When Rob Bianchi became interim director of the Defense Commissary Agency in November, 2017, one of his main charges from defense officials was to reverse the trend of declining sales in commissaries over the previous six years.
As he leaves that role as interim director, he says there are signs of improvement in sales. But COVID-19 has muddied the waters, with a dramatic increase in sales in March — while hampering the ability of many people to get on base to shop at commissaries over the last six months.
And in the bigger picture, the COVID pandemic has reinforced the importance of commissaries on bases around the world, said Bianchi, a retired Navy rear admiral.
Bianchi has made history. He’s the only person to run the worldwide commissary system and the worldwide Navy exchange system simultaneously. He’s also arguably faced more challenges than any commissary director since the agency was formed in 1991.
Since November, 2017, Bianchi has dealt with declining sales; destructive hurricanes; problems with produce in the Pacific region commissaries; implementing a fundamental change in the commissary benefit, with a new way of pricing commissary products and adding about 1,000 different commissary store brand items; addressing long-standing problems with keeping shelves stocked; and preparing for the increase of potentially millions of new customers in January, with the new disabled veteran shopping benefits — all while also being at the helm of the Navy Exchange Service Command.
Then came COVID-19.
Bianchi is returning to that full-time role of CEO of NEXCOM; defense officials have named William Moore as the new commissary director. Moore previously served as the principal deputy to the Army’s deputy chief of staff for logistics, responsible for programming, budgeting and execution of Army logistics.
“If you’d asked me six months ago, I probably would have said that working through all the transformational things was the most challenging,” said Bianchi. But COVID-19 has moved to the top of the list of challenges, he said, in an interview as he was leaving his role at DeCA.
Many argue that sales are the primary barometer of the commissary benefit. If sales are declining, does that mean beneficiaries value the commissary less? It remains to be seen what effect the efforts of Bianchi and the commissary team will have on improving sales. And COVID is having an effect in many ways, good and bad.
From 2012 to 2017, commissary sales declined overall by about 20 percent. Bianchi has examined a variety of issues to address that, from customer service to local commissary relationships and support for their installations; product assortment and product availability on the shelves. Commissaries have added about 1,000 store brand items designed to offer “generic” lower-priced options, and added the YES program, lowering prices year-round on popular-selling brands. YES stands for Your Everyday Savings.
Meanwhile, Bianchi and the commissary agency team have implemented the new pricing system that replaces a system of 150 years, where items were sold at simple cost of the product from the vendor, plus a 5-percent surcharge used for construction and renovation of stores. The new system of variable pricing allows DeCA to mark prices up or down, earning a profit that can be used to reduce the amount of taxpayer dollars required to operate commissaries, currently around $1.1 billion annually.
Bianchi declined to specify how much profit has been made on commissary sales that will be used to reduce the commissary requirement for taxpayer dollars.
But DeCA still must maintain the congressionally-mandated overall average level of customer savings no lower than the baseline of 23.7 percent, compared to civilian grocery stores.
The six-year slide hasn’t been completely turned around, but they’ve slowed the sales decline, Bianchi said. In 2018 and 2019, sales were down about 4 percent as opposed to about 6 or 8 percent in previous years, he said. And in January and February, commissaries were seeing an uptick in sales, before the pandemic. He saw the commissary private label products and YES program taking hold.
Then the pandemic hit, and customers flocked to commissaries in March. On March 13, the commissary system posted the highest one-day dollar amount of sales —$34.5 million — in the history of the Defense Commissary Agency. Overall commissary sales in March were up by 31 percent compared with March 2019.
Sales since then have tailed off some, but DeCA is still seeing an overall trend of about 2 percent for this year above last year, he said. “The reality of having to shelter in place, eat from home, work from home, is making the grocery store a more popular place for everyone, as you’re seeing on the commercial side,” Bianchi said. In July, there was an overall increase in sales of 2 percent, compared to July of 2019, but 62 percent of stores were doing better than that 2 percent increase, he said. Other positive indicators are high marks from customer surveys, he said. “So I’m seeing a lot of bright lights out there that tell me that things are moving in a positive direction.”
