Already stressed by higher inflation, packaged goods brands and retailers must now contend with cuts to a government program that helps low-income people buy food. The changes are expected to result in billions of dollars lost in consumer spending power, forcing brands to alter marketing strategies by bulking up deals, investing in private labels and moving into dollar stores, experts say.
The cuts involve the Supplemental Nutrition Assistance Program, or SNAP, historically known as food stamps. The recently approved debt ceiling deal tightens work requirements for the benefits: Previously, in order to get the assistance, eligible recipients ages 18 to 49 had to show they were enrolled in a job training program or worked for at least 80 hours a month. That age range is now expanded to 18 to 54. This could result in 750,000 adults ages 50 to 54 losing benefits, according to the Center on Budget and Policy Priorities, a nonpartisan research and policy group.
And those cuts come on top of the expiration of COVID relief programs that had boosted SNAP benefits. The end of the emergency allotments—which some states started cutting in February—will lead to a minimum of $95 per recipient lost every month for the nation's 41 million SNAP recipients, meaning brands and retailers will face a $46 billion-plus gap in consumer spending in the year to come, according to Numerator, a consumer insights firm.
“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,” Matt O’Grady, president of the Americas for Dunnhumby, a customer data science company, said in a statement. “At one point or another 20% 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.”