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Editorial Comment — March 2018


The Merger Memo …

An unsigned Defense Department memo, drafted early in March, calls for consolidation of the military resale systems.

First, we sure hope everyone understands the issues the exchange systems have with the grand consolidation plan, and the impacts it will have on their operations. These are self-sustaining, well-run, profitable businesses; and any hiccups will certainly affect their credit ratings, to the detriment of their lines of credit. This is real-world stuff with loan-service implications, to start with, upon such things as the selling price for merchandise on the shelf and the interest rates servicemembers have to pay on their Military Star cards.

Keep in mind, today’s exchange businesses support, partially support or indirectly help fund a wider spectrum of MWR system operations than ever before: child development centers, youth services, community centers, auto skills, swimming pools … and many more. Remember also that anything that impacts exchange profitability also impacts how the exchanges can allocate resources to other programs they manage, for example, school lunches overseas.

Can the exchange systems be consolidated? Maybe. Should they be? Maybe, maybe not. But to merge DeCA into the exchange mix? Why? What does DeCA bring to the table?

As it stands right now, the big push over the past few years for commissaries to mimic commercial supermarkets, instituting variable pricing and bringing in private labels, has done nothing to improve DeCA sales.

Sales are still declining (and please stop blaming fewer troops, baggers, and empty shelves … why are the shelves empty?). If the Pentagon had taken the time to look into what was happening in the grocery market, it would have seen all the changes coming ... and known that the nonpay- benefit commissaries would not be able to compete in the same league as a commercial operation.

Whoever decided to bring in a retail novice to run DeCA, and to implement a new Enterprise Business Solution — a rollout that is still on-going, and which will take years before it’s fully operational — did not know or understand how a real-world business operates …

You set DeCA up to fail!

In the real world, businesses must be accountable. If you don’t sell, you don’t eat. You have to pay the bills — no one does it for you. There are no appropriations to fall back on.

All that B.S. the services, resale agencies, military families and industry have been put through over the last six years ... why?

A year or so ago, a widely reported study claimed to have found $125 billion in administrative waste at the Pentagon. As you ponder in the puzzle palace, why not take a long, hard look for some of those funds? They could have funded the cost-plus commissary system for almost 100 years!

Exchanges should not be pressed to bail out the financial mess created for DeCA, least of all for a concept that might look good on paper but is hopelessly flawed in real retail life, or for a feather in the cap of some folk who just want it done and to hell with the consequences.

The business-case due diligence, which is apparently all that remains before a merger declaration — the memo offers no Plan B — must become a true diligent profitand- loss-based investigation, not just a whitewash of confirmation bias and wishful thinking.

Exchanges should not be left holding the bag for the mess that’s been created!


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