Bianchi believes that many beneficiaries have reconnected with the commissary during the pandemic, as they have viewed it as a safe place to shop, and the stores have often been able to stock more items than some commercial grocery stores. As customers came into the stores, “it may have reinforced in people’s minds that the commissary has evolved over the last couple years. I’m optimistic about the sales trajectory as we go forward,” he said.
But COVID has had a negative effect on some shoppers, especially the retiree and disabled veteran shopper population. As some bases have had to revert to Health Protection Condition Charlie, some of those installation officials have limited base access for retirees and the newly eligible disabled veterans. “In looking at the data, we see that some of the retiree and veteran traffic has declined,” Bianchi said. “I think it’s because they’ve had difficulty accessing the base for whatever reason, because [installation officials ] have had to throttle back on base access for health and safety conditions.” Some veterans and retirees may also have more health vulnerabilities to COVID, and they may be limiting their visits.
Bianchi wants to make it clear: “The decision about whether you can through the gate to the commissary is not mine. We’re not restricting any [authorized shoppers] from shopping.” That’s up to local installation officials during this pandemic.
As of Jan. 1, a new group is eligible to shop — all veterans with VA service-connected disability ratings; Purple Heart recipients; veterans who are former prisoners of war; and primary family caregivers of eligible veterans under the VA caregiver program. Even with a rocky start— to include some installation lockdowns in January with Iran tensions as well as COVID — this newly eligible disabled veterans group is definitely shopping in commissaries, Bianchi said.
Through the end of June, these customers had spent about $27 million in commissaries. “They’re not coming in as often, but they’re buying a lot when they come in,” he said. The average purchase for the disabled veteran population is about $72, compared to the general average of about $53 per shopping trip. “They’re clearly coming in and taking advantage of the benefit that they’ve earned. So we’re happy about that,” Bianchi said.
COVID ’revalidated’ the need for commissaries and exchanges
COVID tops the list of challenges “only because it’s constantly evolving…. It’s like a moving target,” Bianchi said. “I don’t think anybody could have ever imagined the scale and scope of what we’ve had to deal with.”
Not only did Bianchi oversee commissaries and Navy exchanges all over the U.S., but all over the world. As COVID moved from Asia to Europe and then to the U.S., Bianchi said, “you had parts of the world that were in very hot spots and then other parts that were kind of in a recovery. And so that changed our response to each of those, and trying to forecast what’s going to happen, and how we’re going to respond.” The organizations have developed somewhat of a “battle rhythm” now, he said. But in the early stages, “just getting your arms around it was kind of like grabbing the tail of the tiger and having to wrestle it…
“COVID has just been incessant and it has been insidious, and it’s been unpredictable and every other word you want to use in the vocabulary,” said Bianchi, a retired Navy rear admiral.
All the while, the COVID pandemic has “revalidated” the need for commissaries and exchanges, he said.
At the beginning of the pandemic, senior defense officials designated commissaries as being critical on installations, “because everybody realized the importance of having food…. In a lot of places, it was about food and shelter. This was a crisis really focused on quality of life,” he said. It was especially important to make sure the food was getting to commissaries in places such as South Korea, Italy, Japan and Germany because those stationed there didn’t have a lot of other choices, he said.
That DoD designation meant that the commissaries would stay open regardless of an installation’s health protection condition, “because senior leadership realized how important it was to feed our families,” Bianchi said. All 236 commissary stores have remained open during the pandemic, he said, except for closures of several days at Mitchel Field, New York, and Hunter Army Airfield, Ga., for cleaning due to outbreaks.
The pandemic has also reinforced the importance of those long-standing relationships with the industry partners, he said. Members of industry “were able on our behalf, in the tight supply chain environment, to lobby with their leadership and give the military channel first priority as stuff was coming off the line. That’s why we were able to be first in line for a lot of the orders….
“Having this network of commissaries and exchanges around the world is an insurance policy. Not only are we always out there operating, but when there are crises, we can just turn the dial up,” Bianchi said. “It’s not like we have to start from scratch. We have a functioning, operational system that delivers these benefits every day.”
