More households are eligible for SNAP benefits, and these households have more money to spend on their EBT cards (EBT is the electronic system that allows a SNAP participant to pay for food using SNAP benefits). Yet, most grocery stores are not prioritizing these shoppers - equating to at least $70B in relatively untapped purchasing power. This presents a unique opportunity for grocery retailers to serve these shoppers better and simultaneously increase market share.
We, at Propel, have a deep understanding of low-income consumers: Our Fresh EBT audience consists entirely of SNAP recipients. In this post, we share what we have learned about this low-income consumer segment and provide recommendations on how grocery retailers can meet the needs of this growing shopper base.
Recommendation #1: Offer EBT card payment online and/or at pickup There are more than 36 million SNAP households in the U.S. and only three retailers nationwide provide the full functionality for shopping online or at pickup with an EBT card. Amidst the pandemic, a growing number of SNAP shoppers (albeit all shoppers) seek alternatives to in-store shopping and crave more diversity in retailers that offer a variety of EBT payment options. In September 2020, more than 1 million households bought groceries online using food stamp benefits; that number will increase as SNAP shoppers have more money to spend as a result of the new child tax credit and as the pandemic continues.
The majority of grocery retailers are missing out on creating revenue-generating relationships with the SNAP consumer segment.
Walmart and Amazon have seen initial success in the EBT online space, and competition for EBT online dollars is accelerating. Progressing towards EBT payment acceptance is necessary for traditional grocery retailers to compete for future online dollars. While the e-commerce functionality needed to accept EBT payments through the USDA program requires a high upfront investment, there is potential for a strong return on investment in the long term as SNAP spending continues to increase.
Recommendation #2: Enhance the e-commerce experience Back in September 2020, Propel surveyed over 630 Fresh EBT app users to gauge interest in online shopping. More than half of the responses indicated that users want to buy food online but are currently unable to do so at local grocery stores. Most SNAP shoppers felt relieved to have a safer option to purchase groceries during the pandemic.
Post pandemic, shoppers are likely to continue their online shopping habits. Grocery retailers should invest the time and money into improving their online shopping experience to meet consumer expectations and foster retailer loyalty with these shoppers.
When (re)designing an e-commerce platform, retailers should consider the following:
Allow shoppers the option to select and purchase groceries with SNAP for at least pickup service.
Improve the online grocery search capabilities by clearly labeling what is and isn’t SNAP eligible.
Ensure that both mobile and web page load is quick and seamless. Most SNAP shoppers have mobile devices vs. a laptop or computer; thus, a mobile-friendly landing page is critical.
Simplify the ability to find savings and deals online.
Recommendation #3: Invest in private label strategy Financially constrained shoppers want to be assured that they are getting the best value, regardless if they are shopping in-store or online. SNAP shoppers rely on generic brands, even if those products are not on sale. These consumers have a high level of trust in stores brands and find the quality of store brand products on par with traditional brands. The pandemic intensified the need for store brand products, and grocers who don’t adapt their private label brand strategy will soon be left behind.
As the economy continues to shift, meeting the needs of these SNAP shoppers is absolutely critical. Grocers, such as Kroger, Aldi, and Wright’s Market, already took measures to capture this underserved market by offering EBT card payment for grocery delivery and/or pickup. The emergence of digital commerce companies, like Stor.ai, which enables EBT payment processing for grocery stores, can also help to address the digital grocery divide. The market opportunity is clear: Grocery retailers who move toward implementing changes to address an evolving consumer and marketplace will reap the benefits and rewards in the long run.