The Unexpected Birth of a Shopping Revolution
Picture this: it’s 1939, and America’s farmers are drowning in crops they can’t sell, while millions of families struggle to put food on their tables. This wasn’t just irony—it was a national crisis waiting for a creative solution. The U.S. food stamp program was launched at a time when the nation was facing a tragic paradox: As millions of Americans suffered from hunger during the Great Depression, the country’s farmers agonized under a crushing bounty. The economic collapse of the 1930s had sapped food consumers of their purchasing power, so farmers found themselves with a glut of crops and livestock. What happened next would forever transform how Americans shop for groceries. In the first food stamp transaction, they bought a can of pork and beans at Henderson’s Supermarket. That simple purchase at Henderson’s Supermarket marked the beginning of a retail revolution that would reshape the entire grocery industry.
From Orange and Blue Stamps to Digital Wallets
People receiving public assistance could buy orange stamps that were exchangeable, dollar for dollar, for most food items at grocery stores. For every dollar participants spent on orange stamps, they also received 50 cents’ worth of blue stamps, which could be spent only on USDA-designated surplus commodities such as beans, eggs, dairy products, fruits and vegetables. This colorful system might sound quaint today, but it created the foundation for modern retail payment processing. Think of it like having two different credit cards—one for everything, one for specific purchases. In the late 1990s, the Food Stamp Program was revamped, with some states phasing out actual stamps in favor of a specialized debit card system known as electronic benefit transfer (EBT), provided by private contractors. EBT has been implemented in all states since June 2004. This transition forced retailers to upgrade their payment systems, inadvertently pushing the entire industry toward digital transactions years before smartphones made electronic payments mainstream.
Walmart’s SNAP Empire
Here’s a number that’ll make your jaw drop: Walmart accounted for 25.5% of SNAP shoppers’ annual grocery spend, well ahead of the 8.4% share for Kroger, the nation’s largest supermarket retailer. For the year through the end of the 2023 first quarter, Walmart accounted for 25.5% of SNAP shoppers’ annual grocery spend, well ahead of the share for Kroger (8.4%), Costco Wholesale (6%) and Albertsons Cos. (5.9%) That means one out of every four SNAP dollars ends up in Walmart’s registers. We estimate Walmart’s SNAP sales average in excess of $20 billion a year, making the program virtually a second revenue stream for the retail giant. In addition to capturing nearly 26% of SNAP participants’ grocery spending, Walmart also clinched nearly all SNAP grocery shoppers, with 96.9% purchasing groceries from the retailer in the past year, spending an average of $2,290 annually. It’s not an exaggeration to say that SNAP essentially helped build Walmart’s grocery empire.
The Technology Arms Race Nobody Talks About
For most of the history of the food stamp program, benefits had been distributed via physical paper stamps on a small scale by local municipalities, which meant the coupons themselves were easy to counterfeit and often difficult to track. But in the late 1980s, states began introducing the now-common Electronic Benefits Transfer (EBT) card. This switch wasn’t just about convenience—it triggered a massive technology upgrade across American retail. Suddenly, every corner store and supermarket needed EBT-compatible card readers, PIN pads, and processing systems. They are tied directly to government identification records, require a PIN to authorize payments, and don’t involve an exchange of cash during transactions, all modifications that eliminate a host of potential sources of fraud as the stamps pass from families to store-owners. This infrastructure investment inadvertently prepared retailers for the credit card boom and eventually, mobile payments.
The Convenience Store Paradox
Here’s something that might surprise you: More than 254,000 establishments accepted SNAP benefits in fiscal year 2021, but two types stand out: Supermarkets and “superstores” such as Walmart and Target together make up about 15% of SNAP-accepting establishments, but they accounted for nearly 80% of all redemptions. By comparison, more than 44% of all SNAP-accepting establishments are convenience stores, but they accounted for only about 5% of redemptions in 2021. Despite convenience stores being nearly half of all SNAP retailers, they capture just a tiny slice of the spending pie. This forced many convenience stores to rethink their business models, with many expanding their fresh food offerings and grocery sections to compete with larger retailers. Nevertheless, dollar stores remain a lifeline for many SNAP users. Chains such as Dollar General and Family Dollar have begun piloting fresh produce sections and expanded food offerings to attract and retain SNAP customers.
