Target TGT +0.9 percent is attempting to attract more low-income shoppers by allowing them to use food stamps to pay for online orders, according to the company.
Target’s combined effort is aimed at putting a significant dent in the $13 billion in Supplemental Nutrition Assistance Program (SNAP) benefits that are spent at Walmart WMT -0.7 percent each year.
SNAP beneficiaries in the United States, of whom 36.2 percent are white, 25.6 percent are black, and 17.2 percent are Hispanic, represent a significant market opportunity for Target.
Here’s all you need to know about the breakdown
Walmart, the nation’s seventh-largest retailer, is stepping up its efforts to win over lower-income shoppers, who historically buy at Walmart and are sometimes disregarded when it comes to technological advancement.
The Biden administration began delivering an additional $20 billion in food stamps to about 42.8 million people in October, an increase from the previous year.
According to an analyst at Huntington Private Bank, accepting food stamp payments online could help Target increase customer loyalty while also increasing sales of other products.
Since the introduction of the internet and digital banking tools, lower-income consumers have become the fastest-growing group of online shoppers.
Current buying habits of this group of customers include going to traditional brick-and-mortar establishments to pay with cash or a SNAP card; however, the ability to shop online could be a game-changer for this group of consumers.
SNAP assisted more than 13 million African American households in putting food on the table, presenting a lucrative opportunity for client acquisition.
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What Comes Next:
In partnership with the United States Department of Agriculture’s Food and Nutrition Service in New York, Walmart, Target’s primary competitor, has been a participating store in the two-year SNAP pilot program.
According to Fred Killingsworth, CEO of Hinge, “the vast majority of people who are purchasing products with EBT are redeeming government benefits at Walmart…”
According to Reuters, Target aims to begin taking food stamps online in late April, at the very least as a test.