The reach of the Little Rock Air Force Base commissary, the base’s version of the grocery store, extends well beyond the gates of the installation, where 8,000 active-duty military personnel and civilians work.
The store also is a draw to many of the 52,000 military retirees who live near the base, thanks in part, some of them say, to the federal subsidy that allows it to mark products well below what is paid for the same products in civilian grocery stores.
That subsidy, however, would begin to be phased out under the Department of Defense’s proposed 2015 budget, along with some other benefits military personnel enjoy.
The Defense Department insists no commissary will be closed if Congress adopts the budget, but commissary patrons no longer would enjoy the 30 percent savings on average that the Defense Commissary Agency, which oversees all military commissary operations, says they receive now.
The proposal has faced a storm of criticism from military and veterans organizations, as well as some members of Congress. It leaves area military retirees concerned, too.
“They’re trying to balance the budget on the retirees’ back,” said Bob Davis of Little Rock, an Air Force noncommissioned officer retiree who still shops at the commissary twice a month and says other retirees he knows go more often. “It’s a sad state.”
Davis, who retired from the Air Force after 22 years, is president of the Ira Eaker chapter of the Distinguished Flying Cross Society. His time in the military included serving as a combat crew member of C-130 Hercules transport aircraft in Vietnam.
He characterized access to the commissary as a “military benefit. It’s just like going to get your medicine,” which also is covered because of the length of Davis’ military service.
Last month, Defense Secretary Chuck Hagel outlined a five-year Pentagon budget that proposes to shrink Army forces and retire older weapons, including the U-2 spy plane and the A-10 attack aircraft.
The proposed $496 billion Pentagon budget reflects what Hagel called a choice to field a smaller but more modern force rather than a larger one less prepared for combat. The Army would shrink from 490,000 active-duty soldiers to 440,000-450,000 over five years - the fewest since 1940.
The budget retains a commitment to NATO and to building a missile-defense system in Europe. Under the Pentagon plan, land-based missile interceptors would be deployed in Romania in 2015 and in Poland in 2018. The overall missile-defense budget would be $8.5 billion.
The Defense Department also will seek to cut back growth in tax-free housing allowances, ask military retirees and some active-duty personnel to pay a “little more in their deductibles and co-pay” for health insurance, and reduce by $1 billion the annual subsidy to military commissaries, Hagel said.
“If implemented fully, these proposals would save approximately $12 billion over the next 5 years and considerably more by the end of 10 years,” according to a 125-page overview of the proposed budget released by the Defense Department.
The budget proposes tocut the commissary subsidy from $1.4 billion annually to $400 million over three years. The subsidy that remains would continue to fund the shipping of goods to commissaries overseas and 25 commissaries in remote or isolated locations in the United States.
The Defense Commissary Agency now operates 178 commissaries in the United States, including the one at the air base in Jacksonville. Built in 1980, the 37,632-square-foot facility is stocked with 15,000 line items, according to the agency. It employs 64 people and rang up $33.3 million in sales in fiscal year 2013 through its 12 traditional checkouts and four self-serve checkouts.
The commissary has a “friendly atmosphere” due to the special kinship military life engenders, said Richard Brink, an agency spokesman.
“We enjoy a unique relationship with our customers, who have so much in common because of their military service that it’s very common to see customers and employees interacting in friendly, helpful ways,” he said.
Even without the subsidy, “shoppers at commissary facilities should continue to enjoy significant savings on grocery purchases (about 10 percent or more), compared to … private grocery stores, and modest savings over discount grocery chains,” according to the overview. “The department will not direct any commissary to close. In the end, patron usage of the commissaries will determine the savings and their competitive advantage.”
Defense department officials envision the commissaries operating the same way base or post exchanges are run, which they call a “successful … business model.”
Exchanges are retail stores on military installations that sell clothes, electronics and other nonfood items, including gasoline. They are run on a for-profit basis with just 2 percent of their budget subsidized by the federal government, according to the Army & Air Force Exchange Services website.
The agency bills itself as the 43rd-largest retail organization in the United States, with annual revenue of $10.3 billion and 40,622 civilian and military employees. It operates retail and convenience stores, gas stations, restaurants, theaters, vending, and other businesses on military installations in all 50 states, five U.S. territories and morethan 30 countries.
Its profits, or dividends, go to support military morale, welfare and recreation programs. In fiscal year 2012, those dividends totaled $234 million. The Air Force share of that revenue was $74.7 million.
Still, the commissary model dates back to the early part of the 19th century when the Army began allowing its officers access to military provisions at forts for their personal use. By 1841, the officers were allowed to make purchases on behalf of their families, all as a supplement to their military pay. The benefit was extended to enlisted personnel in 1867.
The access to post provisions for personal use originally was limited to active-duty personnel, but now members of the National Guard and the Reserves as well as military retirees are allowed to patronize commissaries.
Off-base competitors have the commissary in mind as they work to attract foot traffic, none perhaps more than Knight’s Super Foods, a small chain with stores in Jacksonville, Cabot and Beebe, all prime territory for military retirees.
Like other chains, Knight’s can offer store brands at a discount to name brands. The commissary, by regulations, offers only name brands and charges a 5 percent surcharge on purchases to cover maintaining the stores and building new ones.
Nathan Ripperger, the assistant manager of Knight’s Jacksonville store, said he sees a lot of military personnel, their families and military retirees on Wednesdays, which is “Double Ad” day at the chain. Wednesday is the last day for the specials offered the previous week and the first day for the specials offered in the succeeding week.
The store tries to compete on price as well as service, he said.
When the federal government shut down last year, the store offered every patron 10 percent off for the roughly two weeks the shutdown lasted and another 10 percent for anyone who showed their military identification card.
“We did really good those two weeks,” he said.
Even so, the commissary isn’t the store’s only competition. Store management worries just as much about Wal-Mart and Kroger, he said.
“It’s a competitive business,” Ripperger said.
Front Section, Pages 1 on 03/24/2014