Grocery Store Sales Set for SNAP Shock in March

Grocers may want to brace for a slump as most states cut back food stamps.

For all but a smattering of states, Supplemental Nutrition Assistance Program (SNAP) benefits are set to roll back to “normal” levels at the end of March, cutting away the increases authorized by Congress as part of emergency pandemic aid. Some jurisdictions have already tapered off the emergency allotments, such as Arizona, Iowa and South Carolina. Per the Center on Budget and Policy Priorities, this tangibly translates to the average SNAP user receiving $90 less per month.

While this will presumably have ripple effects across all sectors serving the SNAP-beneficiary demographic, this significant monthly cutback will most directly affect dollar stores and supermarkets, as 47% of consumers surveyed in September 2022 said they had switched to cheaper merchants to offset inflation’s pressures.

Moreover, PYMNTS’ data shows that a significant share of digital payments are made via Electronic Benefits Transfer (EBT), which may affect grocers of all sizes across the sector.

For grocers like Walmart, which announced its latest earnings Tuesday (Feb. 21), the double-digit growth in food sales could soon be all but erased. For smaller supermarkets serving these communities, terminating this temporary program — which, by some estimates, drove a 10% poverty rate decrease during Q4 2021 — could be devastating.

This news has come at a particularly unfortunate time, as strides have been made recently to close the digital gap affecting lower-income consumers regarding groceries. Last year, EBT payments were finally integrated into eGrocery platforms, thanks to third-party payment processors such as Forage. And the efforts seem to be bearing out, as PYMNTS’ February “Changes in Grocery Shopping Habits and Perception” noted that 10.4% of paycheck-to-paycheck consumers with issues paying bills shop for groceries exclusively online.

In an interview with PYMNTS’ Karen Webster, Ofek Lavian, CEO and co-founder of Forage, explained the company’s noble cause driving the profit-making enterprise. “Our mission is to democratize access to government benefits. And for us, SNAP is an absolutely critical first step, but we’ve got some pretty big aspirations beyond that.”

As the adage goes, forewarned is forearmed. FinTechs, such as Forage and the grocery store sector overall, are nearly guaranteed to feel pain with the end of SNAP’s emergency additional benefits. Businesses likely to be affected would do well to prepare accordingly.