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Diving overview:
- The initial costs for retailers to implement new SNAP purchase limits are expected to be: Total approximately $1.6 billionAccording to a new report from the National Association of Convenience Stores, National Grocers Association and FMI – Food Industry Association.
- Among those estimates, convenience stores would incur the largest cost ($1 billion), followed by grocery stores ($305.1 million), supermarkets ($215.5 million), and finally mom-and-pop stores ($11.8 million).
- According to the trade group’s report, compliance will cost food retailers just $760 million annually, with grocers paying more than $281 million.
Dive Insights:
FMI said in a statement that the significant costs and operational obstacles food retailers face from new and proposed SNAP regulations stem primarily from giving states more control over what products SNAP consumers can purchase with their benefit cards.
“(P)ose proposed restrictions represent significant new costs and operational challenges,” the three trade groups said in a joint statement. “Without clear guidance and appropriate timing, these well-intentioned changes will create unforeseen challenges for both retailers and customers.”
Key cost drivers for food retailers include technology updates, software and POS system upgrades, as well as additional staff to help meet new inventory, replenishment and labeling requirements.
The impact analysis report’s initial cost estimate of $1.6 billion is equivalent to 1.9% of the 2024 net income of all food retailers. This report shows that a growing number of states Request and Obtain Approval from USDA Sets state-level limits on the types of foods on which consumers can use SNAP benefits. So far, 12 states have received waivers.
Convenience stores are expected to spend the most on ongoing maintenance costs ($378.6 million), followed by supermarkets. Meanwhile, supermarkets are estimated to spend about $81 million on annual maintenance costs, while smaller grocery stores spend $18 million.
While most of the initial and ongoing costs are attributed to convenience stores due to their large cross-border footprint, the report noted that smaller stores are likely to bear the greatest financial impact.
The report is based on a survey of members of the three trade groups conducted in June and July, which included questions about one-off and ongoing labor and technology costs.
The three trade groups said SNAP retailers are urging USDA and states to extend the timeline for enforcing SNAP restrictions and provide clear, actionable definitions of restricted foods.
“Clear, consistent definitions and a more realistic timeline will help retailers successfully implement this new reality while keeping SNAP access seamless and reliable,” said Peter Matz, FMI’s director of food, pharmacy and health policy.
