SNAP rollbacks could shrink grocery baskets and curb discretionary spend

The situation: A wave of proposed policy changes could reduce or eliminate SNAP benefits for millions of the 42.1 million Americans who rely on the program—just as tariffs, inflation, and the resumption of student loan payments are already squeezing household budgets.

The impact will extend well beyond SNAP recipients.

When pandemic-era benefit expansions expired in early 2023, Kroger’s then-CEO Rodney McMullen called it a “meaningful headwind for the balance of the year.” The new proposals could deliver a similar—or even more dramatic—burden on consumer spending and retail sales.

The details: Republicans are advancing one of the most significant overhauls to SNAP in decades as they aim to cut $230 billion from the USDA’s budget. The plan includes stricter work requirements, caps on future benefit increases, and cost shifts to states.

• One proposal would require able-bodied adults with children ages 7 and older to work or lose benefits after three months—affecting over 3 million adults and more than 4 million children, per the Center on Budget and Policy Priorities.
• Several states are pushing further: Indiana and Idaho seek to bar purchases of soda and candy with SNAP, while Arkansas wants to ban “non-staple” items—but allow hot rotisserie chicken.

Why it matters: These cuts won’t just affect lower-income households—they’ll ripple across the entire retail industry. Reduced SNAP support means lower grocery spending, and if families can’t afford food, they’ll pull back even further on discretionary purchases. That’s a growing risk for retailers already contending with cost pressures, tariffs, and softening demand.

• Walmart faces the biggest exposure, accounting for 25.8% of SNAP recipients’ grocery spending and 21.3% of their non-grocery spend, per Numerator.
• Kroger and Albertsons are also vulnerable, with 9.1% and 6.5% shares of SNAP grocery dollars, respectively.
• Among non-grocers, Amazon and Target command 15.2% and 5.6% of SNAP recipients’ non-grocery spending, while Home Depot holds a notable 5.5% share—highlighting just how far SNAP dollars extend across retail categories.

Our take: “When we listen to the voice of our internal customers, we recognize that our SNAP customers are feeling more pressure,” said Albertsons then-COO Susan Morris in April. She added many of the grocer’s customers have grown increasingly budget-conscious, which has resulted in them eating out less, shifting their habits, and turning to store brands to stretch their dollars.

With household spending already under strain, further SNAP cuts risk triggering a broader pullback in consumer demand. The ripple effects won’t just hit grocers—they’ll reverberate across the entire retail sector at a time when stability is in short supply.

Go further: Read our report “The First 100 Days of Trump.”