Legally I think observation of a crime without reporting it is itself a crime. And yes, I'm sure I'm guilty of it, I'm just saying that it's technically illegal.
The circumstances that would prompt me to steal would be dire, indeed. I'd have had to already exhausted all other possible means of getting help - attempts to get even a part time job doing crap-work, all forms of welfare, soup kitchens or churches, asking for help from the store manager, ALL family members still living and reachable, whatever. It would have to be at the point of me and/or my family starving if I didn't steal (and frankly, if I had kids, I think there would be easier ways to get help for them and I would take any job there was, and if I was alone, I'd just kill myself before my life got that bad).
Also, seeing somebody in a grocery store, you can't say for certain they're actually poor, or what their circumstances are. They may or may not have already exhausted all other means of getting help; they may just prefer to steal than to ask for help or go to a shelter; they may just have a low moral standard themselves and not think anything is wrong with stealing or not think they should try to get a job because they don't want to do the menial tasks, thinking they're too good for it.
Ethically, I'd say report the person to store personnel. As someone said, if they have the balls to steal, they should have the balls to just ask the manager. (Maybe they already have tried, maybe not. You can't know one way or the other, and I prefer to err on the side of stopping people from doing something that isn't right.) Maybe when they explain why they're stealing, the store will help, maybe not. But theft is still wrong, no matter what the reasons for it.
Realistically, I don't know what I'd do. Probably walk away, or maybe just make it obvious that I saw the man do it and see if he puts it back or something (and knowing people these days, he'd probably glare at me and blatantly go about his business). If I was feeling really bitchy, I might report it, but I don't normally have the cajones to do that sort of thing.