What's driving your Sales? SNAP?

SNAP is the “Supplemental Nutrition Assistance Program” (formerly known as “Food Stamps”) in the United States.  . “We put healthy food on the table for more than 46 million people each month.” http://www.fns.usda.gov/snap/

Could this be driving spikes in your sales?  If you are involved with food/beverage sales in the United States, very possibly, it could.  

SNAP sales spikes can be large and short-lived.  Ignore SNAP and your product may not be available on the shelf when it's needed, losing sales opportunities.
A few key facts:
  • Most food and beverage items are eligible for purchase with SNAP, excluding hot foods, foods consumed in the store, alcoholic beverages and tobacco products. 
  • 2011 redemption exceeded $71 billion. 
  • Redemption has doubled in the last 3 years 
  • Approx. 15% of the U.S. population now receives SNAP benefits.  Participation rates vary substantially across states, counties and neighborhoods.
  • Average monthly benefit of $134 per person enrolled. 
  • Eligible non-participants left $29 billion unclaimed in 2011 
  • Funds are made available by EBT card which can be used very like a pre-paid debit card to purchase goods.  Unused funds can roll-over to next month.
OK, we've established that it's big, actually very big, that it's relevant to a broad range of food and beverage products and that it impacts purchases for a large section of the population.

What makes it challenging for a retailer is that each state independently handles distribution of funds for its population and they are a long way from being consistent .  (Actually in some cases, individual counties can control how funding is distributed).  Each state distributes funds on specific days of the month of their own choosing.  Typically, they decide who gets funds on which day based on digits from a case file or Social Security number or the starting letter of the last name).

For example, as of 8/12, Virginia distributes all funds on the first of the month, Maine distributes funds somewhat equally between the 10th and 14th.

SNAP baskets are large and it appears that the bulk of these funds do get spent very quickly after being made available, so, if you're trying to sell food in Virginia, you need to be very well-stocked with products that resonate with the SNAP shopper on the 1st of every month.

Moreover, not all stores (even within the same state) will see the same spikes in demand because of differences in their shopper base.  If, for your product, the spike in sales at state level is  +50% over a "regular" day, there will still be stores that see almost no impact at all and some that see much more.

That distribution  of funds is based on day of the month causes additional issues with most forecasting and reporting systems that are based on weeks rather than days .  These sales spike (and subside again) quickly, at a rate that is largely hidden by looking at sales in weekly buckets.
  • Do you know which of your products are most heavily impacted?
  • Do you know which stores see the biggest spikes in sales?
  • How can you persuade your replenishment system to plan appropriately for such short term spikes?
  • Can your supply chain ensure delivery in advance of peak demand?
  • Are your promotions planned appropriately around SNAP distribution dates?
  • Are your planograms designed to handle these spikes  in demand?
  • Can your planograms flex to handle spike and non-spike days or have you 'built a church for Easter Sunday'?
  • Are you losing sales?

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