Grocers eye an opportunity serving lower-income consumers

The trend: Thirty-seven percent of US adults’ personal finances have gotten worse in the last year, an eight percentage point jump from February, per a NPR/PBS Newshour/Marist poll.

  • The situation is particularly pronounced among lower-income consumers. US adults who earn $50,000 or less are roughly three times less likely than higher-wage earners to state their financial picture has improved in the last year, according to the survey.
  • That’s a substantial segment of consumers, which is far larger than the nearly 41 million people receiving Supplemental Nutrition Assistance Program (SNAP), per US Agriculture Department (USDA).
  • While individually SNAP recipients and other lower-income consumers have less spending power than higher-income shoppers, collectively they represent a sizable customer segment that several retailers and aggregators—including Walmart, Albertsons, and Kroger—are looking to better serve.

Skyrocketing prices: Retailers’ efforts, which include the expanded acceptance of SNAP benefits, the rollout of lower-priced lines, and new partnerships, aim to help consumers cope with soaring food prices. Grocery prices rose 13.5% in August, a 43-year high, per the US Bureau of Labor Statistics.

  • In response, Albertsons last week announced a new partnership with affordable, mixed-income and market-rate housing company WinnCompanies that will enable it to deliver groceries, prescriptions, and vaccination services directly to over 133,000 residents across WinnCompanies’ 520 properties.
  • Kroger launched a new, lower-priced line of products called Smart Way to help it capture the growing share of consumers who are trading down to cheaper options.

Going online: Several retailers are seeking to make it easier to buy groceries online. That’s particularly important given that about 39 mil­lion peo­ple in the US live in low-income and low-access areas, per a recent USDA report. With­in that group, 18.8 mil­lion peo­ple—or 6.1% of the US total pop­u­la­tionhave lim­it­ed access to a super­mar­ket or gro­cery store.

  • For example, Walmart last week rolled out a series of updates to its online shopping channels that includes the option to filter items by those that are EBT- or SNAP-eligible.
  • It isn’t just large retailers eyeing the opportunity. Shopify solution provider Grocerist announced it has received USDA approval for Gong’s Market, becoming California’s first single-store grocer to accept SNAP payments online.
  • Those efforts dovetail with Instacart and Target beginning to accept SNAP payments earlier this year.
  • Meanwhile, warehouse club BJ’s Wholesale Club last week began accepting SNAP payments across all of its US locations, as well as on its website and app.

The big takeaway: Amid a competitive environment in which customer loyalty is increasingly breaking down, there are multiple ways for retailers to gain market share by better serving lower-income consumers.

Go further: Read our report on the Era of Uncertainty here.

This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.