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A new study from customer data science firm dunnhumby is out this morning, identifying "Save-A-Lot, Food 4 Less, and Dollar General as the top three grocery retailers for SNAP customers with Winco and Grocery Outlet rounding out the top five. The next five retailers in the top ten are Price Rite (6), Walmart (7), Aldi (8), Marcs (9) and H-E-B (10)."

The study also notes that there is about to be considerable upheaval in the SNAP world:  "In March 2023, pandemic era emergency allotments ceased resulting in an average 22% reduction of SNAP benefits per household, according to Center on Budget and Policy Priorities (CBPP). With the average SNAP household spending 30% of their disposable income on food, a 22% reduction ($97 dollar on average monthly), means more missed meals, smaller meals, cheaper and less healthy food, skipped medication, delaying or foregoing medical care according to the CBPP.  And according to dunnhumby's analysis of data made available by Edge Ascential and the CBPP, U.S. Grocery revenues will fall by $20 billion from their 2022 levels."

“SNAP recipients began a roller coaster ride in April 2020 with the arrival of higher SNAP benefits due to the pandemic that initially left them with larger food budgets to feed their households. For many, this meant they could purchase healthier foods. But although benefits were increased again in 2021 under the Covid Relief bill, consumers were also hit with record inflation eating into in all areas of their household budgets,” said Matt O’Grady, President of the Americas for dunnhumby, in a prepared statement.

“This year, they are again left in a precarious position with a deep reduction in their SNAP benefits resulting in much less disposable income available to take care of their household food needs," O'Grady said.  "Retailers need to understand that one out of every eight grocery shoppers in 2023 are walking into their stores stressed, emotionally drained, and looking for retailers to be part of the solution. At one point or another 20% of Americans have been on food stamps. Retailers that can be part of the solution by providing customers with strategies and tactics that meet their needs better than the competition will be building loyalty with a group of customers that over time will represent a sizable portion of the grocery market.”

Other key finds from the study:

•  "Ninety-two percent of SNAP customers are at or below the poverty line and are likely to be caregivers, working or both: 65% have families with children, 36% are in families with older adults who are disabled, and 41% are working.  Cashiers and food service workers are twice as likely as the general population to be on SNAP."

•  "Lower income consumers are just as reliant on the grocery store for satisfying their hunger as shoppers from higher income groups. They shop some of the most common categories - meat, packaged food, dairy - at similar rates to higher income groups.  They are less likely to buy fresh produce but more likely to buy frozen produce compared to higher income groups. Lower income consumers rank saving money (63%) as their most important need. In baby care, ready-to-eat, deli, fresh produce and meat, lower income consumers prioritize savings over quality."

KC's View:

It also seems at least possible that SNAP benefits could be affected by the current negotiations being conducted by the Biden White House and Speaker of the House Kevin McCarthy - so grocers could be looking at even more reductions in volume because of smaller food stamp benefits.  And if those negotiations are not successful and we do go off the economic cliff, heaven knows what will happen.  All bets will be off as we enter uncharted territory.

(My theory about this is that the negotiations only will be successful if both Biden and McCarthy are willing to piss off a percentage of their bases - it goes without saying that everyone won't be thrilled with a deal, so they'll have to settle for everyone being a little bit unhappy with whatever settlement they reach.)

There are two other conclusions from the study to which retailers should pay attention, I think.

First, "Cashiers and food service workers are twice as likely as the general population to be on SNAP."  That'll be a talking point in any future union negotiation, I would expect.

And second, "SNAP and lower income shoppers visit fewer grocery banners on average than higher income shoppers (3.6 stores versus 4.5 in an average month), and they give a greater share of their grocery budget to any one retailer. They are therefore more likely to give a retailer their loyalty than higher income shoppers who have bigger grocery budgets.  Retailers should look at SNAP and food insecure customers as a segment to target with actions that appeal to them.  Once their loyalty is earned, retailers will be more likely to keep them."