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E&C Commissary News

Editorial Comment —September 2011

We Go Where You Go —
It's Not Just A Slogan


With all the focus on the recent attacks on the commissary benefit, the American Logistics Association (ALA) has been doing the right thing fighting wildfires and conflagrations wherever the resale's grocery benefit has been under siege. The firefighting has been so frenetic of late, some might even be forgiven for thinking the association's name had been changed last month to the American Commissary Association.

There's no denying that the recent threat to the commissary benefit is a serious one for military families. Defense Commissary Agency (DeCA) stores are still the key shopping lure for servicemembers inside and outside the gate — "Your Commissary: It's Worth the Trip!" is the motto, and it is backed up by the fact that — even with approximately 70 percent of servicemembers living off base — the commissary is still the No. 1 shopping channel in the military, and growing.

What has been overlooked, as the struggle to ensure the survival of the commissary benefit rages on, is the importance of the exchanges to the entire quality-of-life support chain.

The fact is that there's a lot more that goes into the whole retail picture than just commissaries alone, exchanges alone, morale, welfare and recreation (MWR), or any other piece of the quality-of-life puzzle one might care to point at. The system works interconnectedly and interdependently.

After patrons have shopped the commissary, their next port of call is typically the exchange, and then MWR. The child-care centers, gyms, aquatic centers, libraries, and so on, depend on exchange dividends to help sustain them (around $363 million last year).

Meanwhile downrange, when troops return to the forward operating base (FOB) or camp from their missions outside the wire, few things are more welcome to them than the touches and tastes of home, the toiletries and basic hygiene necessities, that exchanges provide.

Where else would the soldiers, marines, airmen, sailors and National Guardsmen and reserve personnel downrange go for the goods and services these stores provide — the bazaar in downtown Kandahar, the backstreets of Djibouti, the souqs in Tikrit and Manama? For more than a century, all the exchange systems have essentially followed the Army & Air Force Exchange Service's (AAFES) mantra of "We Go Where You Go."

Yet, since Secretary Gates's March 14 directive that eliminated AAFES's and NEXCOM's general- and flag-officer commanders' billets at the end of their respective tours, things haven't gotten any more secure for the resale services that go deepest into the field of combat. We're still hearing basically the same rhetoric that ignores the exchanges' differing business models and service-specific missions.

Cut to NAS Brunswick, Maine; on the surface it seems there is a great effort to preserve the commissary benefit there that is worthy of high praise and gratitude toward the state's congressional delegation, specifically Republican Sens. Olympia Snowe and Susan Collins and Democratic Rep. Chellie Pingree. The idea put forward in various forms to Congress, is for a hybrid store that sells the usual commissary categories plus alcohol and tobacco, and items in such other merchandise categories as the Secretary of Defense may authorize. The hope is that the profits from the sale of exchange items will make the store self-sufficient.

Along these lines, for a hypothetical typical liquor business of around $1 million per year — approximately the amount sold in the alcoholic beverage category at NAS Brunswick in recent years — the gross profit is likely to be around 25-35 percent — which is not enough to fund a commissary. However, earnings from these categories represent a very important percentage of exchange revenues that are directed to MWR.

Now at NAS Brunswick, where the existence of the commissary is threatened and the exchange is ultimately expected to close, such an initiative would have little impact on dividends. But if the model were to be applied elsewhere without very careful consideration of all the parameters — for example, if it were applied without taking into account the distance from the nearest exchange — the concern is that it could become a model that would undermine the viability of exchanges and MWR dividends.

The struggle for the commissary benefit is an all-consuming one, at times, and ALA has done a commendable job in the fight for it, but they cannot abandon the exchanges. The pivotal role healthy exchange systems play in supporting the gamut of on-base quality of life must be fully taken into account in the formulation of any new legislation connected with hybrid stores.

The legislators who wrote resale's governing regulations many decades ago were not naïve people; they knew exactly what they were writing, and why. The Armed Services Exchange Regulations (ASER) have been orchestrated very carefully with Title 10 to provide a needed exchange benefit and at the same time a source of funding for MWR. Things have changed, but not so much that servicemembers, retirees and their families no longer value these benefits that they have earned over 20-year military careers, or more, or through active-duty service in the present day.

We're confident that our legislators who are fighting for these benefits today have the military community's best interests at heart, but we do urge a word of caution that the sparkplugs that fire the exchange dividend engine be kept intact and in tune. If exceptions are going to be made to commissary merchandise categories, they must be sure to be excluded from a radius of influence that would impinge on any exchange's ability to execute its business model. If not, the result may very well be a domino effect with serious consequences for exchanges and base MWR program funding.

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