Their previously-established joint buying alliance between the commissary and exchange buyers also came into play here. In the early weeks of the pandemic response, senior merchandising leaders from the commissary agency, Army and Air Force Exchange Service, Navy Exchange Service Command, Coast Guard Exchange and Marine Corps Exchange were on the phone with vendors allocating products, Bianchi said, “to make sure everyone got some of it, so it wasn’t a first-to-the-trough kind of situation,” he said. The buying alliance, which was in place well in advance of the pandemic, helped ensure the commissaries and exchanges around the world got their fair share.
Bianchi stood up emergency response centers for NEXCOM and DeCA before the end of February. “So before everything started getting to the high fever pitch across the country, we had already mobilized our emergency response centers and were already monitoring our supply chain and leaning into ordering important things like water and cleaning supplies,” he said.
They also implemented health and safety protocols early on, putting up plexiglass and signs for social distancing, requiring masks, doing deep cleaning, and temperature checks for their employees. “It sent an important signal to our employees that we care about them. They’re on the front lines every day,” Bianchi said.
These safety protocols matter to customers, too. “We’re hearing from our customers who are very pleased with the sanitization and other measures that we put into place. They definitely feel that shopping in the commissary and exchange is safer than outside the gate,” he said.
DeCA officials have learned other things about their customers, too — for example, that they want the Click 2 Go service at their commissary, allowing them to order their groceries online and pick them up at curbside. They had been slowly rolling out the service over the last year, and it’s now available at six commissaries. This service – where customers order online and pick up their groceries curbside at the commissary— has been popular during the pandemic, and is now available at six commissaries. They’re adding the service at five more stores this year: Charleston AFB, S.C. in September; Minot AFB, North Dakota and Offutt AFB, Nebraska in October; and Jacksonville Naval Air Station, Fla., in December. The service was set to start at Fort Polk, La., this fall, but officials will determine the start date after conducting a hurricane damage assessment.
While many commercial grocers have adapted curbside solutions quickly during the pandemic, it’s not as easy for DeCA to deploy the service “overnight,” Bianchi said, because of technology requirements and changes, and the restrictions on travel during the pandemic. But officials expect to increase the number of Click 2 Go sites to 60 commissaries in the next two years.
NEXCOM has been playing a number of key roles during the pandemic, too — such as negotiating with a vendor to quickly manufacture 550,000 masks to send to the fleet; setting up quarantine support programs at about 36 bases around the world; setting up a curbside pickup process at some Navy exchanges; keeping Navy Lodges and providing more than 40,000 room nights for quarantine as a safe harbor; negotiating with vendors to increase the bandwidth capabilities on installations as families were having to work and do online learning at home; continuing to provide thousands of school lunches when DoD schools shut down; providing more than 30,000 meals to sailors who were taken off the aircraft carrier Theodore Roosevelt as part of the recovery process, to locations on base on Guam and out in hotels.
Helping bring customers back
Military advocates praised Bianchi’s work over the last 33 months. “Through multiple storms, interim Director Bianchi simultaneously steered DeCA and the NEX toward modernization and improved customer service,” said Mark Belinsky, a retired Army lieutenant colonel who is director of currently serving/retired affairs for the Military Officers Association of America. “Improvements in the quality of products at the commissaries, online orders, and curbside pickup helped to re-charge their reputation and bring customers back.
“We look forward to continued improvements to customer service with the new director William Moore.”
Bianchi said he has learned from his experience leading both organizations, and will bring that perspective to DoD as a whole. “I feel fortunate to have been the only guy in history to actually have run both organizations, and to do it simultaneously,” Bianchi said.
He said the response to COVID-19 by employees across both DeCA and NEXCOM “reinforced in my mind the importance of having this organic network of resale outlets…. how they were all collectively quickly able to step up and answer the call when this crisis hit.
“The fact that we were able to provide this uninterrupted response is not insignificant,” he said. “My respect for all of our employees in both organizations, what they have done over the last six months and what they continue to do, I can’t even put into words.
“I recognize them as unsung heroes.”