Executive Briefings

Cutback in Government Food Stamp Program to Affect Food Retailers

U.S. food retailers are poised to take a hit as the federal government reduces its $78bn-a-year food stamp program.

Cutback in Government Food Stamp Program to Affect Food Retailers

Grocery stores and other food retailers have struggled in recent years as consumers battered by high unemployment and shrinking wages switched from upscale products to discounted bulk goods and generic brands.

Food sales, especially at discounters such as Wal-Mart Stores Inc., could be further crimped by the $5bn, or roughly 6-percent, annual cut in food stamps that took effect Friday.

It "is going to hit those outlets that cater to lower-income consumers "” Wal-Mart, dollar stores, grocers also," said Andrew P. Wolf, an analyst at BB&T Capital Markets. "If you look at it from a macroeconomic point of view, it's less fiscal stimulus."

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Grocery stores and other food retailers have struggled in recent years as consumers battered by high unemployment and shrinking wages switched from upscale products to discounted bulk goods and generic brands.

Food sales, especially at discounters such as Wal-Mart Stores Inc., could be further crimped by the $5bn, or roughly 6-percent, annual cut in food stamps that took effect Friday.

It "is going to hit those outlets that cater to lower-income consumers "” Wal-Mart, dollar stores, grocers also," said Andrew P. Wolf, an analyst at BB&T Capital Markets. "If you look at it from a macroeconomic point of view, it's less fiscal stimulus."

Read Full Article

Cutback in Government Food Stamp Program to Affect Food Retailers