The pandemic has brought about two significant trends of particular note for the grocery retail sector. One, of course, is the popularization of online shopping as a convenient, contact-free way to do the weekly grocery shop. The second is an increase in the number of Americans registered for the Supplemental Nutrition Assistance Program (SNAP).
Most grocers have invested over the past year in accelerating their e-commerce offering, but until recently, far less attention has been paid to updating digital infrastructure to accept SNAP EBT and EBT Cash online payments. This represents a huge opportunity to both attract new shoppers and build long-term loyalty, but grocers must move quickly to avoid losing market share.
Rapid Growth of SNAP Across the U.S.
As a result of the pandemic, unemployment has risen significantly over the past year, with more families reporting that they are unable to afford adequate food and other basic necessities. SNAP participants increased 16% from March of 2020 to April 2020 when the pandemic began, at which point some 43 million people were participating—that’s about 8 million more than in 2019.
The number of participants could rise further still, especially if the Biden administration removes some of the restrictions imposed by the previous government under the “public charge” rule. This rule, as it currently stands, discourages immigrants from applying for SNAP for fear of losing their legal status.
Legislators have also responded by easing eligibility restrictions and participation limitations and increasing benefit amounts. Changes since last March have included temporarily providing the maximum benefit to all SNAP households, including those with some reported income; increasing benefits by 5.3% in response to rising food costs; and boosting monthly benefits by 15%. The allowance for a family of four now sits at $680 per month.
Why It’s Essential to Build Relationships With Shoppers Now
With more people collecting SNAP, and more dollars injected into the program, this is a significant market segment. Regional grocers who are simply accepting SNAP EBT payments in-store are only tapping into a small part of it. According to IRI, SNAP households are in fact more likely to shop online than non-SNAP households.
Recognizing the importance of reaching these shoppers through their preferred channel, Amazon, Walmart and Aldi (through Instacart) have already ramped up to accept SNAP EBT and EBT Cash online payments, and their speed to market will serve them well. Regional grocers are beginning to heed the call, but they are playing catch-up, trying to get up and running before losing market share to these players. Adapting their systems and applying to the U.S. Department of Agriculture for certification to accept SNAP EBT payments online is a complex process that takes time, technological expertise and understanding of the varying state regulations.
It may be a challenging task, but the investment is a worthwhile one. Grocers who invest are thinking beyond the immediate numbers, toward building longer-term relationships. Recent data from Brick Meets Click indicates that the online grocery shopping habit is very likely to stick. In the first half of November 2020, 83% of respondents who’d shopped online for food over the previous month intended to use the same service again within the next 30 days. Repeat intent jumps to an astounding 95% for shoppers who have placed four or more orders.
This is how customer lifetime value—which we know is a key success metric—begins. To foster long-term loyalty, grocers need to provide a great online shopping experience where they own the shopper relationship. By owning shopper data, they can provide the promotions and services that continue to engage shoppers with their brand.
The SNAP Online Bottom Line
More households are participating in SNAP, with more SNAP dollars to spend. This, coupled with their strong need and desire to buy groceries online, represents a huge opportunity for grocers, both in the short- and long-term. Regional grocers who delay getting into the market risk losing out to the national players and local competitors who arrived on the scene first and claimed their share of SNAP EBT online dollars and long-term customer loyalty.
Sylvain Perrier is president and CEO of Mercatus.