Dunnhumby has released a special report examining which U.S. grocery retailers are best positioned to win the loyalty of current and potential Supplemental Nutrition Assistance Program recipients and how retailers can limit grocery sales losses due to recently enacted SNAP reductions.
“The SNAP Rollercoaster: A dunnhumby Special Report on Hunger” in the U.S. ranked Save-A-Lot, Food 4 Less and Dollar General 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, Walmart, Aldi, Marcs and H-E-B.
In March, pandemic era emergency allotments ceased, resulting in an average 22 percent reduction of SNAP benefits per household, according to Center on Budget and Policy Priorities. With the average SNAP household spending 30 percent of their disposable income on food, a 22 percent reduction ($97 dollar on average monthly), means more missed meals, smaller meals, cheaper and less healthy food, skipped medication, delaying or foregoing medical care.
And 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.
“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. 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,” said Matt O’Grady, president of the Americas for dunnhumby.
“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. Retailers need to understand that one out of every eight grocery shoppers in 2023 are walking into their stores stressed, emotionally drained and looking for retailers to be part of the solution.
“At one point or another, 20 percent of Americans have been on food stamps. Retailers that can be part of the solution by providing customers with strategies and tactics that meet their needs better than the competition will be building loyalty with a group of customers that over time will represent a sizable portion of the grocery market.”
Key findings and recommendations from the study:
- Ninety-two percent of SNAP customers are at or below the poverty line and are likely to be caregivers, working or both – 65 percent have families with children, 36 percent are in families with older adults who are disabled and 41 percent are working. Cashiers and food service workers are twice as likely as the general population to be on SNAP.
- Create appropriate ways of targeting this segment with relevant offers – The USDA advocates for protecting SNAP participants privacy by discouraging the EBT payment type flag as an identifier for marketing purposes. However, retailers can serve the SNAP and food insecure customer by more thinly slicing their price sensitivity segmentations. For example, take your most price sensitive tier and sub-segment that into three levels. The ultra-price sensitive would be a sub-segment and would be more likely to be food insecure.
- Create mass promotions, like extra deep price locks/price freezes, for ultra-price sensitive customers – Inflation is still a top of mind concern for shoppers, and many retailers are still advertising summer price freezes in the spirit of combating inflation. Consider a second, deeper tier for ultra-price sensitive customers – instead of locking/freezing prices, lower them and keep them there for the duration of the promotion.
- Make health and wellness products more accessible – If SNAP customers are more likely to forgo medical care and be unable to afford enough nutrient dense food, retailers should consider ways to make over-the-counter medicine and vitamins/supplements more accessible to the ultra-price sensitive customers.
The overall rankings in “The SNAP Rollercoaster: A dunnhumby Special Report on Hunger” are the result of a consumer survey-informed statistical model that predicts how retailers execute on the customer needs that matter most for driving performance and emotional bonds with shoppers.