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Low-income consumers tend to be underappreciated and misunderstood. But a recent study by the customer data science company dunnhumby suggests that grocers should consider paying more attention to their customers who are Supplemental Nutrition Assistance Program (SNAP) recipients.
SNAP recipients spend more of their money on food than people with higher incomes, according to dunnhumby, and they visit fewer grocery banners on average than higher-income shoppers (3.6 stores versus 4.5 in an average month). Despite their limited means, they can be valuable and loyal customers.
The study also noted that 92% of SNAP customers are at or below the poverty line and are likely to be caregivers, working or both: 65% have families with children, 36% are in families with older adults who are disabled, and 41% are working. Cashiers and food service workers are twice as likely as the general population to be SNAP recipients.
“The SNAP Rollercoaster: A dunnhumby Special Report on Hunger,” notes that in March 2023, pandemic era emergency allotments ended for SNAP recipients. This will reduce grocery purchasing power for 22.5 million American households and increase food insecurity for 43 million Americans, the report argues, pointing out that the average SNAP household received $439 in SNAP benefits in March 2022, and the Center on Budget and Policy Priorities (CBPP) estimates that number was $342 in March of 2023, the first month after the emergency allotments ended.
“SNAP recipients began a roller coaster ride in April 2020 with the arrival of higher SNAP benefits due to the pandemic that initially left them with larger food budgets to feed their households,” said Matt O’Grady, president of the Americas for dunnhumby. “For many, this meant they could purchase healthier foods. But although benefits were increased again in 2021 under the COVID relief bill, consumers were also hit with record inflation eating into in all areas of their household budgets.
“This year, they are again left in a precarious position with a deep reduction in their SNAP benefits resulting in much less disposable income available to take care of their household food needs.”
Food retailers will also feel some pain. According to dunnhumby’s analysis of data made available by Edge Ascential and the CBPP, U.S. grocery revenues will fall by $20 billion from their 2022 levels because of the SNAP reductions.
The report argued that retailers can be part of the solution by targeting these shoppers with relevant offers, deploying value tier private brands, mass promotions for ultra-price-sensitive customers, and making health and wellness products more accessible.
Also included in the report is a ranking of the retailers that are most favored by SNAP recipients. Save-A-Lot, Food 4 Less, and Dollar General were listed as the top three grocery retailers for SNAP customers, with Winco and Grocery Outlet rounding out the top five. The next five retailers in the top 10 are Price Rite (6), Walmart (7), Aldi (8), Marcs (9) and H-E-B (10).
Perhaps it shouldn’t be surprising that some of the nation’s top retailers are on this list. Most consumers appreciate opportunities to save money — SNAP recipients just need them more.
