While this morning’s MNB FaceTime focuses on the positive steps that the food industry took to address the needs of their customers who depend, in normal times, on SNAP benefits, the New York Times looks at the degree to which many retailers are concerned about their own financial situations; after all, if SNAP recipients are not receiving their benefits, that’s money they are not spending at their local retailers. It is, the Times writes, a long-simmering problem:
“For the better part of two years, well before the federal government shut down and SNAP payments were paused, lower-income consumers have been slowing their spending, especially for discretionary items. Nearly three-quarters of individuals who receive SNAP benefits live below the poverty line, making less than $32,000 a year for a family of four.
“The ripple effect of that spending pullback is being felt by retailers, food companies and restaurant chains.”
The Times points out that “the shutdown isn’t the only impact on SNAP benefits. The latest budget bill tightened rules around who is eligible for the program and made billions of dollars in cuts in the coming years.
“Separately, a dozen states, including Nebraska, West Virginia and Florida, have received approval from the U.S. Department of Agriculture to bar people from using SNAP dollars to purchase items like sodas, energy drinks and candy.
“Food manufacturers and restaurants in recent months have been looking for ways to keep lower-income consumers buying.”
Regardless of whether or how soon the federal government reopens and the SNAP benefits are restored, the Times says that at least some economists are suggesting that “the lapse in food-assistance payments is likely to cause lower-income households to scrutinize their spending more.”
KC’s View:
It shouldn’t be a surprise that as things get more expensive, especially when benefits don’t keep up (as they rarely do), that people of lesser means will spend less money, making hard decisions about discretionary items. That’s the responsible thing to do.
But this story does underline the persistent economic problem that the nation faces, and that will affect many retailers. The high percentage of people in the US who live below the poverty line is alarming – last year, it was more than 10 percent, or close to 36 million people. (It was down a bit in 2024, but hard to imagine that it won’t be up for 2025.) And the idea that close to four our of 10 SNAP recipients are under 18 years of age is distressing.
The economists would seem to have it right – lower income households are going to scrutinize their spending, which is going to have an extended impact on the retailers where they traditionally have done business. Not only are they likely to cut back on their purchases, but many – at least those who have the option – will switch their spending to more aggressively value-centric options, such as Ali, Lidl, Dollar General, WinCo and Walmart. So we could see a shifting of consumer dollars within the food retail environment.
It was just the other day that the National Retail Federation (NRF) forecast that the US could see its highest volume holiday shopping season ever. This will at least in part be because of inflated prices – people will have to spend more. But it also may underline for a lot of people the severity of income disparity in the US, which may force some retailers to reconsider their value propositions and even, in extreme cases, their viability.
The post The Extended Food Problem Facing Low-Income Shoppers & Their Retailers appeared first on MNB.
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