The Trump administration’s drive to narrow the scope of the Supplemental Nutrition Assistance Program (SNAP) may cost food retailers nearly $1.6 billion upfront and $759 million annually, according to a survey conducted by three grocery industry trade groups.
The Impact Analysis attempts to estimate how proposed restrictions on the purchase of items like ultraprocessed foods and soda for SNAP beneficiaries will reverberate through the economy, a question that has become a political flashpoint between federal and state governments.
The report argues that it falls on individual retailers to administer and enforce those potential restrictions, which will require investments in technology, inventory management, employee training and more.
SNAP benefits cannot be used on beverage-alcohol. However, any impact on retailers could create more headwinds for the already tumultuous industry, particularly beer, as the category relies heavily on convenience store and grocery sales.
Beer dollar sales (-2.8%) and volume, measured in case sales (-4.4%) are both in the red in Circana tracked off-premise channels (multi-outlet plus convenience) year-to-date (YTD), through September 7, according to the market research firm.
The analysis is based on a survey of 35 members of three major industry organizations: the National Grocers Association (NGA), FMI – The Food Industry Association (FMI), and the National Association of Convenience Stores (NACS).
In presenting the analysis, the NGA, FMI and NACS are calling for the USDA to extend the timeline for implementing SNAP restrictions and “provide clear and actionable definitions of restricted foods to ensure that all retailers can comply with new regulations and waivers without ambiguity.”
“These new restrictions are unprecedented,” said Margaret Mannion, director of government relations for NACS, in a statement. ”Without clear rules and the time to implement them, they will impose significant costs on all American consumers, not just SNAP participants.”
C-Stores Facing $1B Upfront Climb
Across the four store formats, convenience stores are doing the heaviest lifting when it comes to upfront costs, clocking in at $1 billion. Ongoing yearly costs are pegged at just over $378 million.
That’s partly because the burden of changing qualification rules falls on smaller stores, requiring more labor. The costs of updating technology and systems are largely fixed on a per-store basis, placing a heavier relative burden on smaller operators like convenience stores.
Supermarkets ($305 million) and supercenters ($215 million) will also be spending big upfront to comply with the new SNAP rules. Hardware and software purchases weigh the heaviest on the balance sheet: The estimated per-store cost for a supercenter is approximately $1.5 million, but, for c-stores, it’s only $5,000. Moving forward, supermarkets are pegged to spend around $281 million annually, with supercenters spending just over $81 million.
Small-format stores, meanwhile, have relatively low upfront cost of around $11.7 million, but face almost $18 million in ongoing costs.
C-stores are beer’s largest Circana-tracked off-premise channel in terms of YTD dollar sales – nearly double that of grocery. The category’s dollar sales (-2.2%) and volume (-4.3%) trends are slightly stronger in c-stores compared to overall declines, while YTD losses in grocery are steeper (dollar sales -3.6%, volume -4.8%).
Compliance Burdens
Beyond the initial financial outlay, businesses operating in multiple regions will need to spend time and money aligning their product assortments, pricing and labeling with individual state regulations. Survey participants were asked about the weeklyper-store cost of customizing product assortments, pricing, labeling and stocking on a state and local level.
For supercenters, those could add up to as much as $10,000 per store every week, on top of an initial one-time payment of $100,000 per store. Add compliance monitoring, and that’s another estimated $1,000 per week for the channel (compared to around $500 per week for grocery stores).
Lost Productivity, Sales
Adding further injury, once retailers have spent the money to adapt to the new SNAP rules, they can expect to lose dollar sales , according to the report.
In-store revenue is predicted to drop across all channels, with convenience stores estimated to lose over $1,000 per week, per store. For supercenters and supermarkets, that number climbs up to $10,000 per store, per week.
Against that backdrop, those retailers will need to find money to pay new full-time equivalent staff members to enforce restrictions and monitor compliance, as well as to train checkout and supply chain procurement employees on how to navigate the rules.
For supercenters, the changes are projected to cost checkout associates over 100 additional person-hours per week, per store. Then there’s an additional 110 person-hours per week, per store, on in-store marketing to ensure products’ SNAP eligibility is clear to shoppers. Other channels are expecting at least 20 more person-hours per week for checkout staff.
Limited Forecast
The NACS survey, while illuminating, should be taken with some caveats. As noted in the report, the small sample size of respondents makes the findings speculative and more of a “best-attempt” to quantify the total scope of costs related to potential SNAP changes.
There was also a “high degree of variability” in the numbers reported by those respondents, with “a number of retailers” expecting third-party inventory managers or product suppliers to absorb the additional costs, either partially or in-full. But, as with tariffs, the ultimate financial burden is likely to fall on the end consumer.
“Ultimately,” the report concluded, “some of the higher costs must be passed onto consumers in the highly-competitive food retailing industry, so consumers stand to ultimately see higher food prices and reduced purchasing power.”