Cuts to SNAP Benefits and What They Mean for Grocers

Retailers should look at strategies that help affected customers’ dollars go further
Tyler Renaghan Upside Headshot
SNAP Benefits Sign Main Image
With the phaseout of emergency additional benefits, consumers on SNAP will now need to battle the twin issues of lower benefits and higher grocery costs – which will inevitably affect retailers.

Grocery consumers of all income levels are feeling the effects of inflation, tightening their budgets and changing their shopping habits as a result. But grocers and some consumers – specifically Supplemental Nutrition Assistance Program (SNAP) recipients – have been experiencing new headwinds since March 1. 

State and federal governments have phased out emergency additional (or EA) benefits that they’d established initially to assist with the economic hardship of the pandemic. While these cuts might help government budgets, they couldn’t come at a more inopportune time for SNAP beneficiaries struggling to make ends meet as the cost of goods skyrockets.

The ripple effects of SNAP cuts will also affect the grocery stores where these consumers go for their essentials. Higher-priced grocers are concerned that SNAP recipients will go to lower-price stores, while value stores are worried these shoppers will trade down, cut back on their purchases, or head to Walmart and dollar stores. 

SNAP Benefits: A Timeline of Expansion and Retraction

It’s essential to reflect on when these adjustments started – nearly three years ago – to understand how much the SNAP program’s eliminations will affect beneficiaries.

In April 2020, the Office of Temporary and Disability Assistance (OTDA) in numerous states approved EA benefits to the max SNAP level. When Congress passed a second COVID stimulus package early in 2021, it boosted SNAP benefits nationally by 15%. Congress and state OTDAs continued to extend the SNAP boost multiple times. Still, 17 states – Alaska, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Mississippi, Missouri, Montana, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee and Wyoming – had already ended their SNAP emergency allotments. 

Now SNAP recipients in the remaining 32 states, plus Washington, D.C., Guam, and the U.S. Virgin Islands have seen the extra funding end with the March cutoff. 

Grocery Consumers Suffer, and Retailers Feel the Pangs

With the conclusion of these EA benefits, the shockwaves are starting to hit stores nationwide. USDA data shows more than 41 million Americans used SNAP benefits in 2022. 

According to the Center on Budget and Policy Priorities, every SNAP household will see at least $95 a month less, but some will see $250 or more in reductions.

Consumers on SNAP will now need to battle the twin issues of lower benefits and higher grocery costs – which will inevitably affect retailers.

This will inevitably shift these buyers’ behavior, with economists predicting as much as $3 billion in monthly sales lost across the industry as a result.

How Grocers Can Help Their Customers (and Themselves)

Undoubtedly, grocers want to support their customers affected by these discontinued SNAP benefits, but without causing profits to implode.

Closely examining current or new strategies that help these customers’ dollars go further in their stores is one way to start. 

For example, it’s been exciting to watch how grocers have grown private labels and how consumers have used these products during the pandemic. With even more economic challenges now and on the horizon, retailers should get aspirational and ask themselves, “Is there room to grow our private label?” Most likely, the answer is yes. Retailers should move quickly to get there, since a new Attest survey found that nearly 86% of consumers will likely to buy private label brands in the future.

Additionally, retailers should no longer put off plans to improve consumer insights and trends intelligence. Specifically, grocers should leverage data to gather insights into these price-conscious customers and how they’re changing post-pandemic SNAP benefits. 

Finally, personalized offers can help grocers provide promotions based on the exact value each consumer needs to convert a sale — which, in a time of SNAP cuts, can make all the difference.

When these consumers feel like they don't have anywhere to turn, by making an effort to support them, you can prove your value — emotionally and financially — to continue being a part of their daily lives and buying behaviors.

About the Author

Tyler Renaghan

Tyler Renaghan is VP of retail at Washington, D.C.-based Upside. He is responsible for developing the go-to-market strategies that drive merchant adoption and continued growth through retail partners. Reach him at [email protected].
This ad will auto-close in 10 seconds