By Barbara Thau
NEW YORK–Tax rebate checks are being mailed this week and merchants are angling for their cut from Uncle Sam with promotional ploys designed to entice shoppers to spend their money at their stores.
A number of retailers are pitching big-ticket items; some chains are targeting back-to-school sales and others are highlighting eco-friendly offerings.
The government’s economic stimulus package will provide checks of up to $600 for individuals and $1,200 per married couple. Families with children will get an extra $300 per child. The checks are expected to pump $42.9 billion into the economy.
Consumers plan to spend an estimated 40.6 percent of their tax rebate checks, but the remainder will be used to pay down debt, medical bills and stash into savings, according to a survey by the National Retail Federation.
“The [retail] industry is cautiously optimistic that we will get a good share of this,” Rachelle Bernstein, vice president, tax counsel for the NRF, told HFN.
When tax rebate checks were last distributed in 2001, shoppers spent 40 percent of them, which coincides with forecasts for this year, Bernstein said. But just as the terrorist attacks of September 11 likely tempered shopping then, economic woes could hamper spending in 2008, she said.
This year’s NRF survey revealed that 1.8 percent of consumers will spend their tax-rebate money on furniture; 1.3 percent will spend it on appliances; and 5.5 percent will use it for home improvement projects.
Home improvement giants Home Depot and Lowe’s are going after the home project business. Home Depot is urging shoppers to “turn their tax rebate into an update,” such as a kitchen or backyard make over. The retailer’s Web site links to project ideas, pushing everything from lighting upgrades to home grilling.
Meanwhile, Lowe’s is touting the idea of reinvesting in the home, sending a message that the housing malaise must come to an end at some point.
Retailers are also wooing shoppers with special incentives.
Lowe’s, Sears and Kmart are offering shoppers check-cashing services at their stores.
Sears is taking it a step further.
The retailer and its sister chain Kmart are offering a 10 percent bonus to shoppers who convert their tax checks into gift cards at Sears, Kmart or Lands’ End’s free-standing outlet stores.
“It’s the first time we’ve offered a tri-branded gift card,” Kirsten Whipple, a Sears spokeswoman, told HFN.
Sears is also promoting cash-back offers on its appliances from Kenmore, GE and Jenn-Air, particularly energy efficient ones. “We’re not sure what to expect [from the promotions], knowing the economic environment,” Whipple said.
Sears is one of several retailers, including Home Depot, that have pledged support for a resolution in Congress to encourage shoppers to spend their rebate checks on energy efficient products.
For its part, Home Depot is playing up its Eco Options. Eco Options is Home Depot’s exclusive label for products that conserve water and save energy.
Boscov’s is calling out big-ticket items, such as $499 patio sets in its home advertising. The ads say “here’s what you can get with your rebate check,” John Young, senior vice president and general merchandise manager of home, told HFN. As some shoppers will get checks for $600, “it hits the price point.”
Ashley Furniture is also broadcasting big-ticket fare in its Tax Refund Days marketing plug.
The furniture chain is offering a discount equal to the amount of the sales tax on an entire purchase.
Ashley is promoting assortments in its circulars such as a $1,599 five-piece bedroom set; a $999 queen bookcase headboard with built in LED lighting and mirrors; and “extras for your room,” such as lamps for $124.99 and chenille throws for $29.99.
Retailers expect the checks, which consumers will get between May and July, to boost their back-to-school business.
“A lot of retailers will look to that to infuse their back-to-school business,” said Shilpa Bharne Rosenberry, senior retail consultant with WSL Strategic Retail.
Some retailers, like J.C. Penney, are opting to forgo special tax-rebate check promotions.
J.C. Penney expects to get a lift in its back-to-school business, said Mike Ullman, chairman and chief executive officer of J.C. Penney, during the retailer’s two-day analyst meeting last month.
“Back to school is not an impulse buy—it’s destination shopping,” he said.