How SNAP benefits cuts will impact cash-strapped grocery shoppers
Cuts to the Supplemental Nutrition Assistance Program, better known as SNAP, are here, and retailers face losing sales from recipients.
In July, Congress voted to pass the One Big Beautiful Bill Act in July, which made changes to the work requirements people have to meet in order to be eligible for SNAP benefits. In 2024, nearly 42 million Americans received SNAP benefits, according to the USDA. According to the Congressional Budget Office (CBO), about 2.4 million Americans are expected to lose SNAP benefits this fall as a result of these changes.
The controversial decision has already caused a backlash among recipients and SNAP benefits advocates. It will also likely hurt retailers and grocery stores with a customer base that heavily relies on using SNAP to shop for food. According to data by Numerator, value-driven retailers tend to be top destinations for SNAP shoppers. For example, Walmart captures 24% of verified SNAP recipients’ purchases, followed by Kroger at 8%, Costco at 6% and Amazon at 5%. However, analysts expect the more affordable grocery chains like Walmart and Aldi, as well as discount stores like Dollar General, to receive a boost from SNAP shoppers trying to stretch their dollars.
Sujeet Naik, analyst at Coresight Research, said that retailers such as Walmart and Kroger are likely to be the most impacted retailers, as they over-index on SNAP shoppers. Similarly, Naik said, discount store chains such as Dollar General and Dollar Tree will be hit with modest topline and traffic headwinds because many of their customers are SNAP recipients.
“These retailers also depend on SNAP shoppers to come in and buy other items,” Naik explained. “With cutbacks, these customers may have to dial back on non-discretionary items they’re used to buying from these retailers.”
However, Naik said, the retailers likely to be hurt the most are small, independent stores that are mostly in rural areas, as they may be unable to cope with the sudden drop in traffic by heavy SNAP users.
At the same time, Naik noted that more states are moving to restrict SNAP-eligible items. In August, Health and Human Services Secretary Robert F. Kennedy Jr. announced that six new states — Texas, Oklahoma, Louisiana, Colorado, Florida and West Virginia — will receive waivers to restrict SNAP purchases of processed foods in 2026, joining six other states. Many states are banning the use of SNAP to buy items like sugary sodas and candy bars. In the case of Arkansas, that also includes purchases of fruit and vegetable drinks that contain less than 50% natural juice.
“Items like candy, sodas or energy drinks will be hard hit in grocery chains’ center aisles,” Naik said. For discounters like Dollar General, this behavior is even more detrimental as they don’t have a wide range of fresh food or produce SNAP shoppers can spend on.
In turn, CPG companies that make beverages and snacks could feel additional pressure with a drop in demand. Large food manufacturers like General Mills and Campbell’s are already facing slowing sales in their snacking divisions, as consumers cut back on treats or seek healthier alternatives.
Ofek Lavian is the co-founder and CEO of fintech startup Forage, which helps retailers and delivery platforms accept SNAP EBT payments. Lavian told Modern Retail that retailers are currently on the frontlines of the evolving SNAP landscape because they have to manage state-by-state rules, item eligibility restrictions, reduced SNAP education and customer frustration at checkout.
According to Lavian, the new restrictions and cuts will impact retailers, especially — and especially those operating in the 12 waiver states that are banning purchases of certain processed food under SNAP starting in 2026. “Cuts to SNAP and tighter restrictions will reshape how retailers serve low-income Americans who rely on EBT,” he said.
Lavian added that the benefits’ rollbacks come at a time when grocery costs are already the top financial stressor for American families. According to a July 2025 AP-NORC Center poll, 53% of Americans said the cost of groceries was their major source of stress.
What’s more, a number of online grocery and delivery platforms have invested in adding SNAP as a payment form in the last few years, seeing it as a promising way to reach more customers. Among them are Forage clients like Thrive Market and DoorDash. “We’re working closely with partners like Uber Eats, DoorDash, and Gopuff to guide and advise on these changes to the program,” Lavian confirmed.
With tariffs also going into effect this year, retailers like Walmart have been moving to increase prices to offset losses. Naik said that, as a result, retailers that have sharpened their value proposition will likely be able to weather the SNAP payment losses.
“The SNAP funding cuts will disproportionately affect low-income consumers who are already navigating this cumulative impact of inflation over the past few years,” Naik said.