450 million.
But it would be misleading to imply that the war in Iraq had a profound impact on the bottom line. It didn’t, according to Fox.
Instead, the greatest variable, from a financial standpoint, was the decline in the value of the U.S. dollar against the euro. From February to December, the dollar lost 15 percent of its value against the euro.
“As the value of the dollar decreases,” Fox said, “the number of shopping trips on the economy” drops. For DECA customers, trips to a local grocery store or restaurant “decrease at a proportionate rate” to a declining dollar, he added.
Grocers in the United States refer to something called the “market basket.” The U.S. Department of Agriculture roughly defines it as the typical food items purchased by a household in a base period. Various entities use this concept to track a number of trends, most significantly the cost of living.
According to DECA, 22 percent of its goods are purchased on the economy. That includes items such as coffee, eggs, produce, pork and even some sodas. Due to the dollar’s declining value, those products cost more to procure, and, hence, require a higher shelf price.
So for DECA customers, the typical “basket” of goods costs more today than it did a year ago.
But that alone doesn’t explain the increase in the agency’s revenue.
Because the dollar doesn’t stretch as far as it used to on the local economy, the average DECA customer has adjusted his spending habits, said Gerri Young, spokeswoman for DECA-Europe.
Today, “more of our customers shop on base more often, and when they shop they buy more,” Young said.
The amounts of the “average transaction” from store to store “have gone up” in the past year, she noted.
For DECA, tomorrow’s challenge may well be to maintain — if not increase — that higher share once or if the dollar begins to reassert itself. Fox seems downright feisty over the prospect of beating back the competitors.
The Wal-Marts of the world “are competition for us,” he said. “Anyone who takes a dime of our sales is competition for us.”
As Fox spoke about DECA and its competitors from his corporate office in Kaiserslautern, Germany, classical music played softly in the background. The former Army radio technician finds the music soothing as he goes about his hectic workday looking for ways to generate business and fend off the competition.
“Anybody in the retail business looks to increase sales,” Fox said. “That’s what business is all about.”
Unlike the Army and Air Force Exchange Service, however, DECA isn’t charged with turning a profit. Young said commissaries sell their groceries and household items at cost, plus the 5 percent surcharge that goes toward capital improvement projects.
That freedom from profit margins allows DECA to focus even more on families and the forces in the field.
During the buildup to the war in Iraq, DECA was taking more orders than normal from units. Kanitz described the spring as an intense period.
The 173rd Airborne Brigade out of Vicenza, Italy, for example, purchased 130,000 cases of products, ranging from moistened towels and plastic bags to beef jerky and granola bars.
Meanwhile, the Defense Logistics Agency asked for 2,300 cases of instant soup, which equated to 42,000 servings, while the USS Roosevelt, a naval resupply ship, placed a $90,000 special order as it steamed toward Sicily.
“We got a lot of weird orders for large quantities at one time,” Kanitz said, recalling one request for cases of hot sauce.
At such times, DECA personnel, in conjunction with the military, moves as quickly as it can to accommodate the troops. As Kanitz, the head of DECA-Europe explained, store customers have more choices; a troop in the field has far fewer options.
“Whatever it takes,” Kanitz said, “we will do it.”
Sleepy base gets a rush
In peacetime, RAF Fairford in western England is a sprawling base where relatively few airmen roam.
The contingency base normally hosts about 175 U.S. Air Force personnel. But in spring 2003 the sleepy strip roared to life when a fleet of B-52 bombers arrived in support of Operation Iraqi Freedom. The base population correspondingly swelled to nearly 2,000 people.
“Our sales just shot up incredibly,” Bonnie Kanitz, the director of the Defense Commissary Agency-Europe, said last summer after the end of major combat operations.
In April — the first full month of the war — sales rose by nearly 66 percent compared with the same period last year, according to Kanitz.
While Fairford sales figures for the spring of 2003 were high, they paled in comparison to other more populated bases. Still, Kanitz and other agency officials say they always adjust accordingly whenever a small commissary enjoys a spike of activity.
Though the bombers have long since departed, the solitude won’t last for long. The 100th Air Refueling Wing at RAF Mildenhall plans to relocate to Fairford later this year for several months while its runway gets resurfaced.
A little-known fact about DECA-Europe is that it supplies foodstuffs and other items to U.S. embassies scattered across the theater.
Commissaries in places such as Ramstein, Vilseck and Hanau, Germany, supply goods to American embassies, consulates and remote military detachments. In all, 40 embassies receive regular support, though that number changes from time to time.
“As long as there is a supply line that we can establish between us and them, we try to do it,” said Gerri Young, spokeswoman for DECA-Europe.
Vilseck, for example, supports the U.S. embassies in Moscow; Budapest, Hungary; Prague, Czech Republic; Vienna, Austria; and Copenhagen, Denmark. Monthly purchases by these five embassies run about $125,000, with Moscow accounting for roughly half the amount.
The supply run between Moscow and Vilseck takes five days — each way.
Keith Powell, chief of the management support center at Ramstein, noted that some of the orders his store fills go by land and others go by air.
Typically, he explained, an embassy will send in its orders before its truck arrives. That gives DECA personnel time to select and pack the items.
A rare need to hunt for staff
“Looking for a job?”
So began what many believe was the first and only paid advertisement DECA-Europe ever had to make to fill its ranks. Prospective checkers were offered $8.94 per hour, while candidates for store workers had the chance to earn $12.41 per hour.
But that was in the spring. Since then, the need has largely abated.
As of November, DECA-Europe employed 2,940 U.S. and local national personnel.
During the war, scores of spouses quit out of concern for their families and households. Many, said Kanitz, went “back to the States to wait out this long period of deployment.”
The pool of prospective employees dropped so low that DECA was eventually forced to initiate a mass advertising campaign to recruit people.
“I cannot ever, ever recall us doing pay ads before,” said Young.
For the most part, the team seems back at full strength.
— Kevin Dougherty