Leading Guam wholesalers and retailers want a shot at military customers.
They are enlisting the support of Madeleine Z. Bordallo Guam’s delegate to Congress in an effort to contract with military stores.
According to the group they want Congress to appropriate money to pay for freight costs.
The Department of Defense provides a freight-free allowance — a freight subsidy — for vendors in the continental U.S. that provide goods and commodities to military installations overseas specifically Guam.
Michael Benito assistant general manager of Payless Supermarkets Inc. and chairman of the Retail Merchants Committee of the chamber told the Journal a point paper to be given to the military was shared with Bordallo at a meeting with her on Oct. 13(?). The group asked for Bordallo’s help. Her office confirmed to the Journal it was researching the issue.
He said military exchanges and commissaries on Guam could be given two invoices “One will be the product and whatever markup they need and the other would be the freight component. It’s not a free freight component; it’s billed to another entity — it’s an appropriated funding.”
The wholesalers found a way of generating new business and making a potential client — the military outlets on Guam — an attractive offer Benito said. “The wholesalers see a great opportunity to build some business. This is capitalism at its best: we can provide you better service and better value. All we want to do is level the playing field. Once we take that freight cost off — you get better value by dealing with the local wholesalers. Military outlets could reap savings.” He said “It will save the military a lot of money. They won’t have to worry about the product going outdated on them. They don’t have to buy full components ” he said.
Timothy T. Kernaghan vice president and general manager of Dickerson & Quinn said he agrees with the proposal. However he said “The reality is the military would have to treat Guam on an exception basis and I don’t think the military manages by exception very well.” He added “I’d love to see it [a freight subsidy] but as I’ve stated it would require the Department of Defense to treat Guam separately over other overseas destinations and it won’t do that because they like one policy for everywhere.”
Benito said military customers would benefit greatly in a number of ways if goods were supplied on Guam to military retail outlets. “It will improve service levels in the commissary; a lot of items go out of stock in the commissary — we will be able to provide a regular supply of products. Their consumers in the commissaries will be able to have access to special offers. Their consumers will have the benefit of giveaways — cars barbecues and canoes.”
Kernaghan said special offers would certainly be shared with military customers. “All the kinds of promotions that we do locally we could then do on-base. Because the stocks are kept locally the fill rates would be better for the commissary. There wouldn’t be these extended periods of time when the commissaries wouldn’t have product on the shelf because of shipping schedules. We actually could supply them better than the national distributors could because we have product on-island.” He said there was little doubt “Military patrons would have a better variety access to local promotions and what we term better fill rates — we can stock the shelves at a higher percentage.”
Benito said military consumers would be offered the same level of service provided throughout the island. “It’s what we are doing for our own clientele. Our prices are close or even better than stateside suppliers [without the freight component]. At the end of the day the commissaries can get a product for less or equal price and save money because they do not have to worry about ordering excessive amounts — it’s a win-win situation for everybody — there is no loser. Military folks have a better supply chain and access to promotions and we just opened up a new window of opportunity. You’re talking about authorized distributors of national brand here on Guam. They are going to get top quality product.”
Benito credited Peter McGrath president of Foremost Foods with drafting the paper and his work on it. “He was definitely a driving force behind this as well.” Benito said the seven-member committee enlisted the Congresswoman’s help to ensure the committee didn’t overlook anything before it contacted the military exchange authorities “We understand managers of the commissaries are not going to be able to do this on their own. There will be multiple invoicing and the question of who’s going to get invoiced for the freight component.”
Everything would be open to discussion and the supply chain open to inspection he said.
“We are not trying to bypass the local military — the ones in charge on Guam — we will talk to the local commanders so they are not blindsided by this and in case they have any questions or want to inspect our warehouses. I am sure Midpac Ambros Foremost and Market Wholesale would welcome inspections. We [all] have good facilities.“
Benito was not certain when the committee would get an official response from the Congresswoman’s staff. “They didn’t give me an exact date. They said it would be a priority and they would look into it. We’ll definitely stay in contact with her office and make sure it gets pushed through.” Benito said the chamber’s board of directors approved the paper. “This is a paper from the Guam Chamber of Commerce.”
Benito would like to see an end to the exchange and commissary system in Guam he said.
“Speaking as a retailer from Pay-Less my ultimate desire would be for the military to give personnel a cost of living increase so they can shop outside. I don’t know if it’s feasible at this point; we’ve never done any research. It’s come to be a way of life on this island for so long although obviously there are some sort of controls as to who can shop in commissaries. If they would provide cost of living allowances for the military folks with Kmart and the Pay-Lesses there is not too much you can’t find here. We have 35 000 products in our stores —that’s every single day.”
Benito was aware of legislation mandating price differential in other locations between local stores and military stores “I’ve heard about that. I’m not too sure if that law is active here because we’re a OCONUS destination [outside the Continental U.S.]. If you have a CONUS [Continental U.S.] destination that law applies. But in Hawaii the cost of a case of a beer in the commissary can’t be more than a set percentage lower than the local market.”
Frank S.N. Shimizu Sr. president of Ambros and chairman of the Wholesale Merchants Committee of the chamber said he supports the effort. “You can’t blame the military for purchasing where the prices are most economical. So if the FFA [freight free allowance] is applied to distributors and vendors in Guam it would really help.”
However Shimizu said while he may not stock his product on the shelves on bases he still receives their business and would welcome military build-up. “If I can’t sell directly to the military stores when they come outside the gate they help the economy. It will help McDonald’s; it will help me; it will help everybody. Hopefully it will even help the high-priced items like automobiles. It’s good for Guam. In my business I welcome it.”
Shimizu said he is not worried about the proposal to build a large exchange within Andersen Air Force Base. “Where the local retailers can compete favorably against anything that the military can put up is variety and sizes. You will note that in most military installations they are limited in what they can buy.” Shimizu remains optimistic. “I don’t think the local retailers have much to fear. In fact it will help them. In my opinion it will help the local retailers because of the abundance in the variety they can offer. They [military consumers] are limited in what they can buy. It is hard to compare.” MBJ
