SNAP collapse threatens Walmart, Kroger and other retailers — millions could see price increases as a result

SNAP benefits or food stamps, as they’re more commonly known, are a key pillar of America’s social safety net. Any disruption to the system could have far-reaching implications, not only for the program’s beneficiaries but also for retailers and consumers nationwide.

Here’s what is at stake.

42 million Americans directly impacted

SNAP is the largest anti-hunger program in the country. Roughly 12.3% of the country’s population relies on at least some food stamps, which is 42 million people or nearly the size of Canada’s entire population, according to USDA data (1).

In 2023, roughly 83% of these benefits went to households with young children, seniors or people with disabilities, according to the USDA. “SNAP benefits are literally the lifeline that feeds us at the end of the month,” Juan Saro, SNAP recipient, told CNN (2).

Fortunately, the vital program has avoided any major disruptions for much of its existence — until now. Benefits haven’t lapsed since the system was launched during the Great Depression.

Efforts are underway to reverse this lapse as well. A coalition of 23 Democratic attorneys general and three Democratic governors is suing the Agriculture Department over its decisions to avoid using contingency funds to partially sustain the program in November (3).

Two federal judges, to date, have ordered the Trump administration to pay the benefits using contingency funds. Trump wrote about the court decisions on Truth Social (4) that he does “NOT want Americans to go hungry just because the Radical Democrats refuse to do the right thing and REOPEN THE GOVERNMENT.”

“I have instructed our lawyers to ask the Court to clarify how we can legally fund SNAP as soon as possible. It is already delayed enough due to the Democrats keeping the Government closed through the monthly payment date and, even if we get immediate guidance, it will unfortunately be delayed while States get the money out,” he wrote.

It’s not clear how the debit cards that SNAP beneficiaries use to buy groceries will be filled or if the orders will be locked up in the courts with appeals and legal review. It typically takes one to two weeks to reload SNAP benefits.

Meanwhile, 22 states have enabled emergency funding for either food banks or the program directly to keep the lifeline open for their residents, according to Axios (5). That means at least some families could avoid the worst-case scenario. But that still leaves millions of people in other states vulnerable, and experts believe the fallout could flow to retailers and families that do not rely on the program.

The impact on retailers

Food stamps are not just a benefit for vulnerable families, but a key source of revenue for retailers across the country.

Walmart alone accounts for 24% of total SNAP spending, according to market research data firm Numerator (6). That means that if funding for the program lapses, the retail giant stands to lose an estimated $2 billion.

Wolfe Research analyst Spencer Hanus estimates that discount retailers like Dollar General and Dollar Tree could also see a hit to mid-single-digit revenue if the program is suspended (7). Kroger and Costco are also exposed.

Although the impact on grocery prices is difficult to predict with precision, David Ortega, professor of food economics at Michigan State University, told Reuters that some retailers could raise prices to preserve their thin margins if SNAP funding lapses (8). In other words, ordinary families could face higher grocery bills to cover the shortfall.