Black grocers are among businesses that could be walloped by federal cuts to food benefits programs that scores of people rely on to buy groceries.
Revenue for small grocers is expected to be cut considerably due to major changes to the Supplemental Nutrition Assistance Program (SNAP) that took effect September 1.
The Congressional Budget Office projects that up to 2.4 million additional Americans will not get federal food benefits each month. The nonpartisan agency estimates that the law President Donald Trump recently signed will trim federal spending on SNAP by almost $187 billion in the next decade.
According to this report, over 40 million people will be impacted and possibly lose benefits while food benefits will reportedly be cut by an average of $100 monthly for roughly 600,000 low-income households.
Black businesses that sell groceries will feel the squeeze as they operate in low-income areas with high levels of SNAP recipients. Unlike larger grocery chains, the smaller stores often depend on SNAP sales while functioning with tighter profit margins.
Many Black grocers are in food deserts, areas without or with limited access to traditional larger supermarkets. While the smaller stores are a key food source for residents, they are vulnerable to cuts that can reduce spending power and foot traffic.
Payment reliance on SNAP can fluctuate broadly. Some grocers reportedly collect under 1% of sales from the program, while others bag up to 70%. The bottom line: Black businesses are often hit harder when program changes occur, particularly if their customers reduce spending.
Furthermore, the cutback could possibly hurt 27,000 retailers, mainly in rural areas with the largest portion of SNAP users, based on this account. This report shows Black Americans made up almost 26% of SNAP participants as of 2023.
At the same time, the number of Black grocers appears not to make up a large percentage of grocery stores and supermarkets industrywide, based on BLACK ENTERPRISE research. Some stores that have opened over the years are cited here. Though an official tally is unknown, there are still multiple Black grocery stores existing nationwide.
Katina Holliday, CEO of Freshly’s Market in Aberdeen, Mississippi, is witnessing how the SNAP cuts are impacting Black grocers. Via email, she shared that the store’s staff has been cut by half in recent months. It has combined positions and rearranged how it is run.
“That’s significant for us and for our community here in Mississippi—a rural food desert area with an older population and transportation issues. It’s made things worse for everyone,” Holliday says.
While larger
retailers could feel the losses, they have more resources to endure them. Some analysts believe retailers like Walmart and Amazon, and big discount stores, could even gain more business because SNAP recipients could turn to them for affordability and greater value options even amid reducing their spending amount.In general, smaller independent grocers often pay more for inventory than larger grocery chains. Holliday says smaller stores’ costs are higher to begin with. She says the profit margin that used to be 13% is between zero to 2%.
“Our overall revenue has been cut in half. And when revenue drops like that, products sit longer on the shelves, which creates a trickle-down effect. Honestly, it’s getting harder to just stay in business and still provide for the community.”
Here are some tips Holliday offered that Black grocers can consider to help counter cuts in the SNAP food assistance benefits:
- Look to join local/regional retail and grocery associations to make a collective effort for policy changes at the state and federal level to protect retailers from lost revenue. Advocate for reimbursement rate protections and seek reimbursement for SNAP payment processing fees. Consider offering customers them bulk-buying discounts or extended credit terms.
- Connect with local nonprofits, churches, or community groups to arrange food drive days, discount days, or coupon programs.
- Utilize any state or local programs that underwrite administrative costs for SNAP-accepting retailers.
Other moves could include offering a loyalty program with meaningful rewards or discounts for repeat visits, according to BLACK ENTERPRISE research. Use customer data to issue personalized offers, like coupons, for goods customers buy often. Also, focus on community engagement. For instance, be open to hosting events, collaborating with local food programs, and backing neighborhood programs.
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