The Online Shopping Revolution Begins
On Jan. 5, 2017, FNS announced the selection of eight retailers for the initial launch of the SNAP Online Purchasing Pilot (i.e., Amazon, Dash’s Market, Fresh Direct, Hy-Vee, Inc., Safeway, ShopRite, Walmart Stores Inc., and Wright’s Markets, Inc.). The SNAP Online Purchasing Pilot began April 2019 in the State of New York, followed by Washington in January 2020. This pilot program opened the floodgates for online grocery shopping among low-income Americans. Notably, while only 89 internet retailers, such as Amazon, were authorized to accept SNAP benefits that year, they accounted for nearly 4% of redemptions. The pandemic supercharged this trend, with platforms like Instacart, DoorDash, and, more recently, Uber Eats have recognized the importance of catering to SNAP beneficiaries. Companies like Instacart, DoorDash, and, more recently, Uber Eats have recognized the importance of catering to SNAP beneficiaries. What started as a pilot program is now reshaping how millions of Americans buy groceries.
Dollar Stores: The Unexpected Winners
Numerator’s scorecard showed that low-price retailers felt the most impact from the end of the extra SNAP benefits. SNAP shoppers spend a disproportionate amount of their grocery dollars at low-price retailers, as 7-Eleven, Dollar General, Dollar Tree, and WinCo all snared approximately twice as much share among SNAP vs Non-SNAP shoppers. Dollar stores discovered they had a goldmine in their hands. Food stamps account for more than 10% of overall dollar-store revenues and can account for more than 20% of supermarket sales in lower-income areas, which explains why you’ll now find fresh produce sections in stores that once sold only processed foods. Rounding out the top 10 food retail chains by share of SNAP customer annual grocery spend were Walmart subsidiary Sam’s Club (4.3%), Ahold Delhaize USA (4.2%), Publix Super Markets (2.7%), 7-Eleven (2.3%), Dollar General (2.3%) and Aldi U.S. (2.1%). These numbers show how SNAP has literally rewritten the rules of where Americans shop.
The $130 Billion Economic Engine
Vilsack’s estimate was based on a 2002 USDA study which found that “ultimately, the additional $5 billion of FSP (Food Stamp Program) expenditures triggered an increase in total economic activity (production, sales, and value of shipments) of $9.2 billion and an increase in jobs of 82,100”, or $1.84 stimulus for every dollar spent. A January 2008 report by Moody’s Analytics chief economist Mark Zandi analyzed measures of the Economic Stimulus Act of 2008 and found that in a weak economy, every $1 in SNAP expenditures generates $1.73 in real GDP increase. A 2010 report by Kenneth Hanson published by the USDA’s Economic Research Service estimated that a $1 billion increase in SNAP expenditures increases economic activity (GDP) by $1.79 billion. That multiplier effect means SNAP isn’t just feeding families—it’s fueling entire retail ecosystems. The USDA shared that approximately $125 billion worth of SNAP benefits were redeemed in 2021 and grew by 61% compared to 2020. If we were to rank it in terms of grocery dollar sales, it would be the second-biggest store right behind Walmart and the fastest-growing out of the top 100 grocery stores in the U.S.
