Save-A-Lot and Food 4 Less are Top Retailers for SNAP Customers, dunnhumby Finds

• SNAP reductions of an average of 22% per household, during a time of high food inflation, are increasing food insecurity for 43 million Americans
• 2023 U.S. grocery revenue will be $20 billion less than 2022 due to SNAP reductions
• Cashiers and food service workers are twice as likely as the general population to be on SNAP

London, May 22, 2023 — In March 2023, pandemic-era emergency allotments ceased resulting in an average 22% reduction of SNAP benefits per household, according to the Center on Budget and Policy Priorities (CBPP). With the average SNAP household spending 30% of their disposable income on food, a 22% reduction ($97 dollar on average monthly), means more missed meals, smaller meals, cheaper and less healthy food, skipped medication, delaying or foregoing medical care according to the CBPP.  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,” said Matt O’Grady, President of the Americas for dunnhumby. “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.

“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% 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% have families with children, 36% are in families with older adults who are disabled, and 41% are working. Cashiers and food service workers are twice as likely as the general population to be on SNAP.
• Lower income consumers are just as reliant on the grocery store for satisfying their hunger as shoppers from higher income groups. They shop some of the most common categories – meat, packaged food, dairy – at similar rates to higher income groups. They are less likely to buy fresh produce but more likely to buy frozen produce compared to higher income groups. Lower income consumers rank saving money (63%) as their most important need. In baby care, ready-to-eat, deli, fresh produce and meat, lower income consumers prioritize savings over quality.
• Rethink how to define a “loyal” customer. SNAP and lower income shoppers visit fewer grocery banners on average than higher income shoppers (3.6 stores versus 4.5 in an average month), and they give a greater share of their grocery budget to any one retailer. They are therefore more likely to give a retailer their loyalty than higher income shoppers who have bigger grocery budgets.  Retailers should look at SNAP and food insecure customers as a segment to target with actions that appeal to them.  Once their loyalty is earned, retailers will be more likely to keep them.
• 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.
• Value Tier private brand and targeted communications. A value tier private brand, aside from being a long-term defense against a discounter like Aldi, should deliver on the basic needs of a product while matching Aldi on price – or whatever retailer has the lowest prices in the market.  Retailers should target communications at ultra- price sensitive customers highlighting the retailer’s value tier private brand.
• 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

Methodology

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. As part of this special report, dunnhumby used data from governmental agencies for our analysis in addition to dunnhumby’s RPI database. The RPI database contains 70,000 grocery consumer interviews conducted from 2017 through 2022. Sixty-nine of the largest U.S. grocery retailers in conventional, mass, club, specialty, discounter, drug, and dollar channels were included in the RPI.

About dunnhumby

dunnhumby is the global leader in Customer Data Science, empowering businesses everywhere to compete and thrive in the modern data-driven economy. We always put the Customer First.

Our mission: to enable businesses to grow and reimagine themselves by becoming advocates and champions for their Customers. With deep heritage and expertise in retail – one of the world’s most competitive markets, with a deluge of multi-dimensional data – dunnhumby today enables businesses all over the world, across industries, to be Customer First.

The dunnhumby Customer Data Science Platform is our unique mix of technology, software and consulting, enabling businesses to increase revenue and profits by delivering exceptional experiences for their Customers – in-store, offline and online. dunnhumby employs over 2,500 experts in offices throughout Europe, Asia, Africa, and the Americas working for transformative, iconic brands such as Tesco, Coca-Cola, Meijer, Procter & Gamble and Raley’s.

 

Media Contact for dunnhumby

Theresa Smith

Silicon Valley Story Lab

theresa@siliconvalleystorylab.com

+1-818-704-8481

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