By CultureBanx Team
- Target is going to let shoppers use food stamps to pay for online orders
- SNAP helped more than 13M African American households put food on the table, making this audience ripe for customer acquisition
Target (TGT +2.66%) is looking to reel in more low income shoppers by letting them use food stamps to pay for online orders. This collective effort by Target is geared towards making a massive dent in the $13 billion of Supplemental Nutrition Assistance Program (SNAP) benefits that are spent at Walmart (WMT -1.42%). The U.S. consumers receiving SNAP benefits of which 36.2% are white, 25.6% are Black and 17.2% Hispanic, presents an important growth opportunity for Target.
Why This Matters: The nation’s seventh largest retail giant continues its fight to win over lower-income shoppers that traditionally head to Walmart, and are generally overlooked when it comes to innovation. In October, the Biden administration began providing about 42.8 million people with an additional $20 billion in food stamps. An analyst at Huntington Private Bank noted that accepting food-stamp payments online could build Target customer loyalty and help it sell other products.
Lower-income consumers have been the fastest-growing segment of online shoppers, as they gain more access to the internet and digital banking resources. Currently, these consumers are primarily shopping at traditional brick-and-mortar stores because they can pay with cash or a SNAP card, but this could be a real game-changer to move them online. SNAP helped more than 13M African American households put food on the table, making this audience ripe for customer acquisition.
What’s Next: Target’s top competitor Walmart has been a participating retailer in the two-year SNAP pilot program with the U.S. Department of Agriculture’s Food and Nutrition Service in New York. “The majority of folks that are buying things on EBT are redeeming government benefits at Walmart…” according to Fred Killingsworth, CEO of Hinge. Tentatively, Target plans to start accepting food stamps online in late April, according to Reuters.
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