Wal-Mart is the nation’s largest grocer and toy store retailer and according to a recent company report, it receives 50% of its revenue from the sale of food. Given their dependence on grocery store sales, this would indicate they benefit from the government program called Supplemental Nutrition Assistance Plan (SNAP) aka food stamps. However, just how much they have benefited from the program hasn’t been publicly disclosed.
Now, the company’s recently published annual report indicates that grocery store sales sparked by SNAP and other related welfare assistance has the ability to directly impact the company’s bottom-line. While not stating how much of their grocery sales are made with food stamp assistance, the report cited that it is a significant factor in the company which is outside of their control.
It should be noted that if this is true of Wal-Mart it will certainly be true of other grocers such as the Kroger Food Stores, which historically performed well in head-to-head competition with Wal-Mart, and other grocery chains.
While news of Wal-Mart’s SNAP dependence is extraordinary, it really shouldn’t be. The number of people receiving food stamp assistance now tops 100 million in a nation of 317 million. It is unavoidable that a grocer as large as Wal-Mart would not be depending on that assistance for their growth. It should be noted that the recently passed Farm Bill will end up reducing average food stamp benefits by $90 as the deficit plagued federal government seeks to find ways to balance the federal budget.
However, now those same reform measures will ripple throughout grocery food chains and other food outlets such as gasoline stations, which heavily rely on the sale of food for their profitability. It is an interesting commentary on how the economy has transformed under President Obama.
wal mart food stamp