grocery stores independent on food stamps sales may encounter changes due to the latest tax legislation
In Opelika, Alabama, Wright's Market, an independent grocer, is bracing for the impacts of recent cuts to the Supplemental Nutrition Assistance Program (SNAP). The food stamps program, which has seen reductions in spending due to a new tax and spending bill signed by President Trump, is expected to significantly impact small grocery stores, especially those in low-income areas.
Impact on Independent Grocery Stores
Many independent grocery stores rely heavily on SNAP dollars, with some stores seeing as much as 50-70% of their sales come from SNAP customers. A cut of about 20% in SNAP spending over the next decade due to new work requirements and eligibility caps will reduce customer purchasing power. This reduction is projected to cause a notable decrease in sales for these stores, with an average 6.7% sales hit within six months after eligibility changes begin.
The reduction in SNAP benefits could lead to store closures, particularly in underserved urban and rural communities, where SNAP-generated revenue is crucial. This contributes to a rise in food deserts where access to fresh groceries is limited.
The economic fallout often extends down the food supply chain, with fewer SNAP purchases reducing grocery store orders to wholesalers, which then impacts farmers and processors, leading to job losses and broader economic strain.
The Struggle for Independent Grocers
Independent grocers are also facing new costs such as updating point-of-sale systems and retraining employees in response to SNAP policy changes. While some sources note the cuts amount to a manageable 5-6% reduction in the short term and less than 10% over 10 years, this is still significant given the already thin profit margins (1-3%) and other stresses from the pandemic, inflation, and supply chain issues.
To mitigate some impact, grocers are exploring programs like Double Up Food Bucks to incentivize SNAP spending on produce and opportunities to educate customers on budget-friendly healthy eating. However, cuts to SNAP education programs reduce official support for these efforts.
A Concern for Small Store Owners
Jimmy Wright, the owner of Wright's Market, is worried about the impact of SNAP cuts on small stores. Approximately one-third of Wright's Market's business comes through SNAP purchases. Wright hopes he doesn't have to let any of his employees go due to SNAP cuts, but the uncertainty is a cause for concern.
Stephanie Johnson of the National Grocers Association lobbied to have the SNAP cuts reduced, stating that raising prices on struggling customers or letting employees go are the last things she wants to do. Johnson is excited about the tax cuts in the package, but the SNAP cuts are a significant concern for independent grocery stores.
As Wright's Market continues to navigate these challenges, customers like Diane Chavis, who prefers the store for its old-country products and the best ground beef in town, hope for the store's continued success.
The cuts to the Supplemental Nutrition Assistance Program (SNAP) could have a detrimental impact on independent grocers like Wright's Market, as they heavily rely on SNAP dollars for a substantial portion of their sales. Small grocery stores in low-income areas, such as Opelika, Alabama, might experience a notable decrease in sales due to the reduction in SNAP spending, potentially leading to store closures and an increase in food deserts.
The reduction in SNAP benefits not only affects small store owners like Jimmy Wright but also extends down the food supply chain, potentially leading to job losses for farmers, processors, and others involved. As independents grapple with the cuts, they seek alternative solutions, like Double Up Food Bucks and education programs on healthy eating, but the reductions in SNAP education programs further complicate their efforts.
