SNAP Cuts Set to Pinch Consumers and Retailers Alike
This week marks the last week before food stamp benefits return to “normal.”
At the end of March, increases to the Supplemental Nutrition Assistance Program (SNAP) approved by Congress during the pandemic will end for beneficiaries in most states, a change that chops roughly $90 out of the average SNAP user’s budget.
And as CNBC noted Sunday (March 26), that translates to added pressure for retailers and consumers alike. For retailers, it means the loss of sales on discretionary items as household food budgets shrink.
Consumers, meanwhile, face even greater pressure to feed their families. Trisha Cunningham, head of the North Texas Food Bank, told CNBC that while it’s too soon to gauge the complete impact of lowered SNAP benefits, food pantries are seeing more new faces.
Her nonprofit provided 7 million meals per month before the pandemic, but now serves as many as 12 million meals each month.
“We knew these [extra SNAP funds] were going away and they were going to be sunseted,” Cunningham said. “But what we didn’t know is that we were going to have the impact of inflation to deal with on top of this.”
As PYMNTS noted earlier this month, recent earnings reports have shown some of the impact of reduced spending on nonessential items: Macy’s, Nordstrom and Kohl’s also reported a decline in sales year-over-year, while Best Buy forecast a drop in sales in the coming fiscal year.
The cuts are happening as the cost of food continues to plague consumers across the border. Food inflation was up 10.2% annually last year.
And while consumers could soon forgo eating in restaurants in favor of eating at home, they’re also making choices on that front too. Shoppers are trading between quality and quantity, impacting 69% of consumers surveyed by PYMNTS. Among grocery shoppers who say they have noticed changes to prices, 59% have cut back on purchases of nonessential grocery items, while 35% are buying cheaper alternatives.
In recent months, a number of brands and retailers have discussed a rising demand for private-label goods.
Walmart, for example, which has been pushing its private-label products to customers while trying to battle ongoing price-increase attempts by suppliers. And as noted here last week, Dollar General is poised to take up more space in the private-label sector.
“We believe we will be increasingly important to them in the year ahead,” CEO Jeff Owen said in reference to the chain’s customer base.
“Income brackets above our core customers [are] shopping with us, underscoring our belief that our value and convenience proposition resonates with a broad spectrum of customers.”