In Walmart’s ongoing battle with Amazon, the big-box retailer still has a hold on at least one multi-billion- dollar business that’s not available online: Food stamps.
Recently, sky-high food-stamp spending in the U.S. has been like a moat surrounding Walmart that even Amazon can’t traverse. Though Amazon commands a fifth of the U.S. online grocery business, food stamps can’t be redeemed on its website, at least for the time being.
Nearly 46 million people used food stamps in 2015, near record highs, despite coming down slightly in the past couple of years as some recession-era benefits expired.
Last year, about $70 billion was spent on groceries and other goods using the U.S. Supplemental Nutrition Assistance Program, or SNAP, according to the U.S. Department of Agriculture.
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Nearly all of those funds are spent offline, as the government puts limits on people’s ability to redeem food stamps without being physically present. And most of those dollars are being spent at retailers such as Walmart, which brings in 56 percent of its revenue from groceries.
While the U.S. government doesn’t break out food-stamp spending at individual retailers, it does report spending by retail segment. And last year, the category Walmart is in – Super Stores – accounted for 47 percent of the dollars spent with food stamps, even though such companies represent only about 7 percent of the number of stores that accept SNAP payments.
Walmart doesn't regularly disclose how much money it makes through the food-stamp program. But in 2013 it estimated it raked in about 18 percent of all U.S. food-stamp spending in 2012.That equated to about $14 billion, or about 4 percent of Walmart’s U.S. revenue at the time.
That may not seem like a lot, considering Walmart generates nearly half a trillion dollars in annual sales. But every little bit helps, for a company that recently reported its first-ever drop in annual revenue. Walmart's food-stamp business is material enough to warrant spending Washington lobbying money on it and warning investors when program changes or short-term system outages hit sales.
But Walmart's food-stamp advantage over Amazon could be fleeting. There is a growing movement of people pushing for food stamps to be redeemable online.
Proponents of allowing food-stamp redemption online argue that grocery delivery services could actually bring more healthy food to poor neighborhoods in a way traditional grocers haven't been able to do, making the notion of so-called “food deserts” obsolete.
The U.S. government is slow to change, and it will certainly take time to figure out how to make food stamps redeemable online. But work is already underway to make it happen. And when it does, Walmart's offline benefit could run out.