More stores accept food stamps

By Bonna Johnson
THE TENNESSEAN

From dollar stores to drugstores, more shops than ever accept food stamps, a trend fueled by rising unemployment and other economic hardships that have increased the percentage of food sales tied to government assistance.

The diverse mix of retailers comes at a time when the number of people http://www.tennessean.com/article/20091103/NEWS07/911030337/Half-of-all-U.S.-children-expected-to-need-food-stamps-sometime">getting the food subsidy is the highest it's ever been, including many consumers on the program for the first time.

Boosted by stimulus funds, the amount of http://www.tennessean.com/article/20090713/NEWS01/907130338/Food-stamp-hike-helps-families-cope">food stamp dollars pouring into Tennessee stores each month surged to nearly $160 million in September, up 60 percent over a year ago, according to data from the Tennessee Department of Human Services.

Food stamp benefits "are a much more important part of the revenue of food stores now than in any time of the history of the program," according to Kevin Concannon, undersecretary at the U.S. Department of Agriculture for food, nutrition and consumer services.

And in a time of a down economy, most stores don't want to give up that sort of market share, he said.

"A lot of people in the neighborhood asked us to accept them," said Yaseen Titi, an owner of the Sannabill Bakery, a small market and Middle Eastern bakery on East Thompson Lane. The shop opened in April and, driven by customer demand, began accepting food stamps a few months later.

Now, sales tied to food stamps make up about 40 percent of the business at the store where fresh-made pita bread is a specialty.

There were 1.17 million people in the state getting food stamps in September - a 22 percent increase from a year ago - with roughly one of every six Tennesseans now in the program.

Buying power draws shops

Half of all those getting food stamps are children, and about 40 percent of households on the program include a working adult, which underscores how the program acts as a safety net for many working families, too, and not just the unemployed, Concannon said.

The buying power of the 37 million people getting food stamps nationwide is not lost on retailers.

"We are seeing an even sharper increase in our sales from customers using food stamps," Rodney McMullen, vice chairman of the Kroger Co. board, said in September in reference to second-quarter earnings at the supermarket chain.

While most major grocery stores have accepted food stamps for years, more retailers are joining the program as the process becomes streamlined and participation swells.

Costco Wholesale Corp. made a splash recently when it announced it had reversed field on food stamps and would begin accepting them at its warehouse clubs nationwide. Costco's two Nashville-area stores, one on Charlotte Pike in West Nashville and the other in Brentwood, began taking them on Nov. 5.

Costco officials initially thought their shoppers were too affluent to be on food stamps.

"I think that was probably a little bit arrogant on our part," Costco Chief Financial Officer Richard Galanti told stock analysts during an earnings call last month.

"It's not just a question do we get some additional sales from an existing member," he said. "We're finding, in a small way … we're getting new members that didn't shop at Costco because we didn't have them."

And some of those shoppers are abandoning competitors to shop with their http://www.tennessean.com/article/20091029/BUSINESS01/910290353/Costco-to-accept-food-stamps">food stamps at Costco, Galanti said. Costco piloted the program in New York.

"This economy was a wake-up call," Galanti said. "It is not just low-end economic strata that are using this, that typically don't have purchasing power. It's a lot of people that are using this as a source of their overall consumption."

Even http://www.wholefoodsmarket.com/">Whole Foods, a relatively pricey, natural and organic supermarket, accepts them.

Most people are surprised because of the grocer's upscale image and a location in Green Hills here, Whole Foods spokeswoman Brittany Conner said.

"We're here and can provide healthy, affordable options," Conner said. The store recently posted fliers at Head Start centers around Nashville to let low-income families know about its policy, and the fliers highlight how to get to Whole Foods by bus.

"We've seen a pretty significant increase of people with EBT shopping with us," Conner said. Electronic Benefit Transfer cards are issued to food stamp users - not stamps as in years past. The cards can be swiped at checkout stations much like a credit card, making it less of a hassle for retailers and easier for customers to be discreet with purchases.

User's profile changes

"It's a little uncomfortable, but I have to have food for me and my son, so you do what you have to do," said Charlotte Broadway, 44, a single mother in Hermitage.

An accountant, Broadway lost her job two years ago and has been on unemployment benefits on and off since then. She had been on food stamps briefly decades ago when she was in college and thought she'd never have to do it again.

But as she burned through savings and job prospects faded, she applied for food stamps about six months ago.

"I wouldn't ask for it if I didn't need it, but I'd rather not have to get it," Broadway said.

Broadway is among the growing number of nontraditional users of food stamps, middle-class individuals new to the system or forced into it because of a layoff, reduced work hours or a spouse's job loss.

"They're coming from all walks of life," said Kelvin Meeks, who runs Davidson County's food stamps office as a field management director.

Broadway said she is glad she has more options on where to shop, and even though she usually gets groceries at http://www.Kroger.com">Kroger, she recently began going to the http://www.dollargeneral.com">Dollar General Market in Hermitage, as well, for food items.

In recent years, drugstores and dollar stores have added more food aisles and refrigerated sections for milk and sandwich meats to entice EBT users to shop there.

Even take-and-bake pizza shops, like http://www.papamurphys.com/">Papa Murphy's, accept the food subsidy, including 13 locations in the Nashville area.

Stores must regularly sell at least three varieties of foods in each of four categories - breads/cereals; dairy products; fruits and vegetables; and meat, fish or poultry - and at least two of the categories must include perishable foods. Another way stores can qualify under the program is if more than half of total gross sales are in "staple food," which does not include candy, soft drinks or prepared food items.

