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Welcome to Near Future. In this weekly feature, The Current spotlights innovations powering the next wave of commerce.
One of the promises of ecommerce is its potential to expand access. Often, this benefit is framed in terms of opening up availability of goods that might only be available in a single store, or reaching households far away from city centers.
In grocery ecommerce, this can mean ecommerce provides fresh food in neighborhoods and areas where there are minimal grocery stores, also known as food deserts.
Yet it's not just about where you live. It's also about putting technology within reach. Expanding access also means taking steps to make the advantages of digital shopping available to everyone. This has been visible through an expansion of digital grocery services accepting SNAP payments. Formerly known as food stamps, SNAP benefits are designed to provide access to nutritious food for low-income households, with participants generally at or below 130 percent of the poverty line. The benefits can be used at many grocery stores, and interest in expansion to online grocery has followed with adoption of pickup and delivery.
Grocers didn’t all activate the capabilities to accept SNAP for online ordering all at once. Grocers and the US Department of Agriculture, which administers the SNAP program, have been working to put the necessary integrations in place over the last several years, and each grocer has launched the capability when it's ready.
This rollout kicked off when the USDA launched a pilot to make the benefits available for online orders in 2019 in several states. Then the pandemic arrived, and it was expanded to eventually reach 49 states by 2021, as online grocery ordering became more normalized. Along with allowing participants to use the service, the USDA worked with retailers to put the online capabilities in place. Amazon was an early adopter, and now has SNAP availability in 48 states. Walmart now accepts SNAP payments for online orders in 49 states.
Instacart has been a key partner in bringing SNAP online, launching with Aldi, Publix and Ahold Delhaize, to name just a few of the larger chains with which it partnered. More grocers have followed this year: Wegmans, Sprouts Farmers Market, Safeway. In all, 130 grocers now accept SNAP for ecommerce, per the USDA.
Adoption by consumers has followed. The USDA said over 3 million SNAP households shopped online in May 2022. In March 2020, at the onset of the pandemic, the number that shopped online was 35,000.
With a new program that’s funded through the American Rescue Plan, the USDA is looking to help grow the number of independent grocers that accept the benefits digitally. The agency announced this week that it is accepting applications for a $5 million competitive grant. This will fund an organization to provide support to retailers with technology and systems necessary to expand SNAP benefits to more grocers.
The USDA’s announcement said that many of the initial adopters of online SNAP benefits were large grocers with ecommerce systems already in place as a foundation that made it easier to accept online benefits. But some smaller grocers often face technical challenges, while others might not have the resources for an ecommerce platform. Through the grant program, USDA hopes to see a wider diversity of grocery stores offering online SNAP benefits to “give SNAP participants more choice, better serve rural communities, and meet cultural food preferences.”
“Online grocery shopping is a vital resource that improves access and convenience for all, including low-income families,” said Stacy Dean, USDA’s deputy undersecretary for food, nutrition, and consumer services, in a statement. “We are excited about this grant’s potential to provide new and existing retailers with tools to redeem SNAP benefits in ways that improve customer service for SNAP participants, especially those that face barriers in traveling to a physical store.”
USDA said grant applications must be submitted by Sept. 6, 2022, and it plans to announce the recipient in the fall.
In other innovation news from SNAP, the USDA has a separate pilot program in the works that will allow participants to buy groceries at a physical store using a mobile device, without the need for a physical card.
These integrations provide SNAP customers with the same shopping options as everyone else. They also have the potential to make a big impact in the aggregate. There are 41.5 million SNAP participants in the US, representing 13% of the US population. When it comes to increasing ecommerce adoption, that’s a sizable group to add to the digital fold.
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The job market continues to hum.
The labor market continued to show strength to start 2023, as the monthly jobs report posted big numbers.
Key data from the U.S. Bureau of Labor Statistics’ monthly jobs report:
- Unemployment fell to 3.4%, ticking down from 3.5% in December to remain at historic lows.
- The economy added jobs to the tune of 517,000, which bested the 2022 average of 401,000.
- Average hourly wages rose by $0.10, marking year-over-year growth of 4.4%.
The Current’s view: The labor market continues to be an economic outlier. While there are signs of consumer pullback and belt-tightening among tech companies and retailers after months of high inflation, the job picture remains bright. While tech companies and some retailers are cutting back markedly, there are few signs of the widespread “pain” that economists predicted in this indicator of the economy.
What brands and retailers are thinking: Jobs are a major indicator of demand, and the labor market continues to hum along. That means the consumer pullback is tied to choices about discretionary spending and holding off on certain purchases in the face of high prices, moreso than being unable to afford items altogether.
What the Fed is thinking: Here’s more evidence that a soft landing might be possible. The Fed has been raising interest rates to bring down inflation. There is risk that this will slow down the economy, including employment. There was some slowing in job growth in December, but this report indicates labor market softening still hasn’t happened for a sustained period, even as inflation is cooling. After the central bank scaled back its latest interest rate hike to 0.25% on Wednesday, Fed Chair Jerome Powell said he sees a “path” to bringing down inflation without a significant rise in unemployment. Here’s one more piece of data to bolster that belief.
Keep in mind: The labor market is still out of balance between supply and demand. This report shows a big rise in jobs and the labor force participation rate remaining the same. Job openings actually increased in December, the Labor Department found. So there a still the case. Eventually, it will likely have to come into balance. But given the unpredictability of this economic era, it’s tough to know when, or even how.