A sign alerting customers to the benefits of SNAP food stamps is displayed at a Brooklyn grocery store on December 5, 2019 in New York City.
Scott Heins | Getty Images
Buyers receiving federal food assistance have fueled double-digit growth for food retailers and manufacturers in the past year, but are now under increasing pressure to stretch those dollars, according to the research firm. market IRI.
Some people who qualify for the Supplemental Nutritional Assistance Program, commonly known as food stamps, are unemployed. Others have minimum wage jobs or juggle part-time hours with child care. With congested ports and shortages of truck drivers, transportation and raw material costs are rising, causing stickers to shock in the grocery store.
The stimulus checks have been heavily spent – and no more appear en route.
When this pandemic-fueled funding ends, consumer packaged goods companies will also feel the pain, according to IRI research shared on Tuesday. Businesses will lose about $ 3 billion in spending from SNAP buyers every month. The purchasing power of these buyers is dwindling, even as the Biden administration increased food aid earlier this month and families received child tax credits.
Sally Lyons Wyatt, executive vice president and head of food and beverage practice at IRI, said economic headwinds, such as inflation, “are going to hit these homes more than anyone.”
SNAP is a sales engine for big grocers like Kroger, big players like Walmart, and discount chains like Dollar General and Aldi. About 16% of households in the United States – 42 million people in total – participate in the SNAP program. SNAP shoppers generate 12% of food and beverage sales online and in stores, according to IRI research.
During the pandemic, the impact of this group has only intensified. SNAP shoppers generated 19% of the dollar growth for food and beverage retailers in the 52-week period ended Sept. 5 from the previous year, according to IRI. This is compared to non-SNAP buyers who generated only 1% of the dollar’s growth over the same period.
Lyons Wyatt said businesses and food and beverage retailers must come up with new approaches to serve shoppers who need economical means to feed their families – or risk losing a significant portion of their business. She said they should consider small package sizes and affordable food packages, such as a cheaper version of a meal kit. Retailers may want to offer different tiers of the same item, such as soups or canned beans of a value tier with a standard and premium tier, she said.
She highlighted the creative efforts of grocers to help families eat healthy on a budget, such as providing nutritious recipes with simple ingredients or sponsoring a community garden for children.
And she said companies would lose sales now and in the future if they lay off this group of buyers. She said SNAP shoppers tend to be more loyal to retailers and brands. Additionally, she said, meeting the needs of families participating in SNAP may be a way to introduce yourself to future consumers, as many households have young children or adolescents.
“You’ll be setting yourself up for a lifelong consumer value proposition that might not be there if you just aren’t interested in it,” she said.