Pennsylvania’s grocery industry heads into the fall with a state budget that held the line on new taxes and regulations, a mandate to move EBT cards to encrypted chip technology by the start of 2028 and a swipe fee fight that could return as much as $350 million to the commonwealth’s retailers and consumers.
“I think the industry overall is strong and is doing well and continues to thrive despite some headwinds, which I think all retailers are dealing with,” said Alex Baloga, president and CEO of the Pennsylvania Food Merchants Association.
Those headwinds include tariffs, shipping costs and the wars in Ukraine and Iran, which Baloga said are affecting pricing and transportation, along with an ever-present regulatory burden.
“The cost of doing business obviously has gone up considerably. But in spite of all that, I think we’re very fortunate in Pennsylvania to be home to many of the national leaders in this space in the food industry,” he said, pointing to a membership that spans grocers, convenience store operators and CPG companies up and down the supply chain. “Pennsylvania is known as the snack food capital of the country, maybe even of the world.”
At the shelf, Baloga said Pennsylvania shoppers look a lot like their counterparts across the country, seeking out value options and opportunities.
“The basket size remains relatively steady, but people are definitely making trips to different channels and different retailers probably more frequently than they had in the past,” he said, adding that competition for those dollars has intensified as retailers offer more varieties and opportunities to meet demand.
SNAP in spotlight
Last fall’s federal shutdown and the accompanying SNAP disruption underscored how much of Pennsylvania’s food economy runs through the program, said Baloga, pointing to the entire food chain economy, from the agriculture level to retail and wholesale and everything in between.
Pennsylvania is not a SNAP waiver state, and PFMA has opposed attempts to make it one.
“Our belief is that customers, regardless of whether they’re using SNAP benefits or not, should have choice in what they’re buying, and that our job is to provide options for them,” Baloga said.
Federal cost-sharing requirements under the One Big Beautiful Bill Act remain a worry across the association’s membership. “Because, frankly, states can’t make up that level of support that’s typically come from the federal government,” he said.
Budget wins, chip card transition
Several PFMA priorities made it into the state budget – organized retail crime, the chip-enabled cards, the Fresh Food Financing Initiative and the corporate net income tax – but Baloga said the biggest win is a more general one: no new taxes, fees or harmful regulations. Holding those threats at bay, he said, has a bigger impact than any single line item.
“Not allowing additional new regulations, reducing regulations and keeping harmful taxes and fees at bay is a really big part of what we do all the time,” he said.
The budget authorizes moving EBT cards from magnetic stripe to encrypted chip technology by the start of 2028, a transition that retailers are already seeing in surrounding states.
Baloga said benefit recipients will receive the new cards, technical support and guidance will be provided and further communications will come from PFMA and the commonwealth. What the switch requires of individual grocers will vary.
Swipe fees, pricing scrutiny
On the legislative front, House Bill 2090 – which would end swipe fees on the sales tax portion of transactions – cleared the House Finance Committee, and Senate Bill 1202 is its Senate companion.
“That’s a big deal,” Baloga said, noting that the change represents “about $325 to $350 million in Pennsylvania that would go to help lower costs for retailers and consumers at the end of the day.”
PFMA will keep pressing the issue when lawmakers return to the capitol.
The current two-year legislative session ends in December, meaning the process would restart in 2027. “It’s a big issue for businesses, small businesses especially, because it’s one of their top three costs in their businesses, top two or three.”
Dynamic and so-called surveillance pricing is another area where Baloga sees widespread misinformation. He said electronic shelf labels, which draw much of the scrutiny, are “really used to monitor product freshness and help cycle out inventory and … to make sure the price is accurate, matching the price on the shelf versus the price at the register.”
Surge pricing, he said, is a different animal.
“That’s something you might see if you’re in an Uber or if you’re buying a concert ticket or an airplane ticket, or something like that,” said Baloga, adding that competition alone would make the practice self-defeating for grocers.
“If you’re pricing things that way, you’re going to lose customers to other stores, other businesses, and that’s the last thing you want to do.”
Steady stores, election ahead
As for the store landscape, Baloga said Pennsylvania reflects the national picture, with consolidation on the grocery side and growth among convenience stores.
“Pennsylvania is holding pretty strong overall,” he said.
That includes independents, even as some smaller operators exit the business amid a challenging competitive environment.
The budget also continued $2 million for the Fresh Food Financing Initiative, which Baloga said is one of the ways the commonwealth has made strides on food access. The bigger lever, he said, is the business climate itself in a state with thousands of municipalities and 67 counties.
The budget didn’t address minimum wage, cannabis and skill games, all of which could resurface after the Nov. 3 election.