The Premium Retailer Dilemma
Meanwhile, Target, Whole Foods and Publix have been less vulnerable to decreased SNAP benefits, Numerator said, explaining that SNAP shoppers are less likely than non-SNAP shoppers to shop at these more premium retailers and tend to spend less on average than non-SNAP customers when they do. Target, Whole Foods and Publix are less vulnerable to SNAP benefit declines. SNAP shoppers are less likely than Non-SNAP shoppers to frequent these more premium retailers – and when they do visit, they spend less than Non-SNAP shoppers, on average. This created an interesting business challenge for upscale retailers. How do you attract SNAP customers without alienating your premium customer base? Some have tried targeted marketing, while others have simply accepted that SNAP represents a smaller portion of their business. Other retailers garnering at least a 1% share of SNAP grocery spending were H-E-B (1.9%), Target (1.8%), Dollar Tree (1.6%), Amazon (1.3%), Wakefern Food Corp. (1.1%), WinCo Foods (1.1%), Meijer (1%) and Whole Foods Market (1%).
The Fraud Problem That Fixed Retail
While critics still like to use old arguments of rampant abuse to lambast a program that feeds millions of Americans, the fraud rate has decreased from “about 4 cents on the dollar in 1993 to about 1 cent” by 2006. The rate of trafficking (primarily the exchange of food stamps for cash) went from nearly 4 percent in the 1990’s down to around 1 percent after EBT was fully implemented. The rate of trafficking (primarily the exchange of food stamps for cash) went from nearly 4 percent in the 1990’s down to around 1 percent after EBT was fully implemented. The push to eliminate fraud didn’t just clean up SNAP—it revolutionized retail security systems. EBT helped cut back on food stamp fraud by creating an electronic record of each food stamp transaction, making it easier to identify violations. These same tracking and verification systems now protect all electronic transactions, from credit cards to mobile payments. In fighting SNAP fraud, the government accidentally created the blueprint for modern retail security.
Amazon’s Grocery Gambit
Amazon has also emerged as a key player in the SNAP ecosystem, particularly through its digital-first approach. With initiatives like a discounted Prime membership for SNAP recipients and the acceptance of EBT for eligible grocery items, Amazon is increasingly targeting low-income shoppers. In April 2024, Amazon launched a low-cost grocery delivery subscription that provides unlimited deliveries for $9.99 per month for Prime members and $4.99 per month for SNAP beneficiaries who opt out of Prime. Amazon’s SNAP strategy reveals something fascinating: the company recognized that SNAP customers, despite having limited budgets, often have larger households and higher grocery needs. Amazon generates solid shopper spending from SNAP recipients—due to their larger households and greater grocery needs—even though these customers don’t tend to food-shop with the e-tailer, Numerator added. SNAP households are less likely to purchase groceries on Amazon but spend more when they do. However, SNAP households who do shop on Amazon for groceries spend about 18% more with the e-tailer ($236 annually vs. This insight has shaped Amazon’s entire approach to low-income customers.
The Shopping Behavior Revolution
SNAP recipients are more likely to split their monthly grocery spending among multiple stores (6.4 on average) relative to non-SNAP shoppers (5.9). SNAP recipients are more likely to split their monthly grocery spending among multiple stores (6.4 on average) relative to non-SNAP shoppers (5.9). This multi-store shopping pattern has forced retailers to completely rethink their strategies. Numerator noted that its SNAP research shows these shoppers spending more on groceries while making smaller, more frequent trips. Instead of the traditional weekly grocery haul, SNAP customers tend to shop more frequently but spend less per trip, leading stores to focus more on convenience and accessibility rather than just low prices. More than three-quarters of SNAP recipients (78.4%) shop at Dollar Tree, while 60.5% shop at Target, 51.8% at Amazon, and 49.9% at Kroger. More than three-quarters of SNAP recipients (78.4%) shop at Dollar Tree, while 60.5% shop at Target, 51.8% at Amazon, and 49.9% at Kroger.
SNAP didn’t just change how Americans buy food—it fundamentally rewired the DNA of American retail. From forcing technology upgrades to reshaping store layouts, from creating new business models to driving the online grocery revolution, food stamps have been the invisible hand guiding supermarket evolution for over 80 years. The next time you tap your phone to pay for groceries or order delivery through an app, remember that these conveniences exist partly because a program designed to help hungry families inadvertently pushed an entire industry into the future. Who knew that helping people eat would end up changing how everyone shops?
