Commissaries Begin Measuring Regional Savings
News Release from Defense Commissary Agency
FORT LEE, Va., Jan. 30, 2017 — Commissary savings now will be reported more often and better reflect the cost of living where patrons shop, the director and CEO of the Defense Commissary Agency said.
“We have updated how we measure patron savings at the commissary,” Joseph H. Jeu said. “This enhanced way of calculating savings doesn’t change the actual dollars that patrons save, but it will give patrons a better understanding of price comparisons in their local area.”
Accounts for Geographic Differences
Historically, DeCA measured savings globally, by comparing national prices at commissaries against average market prices for the whole country. However, the cost of living varies by region, DeCA officials noted. To account for these geographic differences, they said, Congress now requires DeCA to report on savings regionally, comparing prices with two or three commercial grocers, including super centers, in the local area of each commissary in the United States.
Through this updated measurement, officials said, DeCA also is expanding the range of items on which it measures savings. Besides continuing to compare about 38,000 branded items at a national level, they explained, DeCA also will compare local prices on about 1,000 products that are representative of a shopper’s typical market basket.
“What we did before was good for showing a worldwide, annual savings average,” Jeu said. “However, now we are diving deeper into our patrons’ shopping experience to better reflect regional differences in cost of living and actual shopping patterns.”
Savings Rates Vary by Region
Because the savings rate is calculated from local price comparisons, it will vary by region due to differences in the cost of living, even when commissary prices remain uniform and constant, officials said.
To illustrate how the price comparisons work, officials used a hypothetical example of macaroni costing $1.25 at all commissaries. The comparison price at local commercial retailers varies by region. In Hawaii, where the cost of living is higher, the price of macaroni in commercial retailers is $2, but in Georgia, where the cost of living is lower, the price outside the gate is $1.50. This would mean that even though customers pay $1.25 for macaroni at commissaries worldwide, customers in Hawaii save 37.5 percent by using their commissary benefit, whereas customers in Georgia save 16.7 percent.
Congress requires that DeCA maintain savings at current levels, even as the commissary system transforms its business operations and improves the shopping experience, officials said. The new savings rate provides an accurate baseline that will allow DeCA and Congress to monitor and protect patron savings, they added.
Savings Levels Will Remain Consistent
“I am pleased that DeCA can offer significant savings to our patrons on products they frequently purchase,” Jeu said. “The enhanced savings calculation will allow us to measure the benefit more specifically and more often, protecting it at current levels for years to come. The value of a patron's market basket should not change because of the new savings calculation. Although market fluctuations will cause prices of grocery products to increase and decrease -- as they do today -- commissary patron savings levels will remain constant.”
This table reflects savings rates by region:
-- New England: 36 commissaries, 21.4 percent savings;
-- South Atlantic: 30 commissaries, 19.9 percent savings;
-- South Central: 33 commissaries, 18.1 percent savings;
-- Pacific: 31 commissaries, 20.9 percent savings;
-- Mountain: 20 commissaries, 17.6 percent savings;
-- North Central: 18 commissaries, 20.2 percent savings;
-- Alaska and Hawaii: 9 commissaries, 32.6 percent savings;
-- U.S. average: 177 commissaries, 20.2 percent savings;
-- Overseas: 61 commissaries, 44.2 percent savings; and
-- Global average: 238 commissaries, 23.7 percent savings.
The calculation includes applicable taxes in commercial grocery store prices and surcharge in commissary prices, officials said, noting that without these, savings would be 22.3 percent in the United States, 45.6 percent overseas, and 25.7 percent globally. Thirty-five states -- 70 percent -- do not have sales tax on food items.
More information is available in the transformation questions and answers on the DeCA website.