‘Food stamps’ feed business

The federal government’s Supplemental Nutrition Assistance Program, formerly known as food stamps, contributed $66.5 billion in retail sales in 2016 and accounted for about 10 percent of U.S. food purchases, according to an Aug. 29 report from the Center on Budget and Policy Priorities.

Last year, 260,000 U.S. retailers participated in the program, trying to get a piece of the pie. In Missouri, 4,995 authorized retailers recorded about $1.18 billion in transactions from low-income shoppers using SNAP to buy food staples. There are 706 retail participants in Missouri Congressional District 7, with 190 of them in Springfield.

It all adds up to a significant number on retailers’ bottom line.

“A normal grocery store probably has between 15 and 20 percent of their food sales from SNAP, but it could be as high as 35 percent depending on the demographics or where the store is located,” said Cindy McMillian, assistant state director of Missouri Grocers Association.

McMillian said nearly all of the independent and small grocery chains that MGA represents are approved to accept payments through SNAP. But the big-box stores are attracting the most SNAP customers.

More than 80 percent of SNAP benefits are spent at superstores, such as Wal-Mart, Target and Sam’s Club, and supermarkets, including Aldi, Price Cutter and Save-A-Lot. But those larger stores only represent about 20 percent of SNAP authorized retailers.

Competitive necessity
McMillian said business owners work to meet the program’s regulations, because of the value it brings.

The rules require stores to sell a variety of qualifying items in each of the five major food groups. Stores that can’t meet the variety guidelines – such as butcher shops and bakeries – may be approved if more than 50 percent of sales come from SNAP-eligible foods. Participating retailers include farmers markets and convenience stores.

The approval process takes at least three weeks, McMillian said.

“It takes a lot of hoops to jump through to get qualified,” said Brenda Day, co-owner of Double Eagle C-Store in Hartville, which began applying for the program in late 2016.

Day said it took several months for her to navigate the approval process – including resubmitting the application twice before she properly completed it. She stuck with it to remain competitive in the rural Wright County town where most other stores participate in the federal program for low-income households.

“We were losing business because we did not have it,” Day said. “We wanted to provide for the people in our town. We had people coming in to buy stuff and wanted to use their (electronic benefit transfer cards), and we couldn’t accept it. So they put their stuff back on the shelf.”

A SNAP inspector from U.S. Department of Agriculture contractor ISN Software Corp. visited the store, making note of the store’s layout and selection before the store was approved in June.

SNAP value
Jeff Copeland, a manager for Cash Saver at 2650 W. Kearney St., estimates 20-25 percent of the store’s sales are from SNAP. After working in grocery stores for decades, Copeland said he believes there is a higher rate of SNAP usage in northern Springfield and rural areas.

“If you are a grocer, you’re going to love the government giving people money so that they can use your products,” he said. “It’s a no brainer. It’s good for business.”

According to the USDA, SNAP assistance is available to a family of five with monthly household income less than $3,081. That amounts to roughly $36,972 per year as the maximum to qualify for a family that size. For comparison, the U.S. median household income is $59,039.

Nationally, there are about 80 SNAP authorized retailers per 100,000 people, according to the report by Washington, D.C-based nonpartisan think tank Center on Budget and Policy Priorities. The rate is higher in the local District 7, with 92 stores accepting SNAP for every 100,000 residents. Southwest Missouri reports the third-highest SNAP participation among retailers across the state’s congressional districts, according to the report.

St. Louis is tops, with 101 stores in the program for every 100,000 residents. In rural areas, where grocery stores are harder to find, participating retailers are more likely to be a convenience store.

“We get a lot of customers from it,” said Nancy Heape, co-owner of Greene County Damaged Freight and Food Sales Inc. on West Kearney Street.

The discount grocery store has accepted SNAP for nearly all of its 38-year history, and she said the program currently represents about 20 percent of sales.

The neighborhoods served by Greene County Damaged Freight and Food and Cash Saver have median household income of $35,052, according to the U.S. Census Bureau’s latest five-year estimate. The Hartville community Double Eagle C-Store serves has median household income of $29,938.

SNAP does add some extra work to sales and accounting procedures, Heape said. Although not required, her store, like most, uses cash register software that separates SNAP-approved items – allowing all the groceries to be rung up at once and processed with separate payment methods. Sales taxes are not charged on SNAP food purchases.

“You just couldn’t have a normal register; you have to have one that separates all that stuff,” Heape said.

The government has tried to ease the workload for store participation.

In 2004, it finished phasing out paper vouchers originally used by food stamp customers in favor of EBT cards, which function similar to debit cards. This also was an effort to decrease fraud.

The rules for the federal government’s Special Supplemental Nutrition Program for Women, Infants and Children – known as WIC – are more complicated and still require paper vouchers, Heape said, so her store doesn’t participate in that program.

Michele Kauffman, office manager for Harter House on West Republic Road, said her store doesn’t offer WIC sales, either, due to the added complexity of that program. But WIC will transition to electronic payment cards in Missouri by the end of the year, according to its website.

Kauffman agreed the SNAP program is a painless way of offering low-income families an opportunity to shop. Last month, 4.9 percent of card payments at Harter House Nixa LLC’s two stores were from SNAP EBT cards.

“People come through with their SNAP card, and we don’t even know it. So they can go through the register, and it doesn’t even flag them as a low-income family,” said Kauffman, who remembers the days of collecting, counting and depositing paper vouchers. “So the program is changing and getting better and much easier for retailers.”