# Food stamp recipients are the new frontier for Target.com
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-03-31
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Target Corp to Accept Food Stamps for Online Orders
Meta Description: Target Corp is set to begin accepting food stamps for online orders in late April, aiming to expand its reach to lower-income households. Learn more here!
URL: https://financedigest.com/food-stamp-recipients-are-the-new-frontier-for-target-comhtml

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By Arriana McLymore and Siddharth Cavale

NEW YORK (Reuters) – Target Corp is preparing to let shoppers use food stamps to pay for online orders, following in the footsteps of Walmart Inc and Amazon.com, in a move that could help the nation’s seventh-largest retailer gain market share among lower-income shoppers.

Roughly 21.7 million U.S. households use food stamps, which are mostly restricted payments to cold food items, non-alcoholic [beverages and seeds and plants](https://www.financedigest.com/air-separation-plant-market-to-register-5-cagr-driven-by-surging-demand-for-nitrogen-gas-within-food-beverage-sector-future-market-insights.html "Air Separation Plant Market to Register 5% CAGR Driven by Surging Demand for Nitrogen Gas within Food & Beverage Sector: Future Market Insights").

Target disclosed to Reuters last week that it will begin to accept payment online with food stamps, tentatively starting in late April, through a [service offered](https://www.financedigest.com/barclays-sets-up-taiwan-subsidiary-to-offer-brokerage-services.html "Barclays sets up Taiwan subsidiary, to offer brokerage services") by Shipt, its delivery arm. A Target spokesman said Thursday that it hadn’t [“shared any official launch](https://www.financedigest.com/abb-to-launch-1-billion-share-buyback-on-april-3.html "ABB to launch billion share buyback on April 3") date” for the service, which also will include drive-up and pick-up orders.

Offering food-stamp payment for online orders could help Target fill a long-time gap in its e-commerce strategy and reach households that might otherwise purchase groceries at so-called “dollar [store” chains](https://www.financedigest.com/uk-budget-fashion-chain-primark-to-invest-140-million-stg-in-stores.html "UK budget fashion chain Primark to invest 140 million stg in stores"), or at Walmart Inc.

Walmart and Amazon.com Inc already accept purchases with [food stamps on their websites since](https://www.financedigest.com/ikeas-restaurants-has-more-than-halved-food-waste-since-2017.html "IKEA’s restaurants has more than halved food waste since 2017") 2019 as part of a program with the U.S. Department of Agriculture, which distributes food stamps. [Grocery delivery](https://www.financedigest.com/delivery-race-among-indian-grocery-startups-brings-road-safety-risks.html "Delivery race among Indian grocery startups brings road safety risks") service Instacart also offers the option.

Still, even though Target has lost the early mover advantage, investors and [industry watchers were positive](https://www.financedigest.com/why-the-it-industry-can-look-positively-towards-the-post-pandemic-world.html "Why the IT industry can look positively towards the post-pandemic world") on the move. Accepting food-stamp payments online could build customer loyalty and help it sell other products, said David Klink, senior equity analyst at Huntington [Private Bank](https://www.financedigest.com/gucci-banks-on-private-salons-for-the-ultra-rich-to-revive-sales.html "Gucci banks on private ‘salons’ for the ultra-rich to revive sales"), which holds over $30 million in Target shares.

[“Target is kind of taking the long view](https://www.financedigest.com/insurance-marketing-is-more-targeted-with-the-single-customer-view.html "Insurance marketing is more targeted with the single customer view"), saying you can use your food stamps now,” he said. But maybe at some point you won’t depend on food stamps and you’ll remember that [Target was there for your various shopping needs.”](https://www.financedigest.com/eu-raw-material-targets-need-money-and-faster-permits-sector-chief-says.html "EU raw material targets need money and faster permits, sector chief says")

“I wouldn’t call it a game-changer, but I think it is important,” Klink added.

Grocery is a [big part of Target’s](https://www.financedigest.com/big-brands-set-to-miss-plastic-sustainability-targets.html "Big brands set to miss plastic sustainability targets") operations. In 2020, it accounted for 20% of its overall [sales of $92.4 billion](https://www.financedigest.com/allianz-puts-n26-stake-up-for-sale-at-3-billion-valuation-ft.html "Allianz puts N26 stake up for sale at billion valuation – FT"), putting it in competition with the 10 largest U.S. grocers, including Kroger and Albertsons. The company this month said it was looking to expand [grocery sales](https://www.financedigest.com/inflation-drives-britains-record-christmas-grocery-sales.html "Inflation drives Britain’s record Christmas grocery sales"), especially through private label.

On March 1, Richard Gomez, Target’s chief [food and beverage officer](https://www.financedigest.com/hundreds-of-tyson-foods-employees-to-depart-as-company-closes-offices-wsj.html "Hundreds of Tyson Foods employees to depart as company closes offices – WSJ"), told investors Target is “going to make our entire experience, in-store and online, accessible to all families, allowing them to shop on their terms regardless of how they pay for their groceries.

[Target’s house brand](https://www.financedigest.com/gumgum-granted-first-mrc-accreditation-for-brand-safety-and-contextual-targeting-for-ctv.html "GumGum Granted First MRC Accreditation for Brand Safety and Contextual Targeting For CTV"), Good & Gather, now offers nearly 2,500 food and beverage products. Target, for example, sells a 12-ounce can of Good & Gather evaporated milk for $0.99 on its website, compared to Nestle’s Carnation condensed milk for $1.69.

