Newsbreak: Major Retailers Braces for Impact as Emergency Food Stamp Allotments End Across US

Emergency allotments for food stamps that were introduced to help SNAP beneficiaries weather financial hardships caused by the COVID-19 pandemic are due to end across the US on March 1, 2023. According to a report by GOBankingRates on February 28, 2023, the allotments, which increased the average monthly benefit per person to more than $240, were originally approved during the pandemic but have since been reduced. This reduction in SNAP payments could lead to a decline in business at retailers such as Walmart, Kroger, and dollar stores, as many beneficiaries’ shop at discount stores to make their money stretch further.

Based on a report by Fox Business on February 20, 2023, food stamps account for more than 10% of overall dollar-store revenues and can contribute more than one-fifth of overall supermarket sales in lower-income areas. A report from BMO Capital Markets showed that supermarkets in eight states that had already ended emergency allotments underperformed those in the 38 states that still paid the allotments.

The companies with the highest exposure to SNAP include Walmart, Dollar General, Family Dollar, Kroger, and BJ’s Wholesale Club, each of which receives nearly 10% of its revenue from food stamps. Although lost SNAP revenue may be recovered through sales to higher-income consumers and low unemployment rates, discount chains could still suffer from lower SNAP-related sales. Stephanie Johnson, vice president of government relations for the National Grocers’ Association, believes it is difficult for such a low-margin business to sustain itself without outside support.