Food stamps are pumping up revenue at retailers across the country. Costco (COST), Wal-Mart (WMT) and others are seeing rushes an hour before funds are credited to electronic benefits transfer cards. Wal-Mart's CFO, Tom Schoewe, has noted the trend, telling Reuters, "Once the clock strikes midnight [on the last day of the month] and EBT cards are charged, you can see our results start to tick up."
Spending via EBT is not only increasing, it generally happens quickly. JPMorgan (JPM), which runs EBT programs for more than 20 states, reports that buyers run through 85% of food stamp funds within the first three days of their availability.
Many retailers are staffing up for the EBT rush and are changing the inventory they put out on the shelves for this short period every month. Also, stores that have resisted accepting food stamps are now updating their point of sale systems to broaden their reach. Costco, for example, is rolling out food stamp capabilities at all 413 of its U.S. and Puerto Rico locations.
High unemployment has made food stamps more common and removed some of the sting associated with this form of payment, which is causing many retailers to change their attitudes toward these customers. After all, more than 37 million were enrolled in EBT programs, according to federal officials, up almost 35% since the end of 2007. approximately one out of every eight people in the U.S. now relies on food stamps, with more to come. Some estimates by the government put the number of people eligible for EBT but not enrolled at 16 million.
So, it's basically become a competitive necessity in the retail sector, especially for food and home goods -- 85% of food stamp funds are spent at grocery and warehouse stores. The number of retailers taking food stamps increased 17% from September 2007 to September 2009. In some cases, customers using EBT account for 10% to 12% of revenues, more in poorer cities and neighborhoods. This year, close to $55 billion is expected to be spent through EBT programs. This is a hefty jump from $37 billion in 2008 and $31 billion in 2007. And in 2010, it could pass $64 billion.
Given how much is being spent via food stamps, it's impossible for retailers not to take notice. Dollar General (DG) now receives 4% of its revenue in this form and is growing at an annual rate of 10%. Kroger (KR) executives cannot remember transactions of this type ever being this high.
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Reader Comments (Page 1 of 1)
12-21-2009 @ 12:37PM
Iridium said...
Confirmation on what I have been saying for a long time. There is more money in food stamps than there is in working wage shoppers. Food Stampers spend more and don't care about matching prices and looking for the greatest bargain.
People on food stamps spend more money per month on food than any family making $35,000 a year can afford to. It is so insulting to see a welfare mom with 5 kids fill up three grocery carts with all kinds of food and watch a young working couple with a baby struggle to pay for half a shopping cart.
In Cleveland Ohio almost every single store accepts food stamp credit cards. CVS, Walgreens, Gas Stations, the local vegetable stand. YES EVEN FARMER'S MARKETS TAKE EBT CARDS!!!
It is only a matter of time before McDonalds starts to take EBT cards to pay for food. IT WILL HAPPEN!!! Pretty soon the working US taxpayer will pay for welfare cases to eat at McDonald's and other fast food joints.
END WELFARE NOW!!!!!!!!!!!!! Nobody should pay tax money to feed undeserving people. By taking my money away you make it harder for me to feed my family. It is not my responsibility to feed someone's child because they had the kid to qualify for more government benefits.