The Struggle and Spending Patterns of Low-Income Families in Grocery Shopping

In the face of rising inflation and grocery prices, low-income families are increasingly finding themselves in a precarious financial situation. If you did not have enough disposal income to go to a restaurant, or buy a meal for delivery, would you buy a desert or treat once in a while grocery shopping? That is the question Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® recently asked.

Despite a recent drop in grocery prices across several categories, many consumers continue to feel the pinch. A report by the Urban Institute, a nonprofit think tank, reveals that a significant number of shoppers have resorted to credit card debt to afford everyday essentials. 

The study, released on May 14, found that 17.8% of adults reported using credit cards or buy-now-pay-later (BNPL) payment methods in the past year. Of those who used BNPL for groceries, 37% reported missing payments on these loans. Furthermore, nearly one in five adults admitted to using savings not intended for routine living expenses to pay for groceries. 

There is a Battle for Share of Stomach

Debt repayment challenges are particularly prevalent among adults with very low food security. Nearly half of individuals in this category paid for groceries with a credit card and either paid less than the full credit card balance or did not make the minimum required payment. The report's authors, Kassandra Martinchek and Dulce Gonzalez, concluded that many families used savings or credit from credit cards, BNPL, and payday loans to pay for groceries, with families already struggling to meet their food needs facing starker repayment challenges. 

The authors emphasized the importance of the Supplemental Nutrition Assistance Program (SNAP) and other programs that can extend credit to help families cover their costs or provide debt management services. Credit cards remain a popular method for grocery purchases, with more than a third of grocery transactions made using credit cards. 

To improve food security and access to a healthy diet for low-income households, the U.S. government provides economic assistance for food purchases through SNAP. The program aids more than 40 million low-income individuals, about 1 in 8 people in the U.S., purchase food. Research has highlighted benefits of the program, such as lifting families out of poverty and providing long-term benefits to children. 

SNAP aims to address a fundamental problem – the lack of resources available to buy food. Rather than provide food directly or restrict purchases to certain food items, SNAP provides low-income households additional resources to purchase food that fits their preferences and needs. The program, therefore, relies on retailers in the private sector to provide participants with efficient access to food. 

SNAP benefits are modest, at around $7.57 per person per day, on average in 2022. Benefits are determined based on the U.S. Department of Agriculture’s Thrifty Food Plan, which calculates the cost of groceries needed to provide a healthy diet on a limited budget, assuming all meals and snacks are prepared at home. However, since participants can make their own decisions about their food purchases, SNAP households’ purchases may not align with the Thrifty Food Plan recommendations. 

Considering food insecurity concerns, one may expect SNAP households to prioritize staple food items over discretionary ones, such as desserts, snacks, and beverages. However, research indicates that these sweetened, hedonic foods make up a larger proportion of a typical SNAP household’s shopping cart compared to non-SNAP households. While these studies show that SNAP households purchase more hedonic, unhealthy food, previous research has not examined the motivations underlying the behavior. 

Three separate studies were conducted to investigate whether SNAP households buy more hedonic, sweetened food items, compared to non-SNAP households, and if so, what psychological mechanisms drive SNAP participants to purchase more unhealthy food. The first study explored if SNAP households purchased more unhealthy food items, and if so, if they were more likely to do so when using Electronic Benefit Transfer (EBT) cards or cash. The second study tested whether SNAP households experienced stronger food cravings or underestimated the unhealthiness of hedonic food items compared to non-SNAP households, and if so, whether it influenced their food purchases. The final study analyzed if SNAP participants consider high-calorie foods to be better value for the price. 

The studies found that, regardless of whether they paid by EBT card, credit card, or cash, SNAP households’ food baskets had more calories per ounce and higher unhealthiness ratings compared to non-SNAP households. These results suggest SNAP households do not just purchase unhealthy foods because they have extra resources. Rather, their shopping behavior may be influenced by other factors. 

Compared to non-SNAP households, SNAP households reported stronger food cravings and underestimated the unhealthiness of hedonic food. Cravings and unhealthiness perceptions explain the differences in purchase behavior between SNAP and non-SNAP households, even after controlling for income, education, and age. 

In every case, SNAP households spent more money on hedonic food than non-SNAP households did. This difference in spending was not influenced by price evaluations but by food cravings and unhealthiness perceptions. The studies found no evidence for the claim that SNAP households’ unhealthy food purchases are driven by their attempt to maximize energy density or calories-per-dollar. 

The results suggest that SNAP households spend just as much on groceries as non-SNAP shoppers. Considering that almost one in eight shoppers in the United States are enrolled in SNAP, this sizable customer segment exhibits purchase patterns that differ from non-SNAP households. Retailers would benefit from understanding the behavior and motivations of SNAP households to better serve their customers. 

As retailers venture into healthcare, our research suggests an interesting opportunity for companies to further improve health outcomes. SNAP households buy more unhealthy food, partly due to a biased understanding of what makes food unhealthy. Companies that provide healthy food should develop advertising campaigns that more effectively promote healthy options. Through targeted advertising, companies could also identify patterns in SNAP households' shopping behavior and tailor their offerings accordingly. 

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869