Many of the fruits and vegetables sold at Defense Commissary Agency stores in Europe are purchased from local suppliers. So when euro is stronger against the dollar, the price of buying fresh produce on base goes up. (Kent Harris / S&S)
Editor’s note: With the dollar at near all-time lows, the cost of buying goods and services off base is hitting the American military community hard. Stars and Stripes is running stories in an occasional series to show how Americans are coping — and what the government is doing to help — with these pocketbook issues.
As the dollar continues its slide against foreign currencies, conventional wisdom says that Americans will do more shopping and eating on base.
But depending on what troops and Department of Defense civilians are buying, they might not be saving very much money.
That’s because the Defense Commissary Agency-Europe and the Army and Air Force Exchange Service buy hundreds of the items from suppliers in Europe that they turn around and sell to their customers.
Because of customer demand for specific products, and the inability to get fresh items such as produce from the States, DECA estimates it purchases 20 percent of its items from European suppliers, according to Michael Dowling, director of DECA-Europe.
AAFES sells a lot less than that, said Jack Morris, senior vice president for Europe.
Among those items that are European-made, such as 220-volt appliances, the prices have generally gone up.
Other parts of the AAFES operation, such as the bakery operation in Grünstadt, Germany, have largely eaten the difference in costs.
And AAFES restaurants don’t routinely adjust for inflation, Morris said, at least in the short term.
Rising costs
Both agencies share a common problem when the dollar gets weaker: Sales increase, but costs for local national employees and transportation go up.
There are few key differences between the two organizations.
AAFES generally operates at a higher margin than DECA, with much of its profits — about $220 million last year — going to fund Morale, Welfare and Recreation programs.
Because of this, AAFES can sell specific items at a loss, known as a “loss leader,” in an attempt to attract customers to its stores.
DECA doesn’t have that luxury.
As a nonprofit organization that receives appropriated funds from the U.S. government, it is mandated to charge the wholesale cost plus 5 percent for all of its items.
So when it costs DECA more to buy bananas, it’ll cost the customer more for bananas as well.
Air Force Master Sgt. Christopher Jacob, shopping at the commissary in Darmstadt, Germany, this week, said he hadn’t thought of that.
“It makes sense, though,” he said. “The dollar is getting killed by the euro. You figure it’s the law of economics — prices go up.”
Hundreds of miles to the south, Staff Sgt. Greg Frizalone was getting sticker shock while going through the produce aisle at the commissary at Aviano Air Base, Italy.
“Lettuce didn’t used to be $1.62 a pound,” he said.
Much of the fruits and vegetables that DECA sells, in addition to fresh dairy products and bottled water — about 800 items in all — come from European suppliers, Dowling said.
Most of the packaged foods or canned goods come from the States.
Those prices haven’t been affected by the euro and — when compared with similar products off base — are generally big bargains now.
Not everyone has noticed the higher prices.
John Harris, a retired master sergeant who lives about 30 miles from Aviano, Italy, said he’s continuing to buy fresh vegetables and fruits — he proudly pointed to a cart full of them — from the commissary.
He said he doesn’t shop much off base and doesn’t often look at prices.
“You only live once,” he said, “rightly or wrongly. I’m not much into [price] comparison. If I want it, I’ll buy it. If I don’t, I won’t.”
Tina Pedrotty, an Air Force spouse shopping a few feet away, felt guilty about that attitude, which she shares.
“I should [compare] more than I do,” she said. “My mother would kick me. She’s one of those people who would go to 15 different stores to find the best price.”
But Amy Dye, a civilian contractor shopping in Darmstadt, Germany, said she does compare prices. And that has her shopping more on base.
“I still get my produce from the German stores, though. Even with the exchange rate, some things are still a little more expensive here [on base].”
Joreen Eberhart, another Air Force spouse at Aviano, said she’s been buying more on base as well.
She and her husband still go to the local markets routinely, though.
“I like to see the vendors we know and pick up a few things here and there,” she said.
Dowling said DECA expects its customers to seek out the best bargains, on or off base. But lately, they appear to be shopping more on base.
“Our December sales figures would certainly prove that,” he said, alluding to a 13.2 percent increase over the same month a year earlier.
He said the exchange rate obviously has a part to play in that, but he thinks commissary service, stock and overall pricing play a role as well.
Shoppers might be able to find specific items off base for less money, but they’ll generally save more money on base, he said.
“[Commercial retailers] have to make a profit,” he said.
AAFES, as Morris points out, has a policy where it will match the price of any product it carries that was purchased for less somewhere else.
“But we don’t really get a lot of price challenges,” he said.
Frizalone, shopping at the Aviano commissary, said there are more than enough challenges for him just trying to figure out where the dollar stands against the euro.
“The euro rate goes up and down so much that you don’t know what you’re getting out of the ATM,” he said.
“It’s just too confusing.”
Staff writer Jessica Inigo in Darmstadt, Germany, contributed to this report.