By                    Vance Cariaga

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Target told Reuters last week that it will begin to accept online payments through the Shipt service, its delivery unit. The retailer set a tentative start date of late April 2022. The service also will include drive-up and pick-up orders.

SNAP is a federal program for families who need financial assistance to buy food. Eligible consumers used to pay with food stamps but today use reloadable Electronic Benefits Transfer cards. The cards can only be used for eligible food items and not for non-food purchases such as alcoholic beverages, tobacco products, vitamins, medicines, supplements, cleaning supplies, paper products and cosmetics.

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Allowing EBT payments for online orders could help Target reach lower-income consumers who might otherwise shop at less expensive dollar store chains or at chief rival Walmart. The move might also build a long-term customer base Target didn’t previously have.

“Target is kind of taking the long view, saying you can use your food stamps now,” David Klink, senior equity analyst at Huntington Private Bank, told Reuters. “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. I wouldn’t call it a game-changer, but I think it is important.”

Grocery sales account for about one-fifth of Target’s overall revenue, so they are an important part of its business. Its grocery sales now are competitive with leading pure-play grocery chains like Kroger and Albertsons.

Target’s strategy is to make its entire experience, both in-store and online, “accessible to all families, allowing them to shop on their terms regardless of how they pay for their groceries,” Chief Food and Beverage Officer Richard Gomez recently told investors.

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The retailer’s house brand, Good & Gather, offers nearly 2,500 food and beverage products that are priced to steer customers away from name brands. For example, Target sells a 12-ounce can of Good & Gather evaporated milk for $0.99 on its website, Reuters reported — well below the $1.69 charged for a can of Nestle’s Carnation condensed milk.

“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 Group, a consulting firm.

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