1. Data & Insights

The Struggle and Spending Patterns of Low-Income Families in Grocery Shopping


In
the face of rising inflation and grocery prices, low-income families are
increasingly finding themselves in a precarious financial situation. If you did
not have enough disposal income to go to a restaurant, or buy a meal for delivery,
would you buy a desert or treat once in a while grocery shopping? That is the
question Steven Johnson Grocerant
Guru®
at Tacoma, WA based Foodservice Solutions® recently asked.

Despite
a recent drop in grocery prices across several categories, many consumers
continue to feel the pinch. A report by the Urban
Institute
, a nonprofit think tank, reveals that a significant number of shoppers have resorted to credit card debt to afford
everyday essentials.
 

The
study, released on May 14, found that 17.8% of adults reported using credit
cards or buy-now-pay-later (BNPL) payment methods in the past year. Of those
who used BNPL for groceries, 37% reported missing payments on these loans.
Furthermore, nearly one in five adults admitted to using savings not intended for
routine living expenses to pay for groceries.
 

There is a Battle for Share of Stomach

Debt repayment challenges are particularly
prevalent among adults with very low food security. Nearly half of individuals in this category paid for groceries with a
credit card and either paid less than the full credit card balance or did not
make the minimum required payment. The report’s authors, Kassandra
Martinchek and Dulce Gonzalez, concluded that many families used
savings or credit from credit cards, BNPL, and payday loans to pay for
groceries, with families already struggling to meet their food needs facing
starker repayment challenges.
 

The authors emphasized the importance of the Supplemental
Nutrition Assistance Program (SNAP)
and other programs that can extend
credit to help families cover their costs or provide debt management services.
Credit cards remain a popular method for grocery purchases, with more than a
third of grocery transactions made using credit cards.
 


To improve food security and access to a
healthy diet for low-income households, the U.S. government provides economic assistance for food purchases through SNAP. The program aids more than
40 million low-income individuals, about 1 in 8 people in the U.S., purchase
food. Research has highlighted benefits of the program, such as lifting
families out of poverty and providing long-term benefits to children.
 

SNAP aims to address a fundamental problem –
the lack of resources available to buy food. Rather than provide food directly
or restrict purchases to certain food items, SNAP provides low-income
households additional resources to purchase food that fits their preferences and needs. The program,
therefore, relies on retailers in the private sector to provide participants
with efficient access to food.
 


SNAP benefits are modest, at around $7.57 per
person per day, on average in 2022. Benefits are determined based on the U.S. Department of
Agriculture’s Thrifty Food Plan
, which calculates the cost of groceries
needed to provide a healthy diet on a limited budget, assuming all meals and
snacks are prepared at home. However, since participants can make their own
decisions about their food purchases, SNAP households’ purchases may not align
with the Thrifty Food Plan recommendations.
 

Considering food insecurity concerns, one may
expect SNAP households to prioritize staple food items over discretionary ones,
such as desserts, snacks, and beverages. However, research indicates that these sweetened, hedonic foods make up a larger
proportion of a typical SNAP household’s shopping cart compared to non-SNAP
households. While these studies show that SNAP households
purchase more hedonic, unhealthy food, previous research has not examined the motivations underlying the
behavior.
 



Three separate studies were conducted to
investigate whether SNAP households buy more hedonic, sweetened food items,
compared to non-SNAP households, and if so, what psychological mechanisms drive
SNAP participants to purchase more unhealthy food. The first study explored if SNAP
households
purchased more unhealthy food items, and if so, if they were more
likely to do so when using Electronic Benefit Transfer (EBT) cards or cash. The
second study tested whether SNAP households experienced stronger food cravings
or underestimated the unhealthiness of hedonic food items compared to non-SNAP
households, and if so, whether it influenced their food purchases. The final
study analyzed if SNAP participants consider high-calorie foods to be better
value for the price.
 

The studies found that, regardless of whether
they paid by EBT card, credit card, or cash, SNAP households’ food baskets had
more calories per ounce and higher unhealthiness ratings compared to non-SNAP
households. These results suggest SNAP households do not just purchase unhealthy foods because they have extra resources. Rather,
their shopping behavior may be influenced by other factors.
 

Compared to non-SNAP households, SNAP
households reported stronger food cravings and underestimated the unhealthiness
of hedonic food. Cravings and unhealthiness perceptions explain the differences in purchase behavior between SNAP
and non-SNAP households, even after controlling for income, education, and age.
 

In every case, SNAP households spent more
money on hedonic food than non-SNAP households did. This difference in spending
was not influenced by price evaluations but by food cravings and unhealthiness perceptions. The studies found no evidence for the claim that SNAP
households’ unhealthy food purchases are driven by their attempt to maximize
energy density or calories-per-dollar.
 


The results suggest that SNAP households spend
just as much on groceries as non-SNAP shoppers. Considering that almost one in
eight shoppers in the United States are enrolled in SNAP, this sizable customer
segment exhibits purchase patterns that differ from non-SNAP households. Retailers
would
benefit from understanding the behavior and motivations of SNAP
households to better serve their customers.
 

As retailers venture into healthcare, our
research suggests an interesting opportunity for companies to further improve
health outcomes. SNAP households buy more unhealthy food, partly due to a
biased understanding of what makes food unhealthy. Companies that provide
healthy food should develop advertising campaigns that more effectively promote
healthy options. Through targeted advertising, companies could also identify patterns in SNAP households’ shopping behavior and tailor
their offerings accordingly.
 

Invite Foodservice
Solutions® to complete a Grocerant ScoreCard, or for product positioning or
placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the
global leader in the Grocerant niche. Contact: [email protected] or 253-759-7869


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