Inflation and Supply Chain Issues Are Cutting into Savings at Commissaries

Shoppers at U.S. military commissaries saw a sharp decline in savings this past year, according to a new report, and the government agency in charge of the stores said supply chain woes, pandemic-induced inflation and bureaucratic red tape are to blame.

The Defense Commissary Agency -- known as DeCA -- oversees nearly 240 grocery stores at military bases worldwide. Those grocery stores are required by law to save shoppers 23.7% compared to off-base stores in the area of the military installations they serve.

But service members and their families based in the U.S. saw 18% savings on average, the smallest gap in recent years, according to DeCA's annual savings report sent to Military.com. That's down from 21% in 2020 and 22% in 2019.

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Average global savings were higher, at 22.5% in 2021, but still below the legal target set in 2016 when military grocery stores went to a new pricing system.

While pandemic-related inflation and supply chain woes have driven prices up across the country, data showing that a service member's dollar was stretched thin last year comes as the military reckons with food insecurity issues for active-duty families.

About 14% of enlisted active-duty families reported "low" or "very low" food security in an annual 2020 survey from Blue Star Families.

DeCA director and CEO Bill Moore said in an emailed statement that the pandemic has hit the stores hard and added they have their hands tied when it comes to solutions.

"Hyper-inflation -- the highest in DeCA's 30-year history -- is primarily to blame, coupled with legal, fiscal, and policy constraints DeCA must operate within as a federal agency," Moore said. "We aren't complaining -- these constraints are necessary but do limit our flexibility in mitigating the impacts of inflation."

The sharpest drop in savings were at bases in New England and the North Central, South Central and Mountain regions of the U.S. Some of those areas saw as much as a 5% decrease in savings compared to the previous year.

Commissary employees, such as Fort Lee, Virginia, store director Sean Farrell, are well aware of the supply chain woes. He detailed issues such as empty shelves and limiting purchases on specific items such as chicken in an Army public affairs story last month.

"A couple of weeks ago -- our fresh chicken supply was cut, so I had to put restrictions on that," Farrell told the Army. "[Some patrons] didn't like it because they can't come in and stock up like they usually do."

Commissaries have to compete with big-name retailers close to military bases, Moore said. But they lack some buying power advantages those retailers enjoy, primarily being able to take more losses on products to bring customers in the door.

"Our product costs have risen dramatically, and we are forced to pass on, to some degree, these increased costs in our pricing," he added.

Overseas commissaries saw an average savings of 42% and those in Alaska and Hawaii, states where food costs are typically substantially higher off base, were around 33%. Both remained unaffected as compared to 2020 and 2019.

Moore said DeCA will "still prioritize our overseas and remote locations for products, which impacts availability in other U.S. stores" because bases in foreign countries often have fewer grocery options.

Retired Army Maj. Gen. Richard E. Beale Jr., who served as director of DeCA until 1999, told Military.com that he believes the savings dip is "significant" and likely due to other issues seen at grocery stores across the country during the pandemic.

But Beale added that military commissaries have always had to worry about tightening their belts.

Commissary officials have been permitted to change prices since 2017 as a means of staying competitive with local stores; to create and sell products under in-store labels; and to use some of the profit made to reduce the taxpayer dollars used to run the stores.

Previously, the commissary was required by law to sell goods at cost plus a 5% surcharge.

"The difference on the market basket is not only based on some of the economic circumstances," Beale said. "But the commissary has always been under pressure to reduce costs."

-- Thomas Novelly can be reached at thomas.novelly@military.com. Follow him on Twitter @TomNovelly.

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