Article

SNAP Shopper Behavior: Facing Economic Headwinds

What is SNAP?

SNAP, or supplemental nutrition assistance program, is a government program that helps low-income households provide for their families and purchase groceries via an Electronic Benefits Transfer Card. Formerly known as food stamps, SNAP is used to subsidize shopping and food costs and has grown significantly over the past few years and also experienced a boost in funding as part of an emergency allotment strategy during CODVID-19. In 2019, SNAP was valued at $55 billion but it catapulted to $125 billion dollars in 2021. Today, SNAP purchases command nearly one in four of all CPG dollars, making this a significant growth area for brands and retailers to watch.

What Does the SNAP Consumer Look Like?

Numerator’s recent Helping SNAP Consumers During Economic Headwinds study looked at shoppers who use SNAP frequently–or those making at least 12 trips during the year.

snap profile

Nearly two-thirds of SNAP recipients live in the bottom 30th percentile of purchasing power and SNAP shoppers are nearly twice as likely to have children, twice as likely to be multicultural and they are 28 more likely to live in urban areas. When consumers shop with SNAP, their baskets are huge. Which means brands and retailers can drive basket growth and win trips by understanding the nuances of SNAP shoppers.

The study also found that SNAP users over-index the most as struggling households and one in five SNAP consumers feel overwhelmed with financial burdens. SNAP consumers also more frequently face food insecurity, although they also report feeling better about the economy overall.

SNAP Consumer Habits & Future Profile

The Numerator study investigated three main SNAP consumer themes:

  • Category consolidation–are shoppers dropping categories and units at a faster pace than all U.S. shoppers. And if so, where are they consolidating?
  • Channel & Brand shifting–where and what are consumers buying to offset rising prices?
  • Looking forward–what could SNAP look like moving forward and what does that mean for brands and retailers?

Category Consolidation

When comparing SNAP consumers to non-SNAP consumers, SNAP consumers disproportionately spend more per unit, although that finding varies by category. As a result, SNAP consumers are consolidating units to offset these higher costs.

When reviewing the top 100 categories, we found three key findings.

  • While Grocery and Home Care items are being consolidated by SNAP consumers, the consolidation is happening at the same rate with non-SNAP users, so everyone is feeling the pressure in this category.
  • In Snacks and Seafood units, SNAP users are pulling back units at a much steeper rate than non-SNAP users. This is attributed to the fact that these more discretionary categories are usually the first to see the effects of budget cutbacks.
  • There are some categories, including Personal Care items, that face less consolidation among SNAP consumers as compared to non-SNAP shoppers. This trend seems to lean towards the lipstick effect, where consumers look for more affordable “treat-myself” luxuries as they become priced out of other services or products.

Channel & Brand Switching

With consolidation comes steeper competition, so it is important for brands and retailers to understand where SNAP consumers are shifting their loyalties.

SNAP consumers tend to shop more at places that offer every-day low pricing (EDLP), such as Mass and Dollar channels. The study found SNAP users are also more likely to shop at C-Stores, which is likely because they live in more urban environments. Unfortunately, C-Stores have some of the higher premium changes, so this is likely why SNAP consumers disproportionately spend more per unit than their non SNAP counterparts.

hh spend by channel

When it comes to dining, SNAP recipients are significantly (37x) more likely to eat out at least four or more times per week. But we also see that number trend downward as SNAP users move their dollars away from limited-service restaurants and back to stores. The brands that have seen the biggest losses and trips were Starbucks, Kentucky Fried Chicken, Burger King and Little Caesars, while Duncan Donuts, Wingstop, Chick-fil-A and Domino’s saw the top gains.

snap lsr trends

Looking forward, SNAP consumers are starting to move away from Dollar and C-Store channels, and they are also moving away from Drug and Online channels.

Where are SNAP shoppers moving?

Club and Smaller Format Stores have been gaining share of traffic for the past two years and there has also been a resurgence in Food and Mass channels since the start of Q4 of 2021. When it comes to Food, the top 50 food retailers aren’t necessarily the major players. Instead, regional grocers like Wakeferri and Wegmans and ethnic grocery stores like H Mart and 99 Ranch are offering the slowest increase in prices and netting a resulting win in trips.

snap retailers growing

Private labels are also gaining unit share. The top brands driving growth and share are Walmart–with its private label brands like Great Value, Signature Select and Equate–as well as Aldi and Costco’s Kirkland, which are all outperforming branded CPG.

snap private label

As SNAP consumers shift their loyalties to the stores and brands that can source products at better, lower prices, retailers will need to be agile to capture the wallets of these shoppers.

The Future of SNAP

Over the past four years, the profile of the SNAP recipient has also changed.  Overall, the SNAP consumer demographic is evolving as more white consumers, younger consumers, more full-time workers, and consumers with higher incomes all start utilizing SNAP benefits.

With respect to occupation, SNAP consumers over-index on trade and care occupations,  both of which continue to be in flux. So it isn’t surprising that job stability is a top concern among SNAP users, who index very high compared to non-SNAP shoppers with respect to job stability. Nearly 56 percent of SNAP consumers feel very or extremely concerned about their job outlook, while only 31 percent of non-SNAP consumers share the same sentiment.

snap jobs

In the long term, brands and retailers could expect more industries, particularly retail, to face slowdowns. This would further affect the makeup of SNAP consumers, who may in turn become even younger, more white and have even lower purchasing power.

Learn more about SNAP shoppers with Numerator

Numerator captures SNAP consumer data by tracking purchase-verified receipts, which varies significantly from legacy providers who rely on recall-based surveys. Numerator’s receipt capture technology provides the clarity needed to understand the full impact of SNAP on modern consumers.

Our team is happy to help brands and retailers learn more about SNAP and other consumer groups and to understand their purchase-verified behaviors and their many demographic and psychographic attitudes. Reach out to a Numerator rep for more information.

For more information, read the full report, view the webinar on-demand, or reach out to us with more questions.

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