A $13 billion part of Walmart's business could be about to take a critical hit from Trump
- The Trump administration is advocating for a cut to SNAP benefits as part of the renegotiation of a piece of legislation known as the Farm Bill, which expires soon.
- A cut to SNAP recipients could further imperil grocery stores and affect the bottom line of stores like Walmart.
A million people could lose their SNAP benefits if the Trump administration successfully pushes Congress to renegotiate a $900 billion piece of legislation known as the Farm Bill - and that could be bad news for retailers like Walmart.
The bill, which is set to expire in September, allocates 80% of the funding for SNAP, which is commonly known as the food-stamp program, according to the Wall Street Journal.The Trump administration is seeking a 20% reduction to spending on SNAP from its current budget of $63 billion. That would shave off nearly $130 billion over a decade and would remove some one million people from food stamps, according to House Democrats. Republicans reportedly plan to impose stricter limits on who is eligible to receive benefits, including introducing more stringent work requirements.
These changes could stymie the funnel of cash that goes from the US Treasury to retailers' bottom lines. US Department of Agriculture data shows that $33 billion of SNAP benefits are spent at big-box stores like Walmart and Target as of 2017. Supermarkets get the lion's share of the rest of the $63 billion yearly budget.
On a more granular level, that means Walmart gets about $13 billion yearly from customers using SNAP alone, accounting for about 18% of the program itself. That only counts SNAP dollars spent and does not include customers who receive SNAP benefits, but buy things other than food during the same shopping trip.
A loss of SNAP benefits for those customers could mean they spend less at Walmart, come in less often, or shop somewhere completely different. That could punch a hole in Walmart's yearly revenue, which is estimated at around $500 billion a year.
Mass-market retailers like Walmart and Amazon have been waging a quiet war for low-income shoppers, which have traditionally been a stronghold of Walmart's. Amazon is implementing programs targeted directly towards this subset of shoppers, like discounts on Prime membership for SNAP benefit holders and trials using SNAP benefits online. Walmart is also participating in the online SNAP program.