The CEO of Army and Air Force Exchange (AAFES) has officially proposed combining with the commissary in an effort to save them from the higher prices and potential closings under a new potential budget plan.
If you've spent any time in either of these stores you know that there is one big difference -- prices.
And here is why. The commissary, by law, sells items at cost. That means they are pricing the items on the shelves according to what they pay for them.
AAFES, which controls all on-base Shoppettes, gas stations, Class Six stores, the Base Exchange (BX), Post Exchange (PX) and any on-base vendors, sells items at a profit and then gives a percentage of income to MWR. They are exempt from sales tax, but still collect other taxes, such as tax on gas. The separate Navy and Marine Corps Exchange system operates in much the same way.
That means food and household supplies at the commissary typically cost much less than those at the BX or PX. Tobacco products, alcohol and big ticket items like computers, however, can be a real deal in the exchanges because of the lack of tax.
For military personnel stationed stateside in non-rural areas, AAFES functions as a convenient way to purchase goods. In places without other options, the system can feel invaluable.
The commissary is currently facing a $1 billion budget shortfall by 2017 that will force it to raise prices and potentially close stores. A Pentagon plan seeks to push the Defense Commissary Agency (DeCA) into functioning more like the Exchange systems.But AAFES CEO Thomas Shull suggests that combining the systems makes more sense than turning DeCA into a new but separate exchange-like entity.
"“Using the best of exchange and DeCA leadership to lead a transition of the commissary from a cost-plus-reimbursement environment into one based on profit and loss principles is a much better solution than the one proposed,” Shull argued. “The exchanges have a core competency of controlling costs while delivering value to our service members and families.”According to Philpott, Shull is reading the writing on the wall. He sees the commissary's fate as tied to that of the Exchange system. If fewer people are shopping at the commissary because the prices have gone up, there will be less foot traffic to the Exchange and sales there will go down.
That may come just as they lose another major source of revenue -- tobacco products. If the recent news about plans for tobacco sales on base and ships are any indicator, the system will no longer stock that product, which in 2012 generated $711.4 million and profits of $125.7 million, according to Philpott. That's a big chunk of change.
For those of us who shop on base this proposal comes down to whether or not we are willing to accept the commissary becoming like one big PX/BX/NX with similar prices. Assuming Congress approves the Pentagon plan to pull commissary funding, we are looking at about a 20 percent jump in prices and potential store closings no matter how you shake things out.
Would combining the stores keep prices below that 20 percent average jump? Given the little information we have it's impossible to tell. But it would likely keep most stores open, something that looks more and more unlikely under the current plan.
Tell us what YOU think in the poll below. If combining the systems meant keeping stores open, would you be all for it?
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