Target will put a leading national brand like Nestle on a display, but put the Target (private-label) item right next to it, to get the consumer to cross over,” said Burt Flickinger, [managing director at Strategic Resource](https://www.financedigest.com/the-importance-of-strategic-human-resource-management.html "The Importance of Strategic Human Resource Management") Group, a consulting firm, adding that the move was “transformative.

U.S. [President Joe Biden’s administration in October began providing about 42.8 million people](https://www.financedigest.com/over-a-third-of-uk-people-think-thomas-whitmore-from-independence-day-will-be-joined-by-donald-trump-in-disneys-hall-of-presidents.html "Over a third of UK people think Thomas Whitmore from Independence Day will be joined by Donald Trump in Disney’s Hall of Presidents") with an additional $20 billion in food stamps, through the Supplemental Nutrition Assistance Program (SNAP).

According to the United States Department of Agriculture, more than 3.2 [million food-stamp households shopped](https://www.financedigest.com/incentive-qas-expands-retail-portfolio-with-million-pound-shopping-centre-contract.html "Incentive QAS Expands Retail Portfolio With Million Pound Shopping Centre Contract") online in January, doubling from a year before. To buy groceries online, food-stamp recipients generally must have an electronic benefits transfer (EBT) card, similar to a [debit card](https://www.financedigest.com/visa-has-terminated-global-debit-card-agreements-with-ftx.html "Visa has terminated global debit card agreements with FTX"). However card holders can’t use the benefits to pay for non-food items.

For Target, one question is whether food-stamp recipients will be willing to pay delivery fees. Shipt, which Target acquired in 2017, charges $7 per delivery but [offers free same-day delivery to subscribers who pay](https://www.financedigest.com/uk-trial-lawyers-to-end-strike-after-accepting-government-pay-offer.html "UK trial lawyers to end strike after accepting government pay offer") $99 per year.

Instacart, which handles deliveries for BJ’s Wholesale Club, Food Lion, Publix and Ahold Delhaize USA, among others, is waiving its $3.99 [delivery fees for food](https://www.financedigest.com/european-food-delivery-shapes-up-with-getirs-gorillas-buy.html "European food delivery shapes up with Getir’s Gorillas buy") stamp purchases made online until March 31.

Amazon has since offered additional discounts of up to 15%on select meat, produce, toiletries and paper [products purchased at Amazon Fresh or Whole Foods](https://www.financedigest.com/end-of-cheap-money-for-u-s-farmers-plows-trouble-into-food-production.html "End of cheap money for U.S. farmers plows trouble into food production") by food stamp recipients using EBT cards.

EBT cards can not be used to pay for Amazon Prime subscription membership, tips or items sold by third-party sellers; however, Amazon [offers membership discounts](https://www.financedigest.com/discount-dining-clubs-tastecard-and-gourmet-society-grow-their-offering-as-chimichanga-and-spaghetti-house-both-sign-up.html "Discount dining clubs tastecard and Gourmet Society grow their offering as Chimichanga and Spaghetti House both sign up") of $6.99 per month for customers who are on government programs including SNAP (food stamps) and Medicaid. An [Amazon Prime membership costs](https://www.financedigest.com/amazon-other-retailers-revamp-free-shipping-as-costs-soar.html "Amazon, other retailers revamp ‘free’ shipping as costs soar") $14.99 per month, or $139 per year.

Lower-income households are seeing their purchasing power erode as meat and bread prices, and [heating and gas costs](https://www.financedigest.com/cutting-business-costs-pros-of-using-commercial-heat-pumps-in-2016.html "Cutting business costs: Pros of using commercial heat pumps in 2016"), rise. The price of groceries purchased online in the United States rose 7.6% on average in February, compared to a year earlier, [according to the Adobe Digital Economy](https://www.financedigest.com/louisiana-floods-to-cost-us-economy-more-than-10bn-according-to-aon-catastrophe-report.html "Louisiana floods to cost US economy more than bn, according to Aon catastrophe report") Index.

The $50 [billion or more that Americans spend](https://www.financedigest.com/chipmaker-infineon-ready-to-spend-billions-on-acquisitions-ceo.html "Chipmaker Infineon ready to spend billions on acquisitions – CEO") annually on groceries purchased with food stamps represents just 5% of the $1 trillion spent on food-at-home yearly, said Bill Kirk, consumer analyst at MKM Partners.

Still, Target’s new payment option underscores its ambition to boost market share in the area of groceries, a category where [strong growth in volume sales](https://www.financedigest.com/indias-tata-motors-jumps-to-a-7-month-high-on-strong-q4-jlr-sales.html "India’s Tata Motors jumps to a 7-month high on strong Q4 JLR sales") is hard to come by and where inflation is particularly acute.

(Reporting by Arriana McLymore in New [York City](https://www.financedigest.com/new-york-becomes-first-u-s-city-to-mandate-covid-vaccines-to-enter-restaurants-gyms.html "New York becomes first U.S. city to mandate COVID vaccines to enter restaurants, gyms") and Siddharth Cavale in Bengaluru; Editing by Nick Zieminski)


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