The Scramble For Your Tax Rebate

Yahoo News:

Beginning today, more than 130 million Americans will be getting tax rebate checks, ranging from $600 to $1,200 per household. Retailers across the country desperately want a piece of that action in a U.S. economy flirting with recession, and the sales promotions tied to the government cash injection are already coming fast and furious. “We are going to start to see retailers raise the stakes in terms of types of promotions they are going to offer around rebate checks,” says Scott Krugman, spokesperson for the National Retail Federation.

Big-box retailers Sears and Kmart, both of which are under earnings pressure, and national grocery chain Kroger will give customers gift cards in exchange for their entire stimulus check starting in May. To entice shoppers to hand over up to $1,200 in full, the retailers are adding 10% to the rebate total. “Every major retailer that has a gift card could execute this kind of initiative,” says Ann Raider, head of retail partnerships for Affinity Solutions, a company that develops retail rewards programs.

Other retailers are trying to work the customer care angle as well. On Apr. 20, Staples announced an online “Economic Stimulus Center” targeting small business owners, who generate more than half of the company’s $19.4 billion in annual sales and will be eligible for tax breaks under the government’s stimulus efforts. The chain is offering cash savings on big purchases as well as free advice on how small enterprises can lower their tax bills.

An estimated $42.9 billion is expected to be injected into the economy through stimulus checks. But with 25% more overdue credit-card bills this year than last and rising food and gas prices, less than half of consumers are expected to spend the extra cash in stores. “For the first time in 10 years, people will start to save out of income rather than (home and stock) appreciation,” Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting firm says. Let the promotional wars begin.

Photo by mokra.

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