Goodlettsville-based Dollar General accepted food stamps at most locations by 2004, around the same time it rolled out refrigerated food sections, spokeswoman Tawn Miller said.

"All the dollar stores have increased the number of stores accepting food stamps," said Zoe Tan, an equity analyst with Morningstar Inc. "It's helped them boost sales, especially during this economic downturn."

Dollar General is especially well positioned to take advantage of the uptick in food stamp use, Tan said. Almost 70 percent of its sales come from items you can eat, compared to 50 percent to 60 percent at other chains, she said.

http://www.familydollar.com">Family Dollar, which has 207 stores in Tennessee, began taking food stamps in 2007, spokesman Josh Braverman said. About 80 percent of Family Dollar stores take food stamps, and all will do so by spring, company Chairman and CEO Howard Levine said in a recent earnings call.

Fifty http://www.dollartree.com">Dollar Tree stores across Tennessee started taking the food subsidy in the past 18 months, according to the USDA. While it remains a small percentage of sales, it's growing and in some stores is very important, Dollar Tree President and CEO Bob Sasser said earlier this year.

The food subsidy is accepted in about 2,400 of the chain's stores, up from 1,570 a year ago, and the company wants to add locations as quickly as possible, just as it's trying to get more refrigerated and frozen food products on the shelves, he said.

With an expanded mix of food items, food stamps have "become a more important component in our business," Sasser said.

WASHINGTON - A lot more Americans are feeling stressed out by debt this holiday season, raising the glum likelihood they'll behave like Scrooge rather than Santa.

In fact, fully 93 percent say they'll spend less or about the same as last year, according to an Associated Press-GfK poll. Half of all those polled say they're suffering at least some debt-related stress, and 22 percent say they're feeling it greatly or quite a bit. That second figure is up from 17 percent just last spring, despite all the talk about economic recovery.

Most people - 80 percent - say they'll use mostly cash to pay for their holiday shopping, and that generally means buying less.

For example, Joy McGavin, 26, of Pittston, Pa., says she will cut back on holiday gifts by a few hundred dollars this year and pay for everything with cash.

"Family - nieces and nephews - we won't be able to afford this year," says the stay-at-home mother of three. They now shop at Big Lots - not Wal-Mart. "They're too expensive this year," she says.

Her husband, Robert, had been working two-full time jobs, as a mechanic at a garage and at an auto parts store. Recently his retail job was cut back to part time. "We don't have as much as we had last year," McGavin laments. They don't have health insurance and have racked up major medical bills.

Diane Morrison, 57, of Flemington, N.J., says simply, "I'm going to cut back." She's clipping coupons and "looking for big sales."

She owns a payroll company, and many of her clients are laying off workers. Some of the companies are folding, she says, and "I'm feeling more stressed because I feel my income will go down because of what's happening with my business."

Morrison and the McGavins are hardly alone with job problems. Unemployment has rocketed past 10 percent for only the second time since World War II, making it harder to pay monthly bills. Home foreclosures have spiked to record highs, and defaults on credit card debt are rising.

What does that mean for retailers in their most-important season?

"Cash serves as a very direct governing force upon spending," says Dr. Alan Hilfer, director of psychology at Maimonides Medical Center in Brooklyn, N.Y. "If you have $100 in your pocket, and that's all you can spend, you'll look around and make a decision based on the amount of money you have." Credit cards, on the other hand, allow people to make more impulse purchases.

In the survey, people who intend to spend less during the holidays reported suffering from higher debt stress than those who plan to spend the same or more, said Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the results.

Those who plan to use cash to pay for most of their holiday season purchases have higher stress levels, he said. So do those who will carry over at least some of their holiday season credit card charges because they won't be able to pay the bill in full when it arrives.

Hilfer said that when debt increases and becomes a focus of anxiety, it forces people to start thinking more long term.

"They won't allow impulse buying and won't splurge as much because they are thinking that next year they may need to have the money to fix the motor on the washing machine, so they can't spend that money now," he said.

How consumers behave during the holidays and beyond is a critical force determining how strongly the economy snaps back from the worst recession since the 1930s. Consumer spending is the single-largest driver of overall economic activity.

The traditional kickoff of the holiday sales season is Friday - the day after Thanksgiving.

This time of year is crucial for merchants, accounting for up to 40 percent of their annual sales. The National Retail Federation believes holiday sales will decline this year, but the drop won't be as steep as last year when the country was deep in recession.

Looking to next year, consumers won't be in much of a mood to go on a shopping spree because of high unemployment and tight credit, according to the National Association for Business Economics. Consumer spending will rise a lackluster 2 percent next year, restraining the recovery, NABE forecasters said. Unemployment now at 10.2 percent, will average 9.8 percent.

For people who do plan to charge their holiday purchases, 75 percent say they'll pay off the charges in full when the bill arrives.

The average amount owed on credit cards is $5,600, the poll said, up from $4,900 in the spring.

More broadly, people carry an average of about $46,000 in debt - mortgages, credit cards, auto loans and other consumer debt. That's a far bigger load than in the early 1980s when the jobless rate last topped 10 percent. In 1982 per capita debt totaled about $14,000 in today's dollars.

The AP-GfK poll involved interviews with 1,006 adults and was conducted Nov. 5-9. The margin of sampling error was plus or minus 3.1 percentage points.

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AP Director of Polling Trevor Tompson and Associated Press Writer Ann Sanner contributed to this report.

On the Net:

Questions and results at http://www.ap-gfkpol l.com.

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