- The Washington Times - Wednesday, April 30, 2008

Retailers are eyeing the rebate checks landing in Americans’ bank accounts this week, hoping to burn a hole in shoppers’ pockets with big deals and discounts.

Companies such as Wal-Mart and the upscale Restoration Hardware are offering shoppers a deal if they cash their stimulus check for a gift card or $100 off large purchases.

The rebate checks are part of a $168 billion economic-stimulus plan passed by Congress. The checks — which range up to $600 for individuals and $1,200 for married couples, plus $300 per dependent child — are expected to land in the bank accounts and mailboxes of 130 million Americans starting this week.

Many of the deals are targeting purchases that require most of the check, such as a discount for a $750 minimum purchase at Restoration Hardware or $500 at Staples.

Sears, as well as its Lands End and K-Mart stores, is giving shoppers an additional 10 percent of their check’s value if they use their entire stimulus check to buy gift cards.

Shoppers who got their rebate through direct deposit aren’t eligible.

The “Economic Stimulus Center” at Staples is offering $50 off a $500 purchase or $150 off a furniture order of $1,000 or more. Wal-Mart said yesterday that it will cash rebate checks for free and has cut prices on groceries.

Grocers such as Kroger and SuperValu Inc. also are offering shoppers discounts when they exchange all or part of their rebate checks for gift cards. Safeway is offering customers 10 percent off that day or the next day’s grocery purchase if they cash their rebate check at the store.

Many shoppers are expected to slice up their checks, spending some and using some to pay off debt. But some of the bargains, such as the gift cards, are only good if shoppers spend their entire check.

The National Retail Federation (NRF) expects consumers to spend 40.6 percent of their rebate checks, pay down debt with 28.4 percent and save or invest 22.7 percent, according to a February study.

“What happens when consumers get worried is, they start taking control of the things they can control. They cut back on restaurants, they cut back on entertainment, they cut back on apparel,” said Phil Rist, vice president of strategy at BigResearch, which did the study for the NRF.

If the NRF’s forecast holds, the $44 billion “rebate-check holiday” will have almost as much effect on retailers as the annual back-to-school holiday. Shoppers spent $47 billion on back-to-school spending last year, making it retailers’ second-largest spending holiday after Christmas.

TNS Retail Forward, a Columbus, Ohio, research group, estimates Americans will spend $42 billion of their rebate checks at retail stores. The group expects retail sales to increase 1.5 percentage points in the second quarter of the year and a healthy 3 percentage points in the third quarter.

Women and young people are slightly more likely to spend their checks than save them, according to the survey.

People who chose direct deposit on their 2007 federal tax returns could get their checks as early as this week. Paper checks will go out beginning May 9.

The rebate checks might already have had a psychological effect on consumers.

Sales at chain stores last week rose 0.9 percent from the week before, according to the International Council of Shopping Centers (ICSC). The New York trade group attributed the increase to shoppers anticipating their rebate checks.

“Consumers continue to face very difficult economic conditions, with record-high gasoline prices curbing discretionary spending,” said Michael P. Niemira, chief economist and director of research at the ICSC. “But the one bright spot is the federal tax rebates — which are just now beginning to flow to consumers — [and] should help to stem some of the weakness seen earlier this year.”

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