Prices have already started shifting at the commissary under the new variable pricing strategy. Have you noticed a difference? The change began earlier this spring when the commissary tested the new program out in 10 stores.
Now the variable pricing strategy is being implemented across the country. Don’t worry; you’ll still see great savings.
If you missed the big announcement, last year the National Defense Authorization Act (NDAA) authorized a significant change in how the commissary determines the price of goods. Previously, the commissary set prices at cost plus a 5 percent surcharge. That surcharge money was used to maintain commissary facilities and to build new ones, such as the $38-million commissary at Fort Belvoir.
DeCA, the Defense Commissary Agency, which operates the commissaries, is funded by taxpayers’ money with a budget of $1.3 billion annually. Washington has been trying for years to get the commissary to be more self-sufficient and rely less on federal funding.
This year they are finally attempting to do just that. Variable pricing is one of their strategies. The commissary will also be introducing store brand products as well.
What is variable pricing?
Previously, the products at the commissary were sold at cost plus the 5 percent surcharge. Under variable pricing, the prices of goods will no longer be that simple.
Instead, many factors are taken into consideration when setting the price of products. This includes the market price, cost of obtaining the item, how well the items sell and more.
This isn’t something new the commissary came up with or that those in Washington fathomed. It is how commercial grocery stores determine their prices. The commissary is now embracing a similar pricing system.
Prices have always changed at the commissary based on the cost the commissary incurs for items from manufacturers. Many factors cause manufacturers to change the price they charge, such as weather and their cost of doing business.
Prices will now fluctuate with the market instead of simply with the manufacturers. While some prices might be going down, others might go up. Overall savings at the commissary will not change however.
How much will each region save?
Commissaries are grouped into regions. Market research is conducted in each region to determine the prices goods will be set at. This includes comparing the prices of about 1,000 products locally as well as the estimated 38,000 products that are checked nationally.
The cost of living varies across the country and with that is the cost of food. Researchers then are tasked with comparing the prices of items at different grocery stores across individual regions to determine the best price to set commissary products at. As the cost of living is higher in some areas and lower in others, so too will be the savings level in each region.
These savings will range from 17.6 percent to 44.2 percent over commercial grocery stores depending on which region you are in. Below are the regions and the overall savings expected.
Region Savings %
New England 21.4%
South Atlantic 19.9%
South Central 18.1%
North Central 20.2%
Which region am I in?
Now that you know how much savings each region is expected to save, you may want to see which region you are in. Commissaries aren’t in typical geographical groupings, as Virginia is included in the New England region as opposed to the South Atlantic for example.
To find out which region your commissary is in, look for your military installation on this map. Are you in the region you expected? How do you feel about the savings percentage your region is expected to get?
Next time you go to your commissary, check the prices and see if you can tell a difference.