We are in the middle of a dramatic shift in how low-income Americans access their groceries. Changes to the Supplemental Nutrition Assistance Program (SNAP) are just now starting to take effect. Under new policies included in President Trump’s tax law, approximately 40 million individuals who rely on SNAP for basic food assistance will experience substantial reductions in their benefits. It is families like these all over the country who will suffer from these predicted cuts. Between $72 and $231 a month, these shifts will greatly impact grocery shopping experience.
Stephanie Johnson, the National Grocers Association group vice president of government relations, painted a picture of the forthcoming SNAP changes. What’s changing These changes will happen in two separate waves. These changes are occurring at warp speed, and they will dramatically impact supermarkets. That will be the reaction of the approximately 20,000 independent and small chain restaurants that her organization, the independent Restaurants Coalition, represent.
Those folks drop off right away as states make the changes,” Johnson said, noting how quickly these changes can happen. She continued, “The effect will be very different according to the community. There are a lot of unknowns.
The imminent SNAP expansion necessitates working 20 hours a week from able-bodied grown-ups. If they are unable to meet this requirement, they need to fill out additional paperwork in order to receive an exemption. This change will disproportionately limit access to people who access care outside a three-month period for most of them over any three-year span.
Giant Eagle, a regional grocery store chain headquartered in Pittsburgh, is doing just that—taking preemptive measures to meet challenges that are likely on their way. With stores in Pittsburgh, Columbus, and Cleveland, it has become the number-one grocery seller in its footprint. A Giant Eagle spokesperson noted, “We feel this is the best way we can help customers save on their groceries, regardless of the individual budget challenges they may be facing.” The company has put its nose to the grindstone to minimize the fallout for its shoppers from this seismic SNAP shift.
On the flip side, the biggest winners from these new cuts will be much larger retailers such as Walmart. Scott Moses, group head of grocery, restaurants and pharmacy at Solomon Partners, indicated that Walmart’s size and pricing strategy would enable it to capitalize on the situation. “As the world’s largest grocer – by a very wide margin – Walmart can use its scale and extremely low cost of debt to capitalize on SNAP cuts,” he remarked. This cost advantage further enables Walmart to undercut smaller competitors on price, reinforcing Walmart’s value proposition to customers.
B.J. Wholesale may find opportunities amidst the changing landscape, positioning itself as a value-based destination for weekly grocery shopping. Independent grocery stores have been hit hard, understandably, as they tend to have smaller sales volumes. The new normal Customers are already adjusting their purchasing patterns in response to dwindling SNAP benefits.
Katina Holliday is the owner of Freshly’s Market in Aberdeen, Mississippi. She shared with us a shocking 35 to 45 percent drop in business from these recent SNAP changes. “Our sales have totally decreased the past couple of months to the lowest I have seen,” she shared. As a result, Holliday has had to reduce hours, combine management roles and freeze hiring.
Johnson shone a light on the pressure put on independent grocery stores with examples of razor-thin profit margins. “Our members have between a 1–2 percent net profit margin; that is a big change,” she noted. “Because of those margins, our members are not getting rich off of SNAP.”
In fact, experts forecast that SNAP customers will be the first to go with cheaper alternatives. They want to get more out of their dollars. Michael Goldberg, an associate professor at the Weatherhead School of Management at Case Western Reserve University, expressed concerns regarding nutritional value amid these changes. He noted consumers would go for less expensive goods. This choice may lead to a decrease in overall nutritional quality.
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